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Gig economy jobs vs freelance work

Bilge Özensoy

The gig economy is steadily on the rise, with estimates that by 2027 about half of the US population will have engaged in gig work. The variety and quick turnaround of gig economy jobs appeal to many. Especially those who have been worn out by traditional forms of employment and are not satisfied with their earnings.Though there is some overlap between gig economy jobs and freelance work, the two terms should not be conflated and used synonymously. We will go over the two concepts and the state of the gig economy vs freelance work in recent years to offer a better understanding of the differences.

What is the gig economy?

The term "gig" was added to the literature by the jazz musicians of the 1920s, and today any musical live performance can be called a gig. Today, the word can signify any kind of short-term job. After learning the gig economy definition, let’s dive deep to understand better what the gig economy means.Gig economy is a free market system where contingent jobs are available, and companies hire workers with short-term contracts. Gig economy jobs are on-demand, short-term and fast-paced projects challenging the traditional economy of full-time workers who rarely change careers.

What is the freelance economy?

The concept of freelancing is older than one may think. In fact, the earliest written record of the word is found in Sir Walter Scott’s 1819 novel Ivanhoe, in which a feudal lord refers to his paid army as “Free Lances”.From its medieval meaning denoting independent soldiers who would work for whichever person or entity that paid the most, in our times, freelancer came to signify any person working independently on a contractual basis.Freelance workers take on projects of various lengths and scopes. They sometimes serve as long-term team members at organizations over the years. Today, the freelance economy is comprised of technology-based independent contract work. It reached a whopping $1.2 trillion dollar volume in 2021, with “one-person businesses” around the world serving various industries.

Why are gig economy jobs on the rise?

The first reason why gig economy jobs have become popular in recent years is that the demand grew as service platforms (apps for ride-sharing, home rental, food delivery, micro-tasks, etc.) became more and more widespread.From the workers’ perspective, especially for students, retirees, or those who simply seek to supplement their income with casual earning opportunities, gig economy jobs have their appeal. It allows for flexibility and autonomy over when, where, and how one works, which is among the urgent demands of the modern workforce.Gig economy jobs certainly come with new and unique challenges. For example, the legislative framework at hand does not neatly apply to workers in contingent arrangements. New legislation and incentives are being developed to protect gig workers’ rights, such as the European Commission’s late-2021 directive proposal.

Tracing the growth of freelance economy

Freelance economy growth is inevitably gaining momentum. Talents and organizations are increasingly realizing the merits of alternative work arrangements. Moreover, work mobility is rising with the help of digital platforms facilitating freelance work across borders.Here are some exciting facts and freelance economy statistics:

  • The sixth annual “Freelancing in America” study finds that more people than ever see freelancing as a long-term career path. In 2019, the total of US freelancing income reached almost $1 trillion—nearly 5% of the US GDP—surpassing significant industries like construction. 
  • Freelancers doing skilled services earn a median rate of $28 an hour, more than 70% of workers in the US 
  • By 2028, there will be 90.1 million freelancers in the US, corresponding to more than half of the total US workforce. 
  • According to McKinsey, 500 million freelancers will be working through platforms before 2030.

Gig economy jobs vs freelance work

In 2022, 36% of the US workforce consisted of gig, contract, freelance, and temporary workers, up from 27% in 2016. Alternative work arrangements continue rising in the labor market, hence it is vital to understand the nuances, trends, and motives. In many countries, gig economy jobs and freelancing are considered under the same legal category. For example, the IRS distinguishes between employees who receive W-2 forms for their income tax. On the other hand, workers who perform services for a company without being direct employees have independent contractor status and receive 1099 forms.An independent contractor is a self-employed person producing a specific type of work product in a determined amount of time. The employer only controls the result of the work, not what to do or how to do it.Following this categorization, are all freelance jobs gig economy jobs? Not exactly. In fact, many freelancers despise being called gig workers. Only 10% of freelancers consider themselves part of the gig economy.Gig economy jobs are characteristically service jobs requiring manual labor and little to no training and professional experience. They mostly consist of micro-tasks pre-determined by the “employer”, offered by gig economy job platforms such as Uber, Lyft, TaskRabbit.Freelance work mostly requires specialization in industry and niche. The reason why companies hire freelancers is to supplement their in-house team, especially on technical issues requiring expertise and agility.Finally, freelance workers are one-person businesses with long-term goals and stable work relationships. Not all freelancers rely on gigs and short-term arrangements, on the contrary, solo workers prefer freelancing to build an autonomous career for themselves, on their terms.

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