As work sees seismic shifts, growing ‘gig economy’ offers opportunities, poses problems

This story is part of a series about the gig economy published by Missouri Business Alert

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Zack Stovall works as a full-time fundraiser but does side gigs as a standup comedian. | Courtesy of Stovall

Zack Stovall, 29, is not a stranger to gigs. A development coordinator by day and standup comedian by night, he is also a freelance writer and cartoonist. If you catch him at a lunch break, chances are he is sketching ideas for his next show.

Stovall moved to St. Louis from Benton, Arkansas, in 2009. During his frequent visits to The Improv Shop, a St. Louis comedy theater and school, his interest in standup comedy grew. Now a full-time fundraiser at St. Louis Public Radio, he continues pursuing his passion of comedy on a part-time basis.

“Comedy is my second career,” he said. “It fulfills the creative side of me.”

Stovall is one of a growing number of people who have full-time jobs but work gigs on the side.

A recent online survey by the online freelance marketplace Upwork and national advocacy group Freelancers Union reported that 55 million people, or roughly 35 percent of the U.S. workforce, made money in contingent jobs in 2016. That’s up from 53 million in 2014. The study also found that more than half of those workers did freelance work in addition to holding more traditional jobs, and that the majority of them did so by choice.

This economic phenomenon, commonly referred to as the “gig economy,” is characterized by individuals working on a short-term contract basis, having flexible work hours and receiving assignment-based pay. It used to be most prevalent in industries that rely heavily on manual labor, such as agriculture, transportation and construction. Now, driven by advances in digital technology, it has been rapidly gaining popularity among a wide range of professionals, including doctors, therapists, lawyers, accountants, interior designers and writers.

Nebulous definitions, data

What is the gig economy? Even experts have trouble settling on a precise definition.

“There isn’t a clear-cut definition,” said Derek Ozkal, a research and policy program officer at the Ewing Marion Kauffman Foundation. “You have a lot of nuances in picking a word. Some people may only drive for Uber. Some people may do lots of different things to fit their schedule and needs for income generation … I feel like there is a pretty wide spectrum in terms of the type of people using it and what they expect out of it.”

gig_economy_graphicCalculations of the size of the gig economy can vary depending on how the workforce is classified. Gig workers such as moonlighters, independent contractors and temps are spread among diverse occupations. They’re not easily identified in surveys of employment and earnings.

“I think one of the difficulties is that the people who are in the gig economy are counted in different places in federal data. Sometimes, they overlap,” said Alan Spell, research manager at the Missouri Department of Economic Development. “It’s hard to break out the exact number.”

The Bureau of Labor Statistics defines contingent workers as “those who don’t have an implicit or explicit contract for long-term employment.” It found that contingent workers accounted for roughly 2 to 4 percent of all workers in 2005, the last time it updated the figure.

State-level data about the gig economy is not available for Missouri, but the state should “mirror the U.S. in many ways,” Spell said.

“I won’t be surprised if we’re very close to the national average,” he said. “I just don’t know for sure at this point.”

Next year, the the Bureau of Labor Statistics will once again conduct the survey it took in 2005, providing more up-to-date numbers about the gig workforce.

Technology powers gig proliferation

Karen Marshall, a 31-year-old from the Chicago area, turned her lifelong interest in photography into a freelance business when she started selling photographs while also working full-time at the University of Missouri journalism library in Columbia. She said online marketplaces like Etsy and Redbubble help her reach more consumers and diversify her product offerings. For instance, through Redbubble, she can create and sell items like iPhone cases and bags adorned with prints of her photos.

Similarly, online freelance marketplaces like Upwork, LinkedIn’s ProFinder and Care.com have made it easier for service providers to connect with customers, and have created more opportunities for those new to the gig economy to do independent work.

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Derek Ozkal | Courtesy of the Kauffman Foundation

Digital payment systems work hand-in-hand with these platforms. People who offer on-demand services now can receive compensation through payment processors like Stripe, which underpins many on-demand companies. Stripe originally developed the instant-payout feature at the request of ride-hailing service Lyft. Lyft’s rival, Uber, has since started its own instant-pay pilot program. Marketplace platforms like Care.com, Instacart and Postdates will soon start giving workers the chance to cash out their earnings immediately.

According to the study by Upwork and the Freelancers Union, 73 percent of freelancers said that technology has made it easier to find freelance work, up four points since 2014. Sixty-six percent of freelancers said the amount of work they have obtained online has increased in the past year.

“The emergence of robust and easy-to-use mobile platforms is really allowing these types of arrangements to be easy to do,” Ozkal said. “I think that’s a huge thing that technology can do.

“(Technology) has increased the trustworthiness of the transaction between people.”

A shifting workplace ideal

Perceptions of gig-based work are changing.

The Upwork and Freelancers Union survey shows that 59 percent of independent workers think the freelancing job market has changed compared to three years ago. Of these, the majority said freelancing as a career is becoming more positive and respected.

The study also indicates that modern people value freedom and flexibility. Among full-time freelancers, the top three reasons people said they freelance were to be their own boss, to have work schedule flexibility, and to have work location flexibility.

“The lifestyle is pretty entrepreneurial,” Ozkal said. “To get into the gig economy, you really have to think of yourself like a business – how do I promote my skills? How do I get little bit financing if I want to do what I want to do? I think it’s a good thing to promote the idea that we all think like entrepreneurs. It’s going to increase our skills in the economy and improve the economy.”

Insecurity remains

This rising economic sector satisfies many Americans’ thirst for autonomy, but it also raises serious challenges in terms of benefits, income security, training and credentials.

Marshall hopes to become a full-time photographer and one day open a gallery. But she often finds herself struggling to make a profit.

“You put a lot of time and money into it, but you never know if you can make money out of it,” she said. “It’s nice to hear (compliments), but then the challenge is getting them to actually be, like, ‘I want to spend the money to buy your work.’”

Marshall is not alone.

The top concerns that keep many people from diving into the gig economy are debt, pay rate and predictability of income. Benefits are also a key issue. The Upwork and Freelancers Union study found that a fifth of full-time freelancers don’t have health insurance.

“I think there are a lot of things for policy-makers to consider,” Ozkal said. The most important, he said, “is getting a clear grasp of exactly who (gig workers) are … and what support should be. It’s a really nuanced topic. You can’t fix it just by changing one policy, because it’s such a wide range of people being involved.”

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