Mobility

The 5 factors driving workers away from the gig economy

Most people are attracted to the freedom and flexibility of the gig economy, but these five factors may change your mind.

With the rise of apps like Uber, Lyft, Postmates, and Favor, more and more Americans have jumped on the gig economy bandwagon. In a gig economy, employees engage in short-term work as independent contractors or freelancers. And with some 16.5 million American participating in "contingent" or "alternative work arrangements," according to the Bureau of Labor Statistics in June, the gig economy appears to be thriving.

The success doesn't come as a huge surprise, as gig economy jobs have many advantages. For one, employees set their own schedules, simply logging onto the app when they feel like working. That means no more requesting off for doctor's appointments or vacations—you are able to work on your own time.

SEE: Remote access policy (Tech Pro Research)

Gig economies provide more opportunity for more people, Forrester researchers Marc Cecere and Matthew Guarini wrote in a January 2018 report. Between students, retirees, underemployed workers, remote employees, and other non-traditional professionals, the gig economy opens its doors to any and all backgrounds, said the report.

Companies also benefit from the gig economy with its significantly lower costs. Saving money is the number one reason companies form or adopt the contingent workforce concept, according to the Forrester report. Since freelance employees have to provide their own devices, vehicles, and work spaces, companies save big. And with freedom for employees to opt in or out at any time, companies get to eliminate the expense of recruiting firms, the report found.

However, working in the gig economy isn't all sunshine and rainbows. Here are five downsides that may make workers think twice before signing up.

1. Inconsistency

The gig economy is extremely unstable. Most gig applications like Uber and Lyft rely solely on user demand. So if there is no demand for a ride, then there are no requests, and no work. Employees have no way of predicting how busy the apps will be from day to day, rolling the dice each time they decide to work. They could be driving all over town completing rides, or sitting in a parking lot waiting around for hours.

"You can say, 'I want to have time off whenever I want; I want to have the freedom; I want to have the ability to work for numerous companies and build up these great experiences.' But, there's a lot more risk in things like that," Guarini said. "My first piece of advice is as you're picking this career path, really ask yourself, 'Is this going to be the type of way I want to work in my career?'"

2. Poor pay

The 90,251 Uber drivers working full-time make an average salary of $9.21 per hour, including Uber fees and vehicle expenses, according to the Economic Policy Institute. That means working full time for a gig economy company like Uber may not provide a sustainable income.

However, individuals may be willing to take less money because of the amount of flexibility they are given, Guarini said. The majority of independent workers use the gig economy as a source for supplemental income, not primary, according to the McKinsey Global Institute. As for a full time job, the gig economy may be a more unreliable option.

3. No benefits

The gig economy does not offer benefits for independent contractors. "One area of concern for independent workers is their limited access to income security protections, such as unemployment insurance, workers' compensation, and disability insurance," the McKinsey report stated. "Minimum wage and antidiscrimination laws may not apply to them, and retirement security is a concern."

Also, employees can say goodbye to paid sick days, vacation days, health insurance, and overtime pay. Employees rave over the freedom they have in the gig economy, which is true, but they are definitely on their own—in more ways than one.

4. Taxes

All independent workers have to track and pay their own taxes. Calculating taxes in the gig economy can be particularly difficult for individuals participating in multiple gig jobs. Many gig workers forget to pay their quarterly tax payments to the IRS and state, which can be difficult if your income is fluctuating a lot, according to a USA Today report.

5. Technological difficulties

The gig economy is powered by cell phones. If an employee is working full-time in the gig industry, then they must have their chargers ready. If your phone runs out of battery, breaks, or gets lost, so does your income for that day. Gig companies need to be particularly cautious and aware of their app's functionality. Without the app, there is no business.

Guarini's overall advice is to make sure the gig economy is right for you before diving into it full time. "If you're picking the career path to do gig, and you want to have that freedom and that flexibility, make sure that, that's really what you want to do. It's kind of like going into a startup, startups aren't for everybody," he said. As a supplemental source of income, the gig economy is a great tool. But as a sole source of income, the gig economy might not be all it's cracked up to be.

Also see

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Image: iStockphoto/AlxeyPnferov

About Macy Bayern

Macy Bayern is an Associate Staff Writer for TechRepublic. A recent graduate from the University of Texas at Austin's Liberal Arts Honors Program, Macy covers tech news and trends.

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