It’s called the “gig economy,” but independent contractor work has become so massive that it’s a major part of the US economy at large.
According to Upwork’s annual report, a record 39% of the total US workforce performed freelance work in 2022—up 3 percentage points from 2021 and 2020. About 60 million Americans were part of the gig economy in 2022, freelancing either full- or part-time doing jobs like creative work, food delivery, ride-sharing, information technology, childcare, home repair services, and more.
Whether you’re a proponent of gig work and the flexibility it offers, or a critic of the lack of protections it affords workers, the gig economy is here to stay. Several macro trends have fueled this rapid growth.
Why is the gig economy growing so fast?
Advances in technology have given rise to the gig economy in several ways. For one, many major players in the gig economy depend on digital platforms and marketplaces: Uber, Airbnb, TaskRabbit, Creatively, Contra, Upwork, and scores more can connect their gig workers directly with customers in a way that wouldn’t be possible otherwise. Technology has also made it possible to work remotely, from collaboration tools to video calls.
Millennials and Gen-Z workers are a huge force in the gig economy: In 2022, 43% of all Gen-Z professionals and 46% of all Millennial professionals performed freelance work, according to the Upwork study.
Many of them grew up with digital platforms—and perhaps more importantly, these generations are more likely than older workers to prioritize flexibility and work-life balance. Job security and health benefits would be nice, sure—but some workers in these age groups put more value on the opportunity to work when, where, and how they want.
Economic and labor-market volatility
Between the Great Recession of 2008 and the COVID slowdown, these younger gig workers have likely seen their family and friends lose jobs or experienced layoffs themselves. Some people who lost their positions picked up gig work between jobs using digital marketplaces, and many have continued in the gig economy as their main source of income or to supplement low salaries—after all, wages have stagnated in the US since the 1970s.
It’s clear the days of working at an employer for 40 years before retiring with a proverbial gold watch are long gone; taking project-based work on one’s own terms can give gig workers a sense of entrepreneurship and some control.
When the job pool goes digital, suddenly companies aren’t relegated to the talent in the same city or even the same country. Instead they can tap into a global pool of workers, who in turn have many gig work platforms to work across and several tools to showcase their skills to companies around the world.
What is the future of the gig economy?
As the gig economy continues to grow, so do its effects on its workers, companies, and the economy—as well as the debate around the concept as a whole.
Continued rapid growth
Some experts predict freelancers will comprise 50% of the workforce by 2030.
A 2021 Pew Research report showed a majority of current or recent gig workers said they were satisfied with many aspects of the work over the past 12 months, including pay and the number of jobs available. That variety of work options should increase as the gig economy grows.
The gig economy is “a workforce that Hispanic, Black, or Asian adults are particularly likely to participate in,” Pew wrote. This could be seen as a win for flexible work among marginalized groups—but the deeper trends show that may not be the case. For example, in Pew’s study only about 30% of white gig workers said they earned money across multiple types of gig jobs, compared to 48% for non-white gig workers.
That suggests some minority gig workers may be struggling to cobble together enough work and money. The disproportionate number of minority gig workers is also concerning, critics say, because of the lack of worker protections:
Debate over worker conditions and protections
Unlike traditional workers, gig workers aren’t covered under legal protections like minimum wage—in fact, the Economic Policy Institute found about 1 in 7 gig workers earned less than the federal minimum wage on an hourly basis and almost a third couldn’t afford to pay their utility bills in full in the month prior to the survey. Gig workers are also not typically eligible for benefits like health insurance, paid time off, and retirement accounts.
Meanwhile, though many gig workers report higher job satisfaction than do traditional workers, the day-to-day isn’t so rosy for some gig workers—especially minorities and those who perform deliveries and other tasks for the general public. The Pew study found non-white gig workers were more likely than white workers to say they have been treated rudely, been sexually harassed, or felt unsafe.
Misclassification of workers is something the US Department of Labor takes seriously, levying penalties on companies found to call workers independent contractors when they should be employees. The DOL details specific guidelines for each category—for example, a business can’t decide “when and how” a gig worker’s work must be performed.
But some companies continue to misclassify workers, either unintentionally or in an effort to skirt the law and avoid paying for employee benefits like health coverage. It’s a situation made more challenging as legislation, particularly on the state level, continues to evolve.
In conclusion: The gig economy today and tomorrow
Gig workers comprise an increasingly large percentage of the labor market, with 39% of the US workforce performing at least some freelance work in 2022—jobs like food delivery, driving for ride-sharing companies, creative services, and more. Supporters of the gig economy hail the flexibility and choice it offers workers thanks to the rise of digital marketplaces. But critics note that comes at the cost of benefits like health insurance and job protections like minimum wage laws that cover traditional employees.
Even as that debate rages, a confluence of social and economic trends are fueling the rapid growth of the gig economy: advances in technology like collaboration tools for remote work and digital marketplaces that connect gig workers with customers; Millennials and Gen-Z workers’ tendency to prioritize flexibility, even if it means losing benefits like insurance; and globalization of talent and job opportunities, offering companies and workers alike a literal world of choice.
Looking ahead to the future of the gig economy, rapid growth is expected to continue: Some experts predict freelancers will comprise 50% of the workforce by 2030. That growth will provide even more opportunities for gig workers, who already tend to report high job satisfaction according to a 2021 Pew Research report.
But debate about the darker side of the gig economy is also growing. Minorities are disproportionately represented in the gig economy, and the Pew report showed they’re more likely to work across several types of job categories—which suggests some may be struggling to make enough money. The Pew study also found minority gig workers were more likely than white workers to say they had been harassed or felt unsafe.
Critics’ other concerns about the lack of gig worker protections include no coverage under minimum wage laws and other legislation, and most aren’t offered benefits like insurance, paid time off, and retirement accounts. Meanwhile, though federal guidelines dictate the terms of an independent contractor vs. a full-time employee, some companies continue to misclassify workers. So, especially on the state level, new legislation is cropping up to attempt to answer what seems to be an ever-evolving question: Who counts as a gig worker?