THE GIG ECONOMY IMPACT
THE GIG ECONOMY IMPACT
By Marissa McKinney
Marissa McKinney is an accounting professional with over 8 years of experience in financial planning, bookkeeping and accounting, specializing in the small business entrepreneur. Get in touch at logistis.us.
There is a lot of hype swirling around the Millennial’s movement toward a “Gig Economy” and the effect it will have on labor force and employers. The general consensus seems to be that people have redefined their ideas of success and in this transformation more people are gaining greater autonomy in their careers. The title “freelancer” has gained more esteem in recent years and the previous negative connotations associated with that title are a thing of the past. The desire to move up the corporate ladder has diminished and what we are left with is a movement towards a nation of independent contractors (IC) and start-ups.
There is a clear increase in the supply and demand for freelance work and telecommunicating makes it easier than ever to begin working independently. The service industry makes up 77.7% of the US GDP (according to the CIA World Fact Book) and many people are realizing their potential in the “Gig Economy.” With the barriers to entry minimal, mostly for service related work, many people are gravitating toward this idea of detachment from the corporate world. Companies like Uber, Airbnb and Task Rabbit are a direct reflection of the desire for people wanting to work on their own time. These companies have aided in the revolution for individuals growing self-reliance. The idea of independence is dreamy but other side of the coin is less palpable.
The perks to self-employment may seem obvious. Who wouldn’t want to make their own hours, work from home or take their laptop on a Caribbean cruise without having to ask their boss for time off ? School teaches you how to land a job, but more than likely, your college or vocational school did not teach you how to be self-employed. When you work for yourself there is no calling in sick, there is no one to plan your retirement or offer healthcare. And, if you are fortunate enough to be successful on your own, what happens when you max out your time and need more help in order to advance in your career? At this point you will need to expand, and in that expansion the next step is generally to hire help. Once you have crossed the threshold from being self-employed to becoming an employer, you enter a world where many people stumble. You may have mastered being the best cupcake maker in the world, but it is very difficult to be the best cupcake maker and successful entrepreneur. Being a business owner and employer can have you fumbling through laws, regulations and a whole gamut of other unanticipated complications.
Some of the obstacles business owners are facing today are higher wage demands, health insurance, salaried employees requesting overtime, the general complications of human resource laws and taxes. All of which can be a huge burden on the individual establishing their business. So can the “Gig Economy” be a winwin for employers and employees alike? I believe so, as long as an employer follows the IRS’s laws and strict stipulations for hiring an IC, then the employer can hire more freelancers and perhaps retain less need for actual employees. This outsourcing simplifies many of the employer’s complications in the preliminary stages of expansion.
The symbiotic relationship between employers and employees has become more pronounced and the “Gig Economy” is changing the entire fundamental nature of “employment”.
Venture capitalist Nick Hanauer and the labor leader David Rolf, argue in the latest issue of Democracy Journal that, “It’s an economic transformation that promises new efficiencies and greater flexibility for ‘employers’ and ‘employees’ alike, but which threatens to undermine the very foundation upon which middle-class America was built.”
In June of 2015, the US had the lowest unemployment rate in 7 years with a steady decline. Is the “Gig Economy” helping this trend? Perhaps more people are being proactive in initiating their own success. Y Combinator leaders anticipate that “there is still room for another ten-fold increase in the number of (good) startups.”
WHEN MAKING THE CHOICE TO WORK FOR YOURSELF VERSUS ENTERING THE CORPORATE WORLD, IT IS BEST TO KEEP THE FOLLOWING IN MIND:
-Make sure you have at least one mentor
-Have a business plan written out
-Find a financial advisor
-Plan for taxes
-Plan for retirement
-Network and be active on key networking sites like LinkedIn
-Always think ahead and be prepared for growth
The entrepreneur needs to remain savvy in their everyday decisions, even as a sole proprietor. As individuals begin to grow, they are going to have to adhere to a multitude of governmental rules/regulations and taxations and it is important to be prepared. There are people and businesses that can help startups save time, money and allow entrepreneurs to focus on what they do best. Success is utilizing the vast amount of resources and consultants in the market. With the modern convenience of social networking and accessibility to resources, it is easier than ever to become self-sufficiently efficacious. //