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What is gig work and does it make the dream work?

October 31, 2022 - 13 min read

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“What is gig work?” and other relevant questions

The pros and cons of gig work

Does gig work make the dream work?

When you hear the word “gig,” you probably think of the entertainment industry. Musicians and other performers used the term to describe the temporary paid opportunities that, when strung together, made up the bulk of their careers.

These days, you don’t have to be a performing artist to land a gig. Temporary contract work is more common than ever, whether you’re a freelance writer who likes independence or a driver who taxis people around for extra cash.

Online availability catalyzed the growth of this work style by giving people an easy way to connect with gig opportunities. Job boards like UpWork and Taskrabbit create easy, industry-specific connections between temporary workers and those looking to hire them. 

But you don’t have to use these platforms to find freelance jobs. Depending on your industry, skills, and type of work, you could use your professional network to connect with clients and sell your services independently.

One in six workers in traditional jobs would like to earn money as independent contractors or freelancers. Perhaps you’re one of them. But if you’re considering doing gig work full-time, you’ll have to be mindful of its pros and cons.

 

“What is gig work?” and other relevant questions

Before jumping into the gig economy, you should know what it looks like. Doing this kind of work can offer you freedom from an overbearing boss and put you in control of your hours. But this kind of independence comes with some tradeoffs.

Here are some FAQs that cover the basics.

Why is it called the gig economy?

The term “gig economy” hit the mainstream in recent years, thanks, in part, to the popularity of on-demand rideshare companies like Uber and Lyft or food delivery services like DoorDash and InstaCart. 

But gig work includes more jobs than those involving an app and a car. It encompasses any exchange of goods or short-term services between independent contract workers and their clients. That could be consulting services, freelance web design or writing blog content, or offering executive coaching to a team.

Typically, the relationship between a contractor and a company is project-based. Then, once the job is complete, their relationship ends, and they part ways. 

What is a gig worker?

A “gig worker” is anyone working as part of the gig economy. Some gig workers are full-time, filling their days with several projects from different clients. Others have a day job and use gig works as a part-time side hustle — whether to gain new skills or earn extra cash.

The temporary nature of these jobs usually means gig workers must rely on self-promotion. Websites like Uber and Upwork can take up that responsibility in exchange for a fee. But, depending on what you’re selling, you’ll have to do that work through social media or networking.

Eventually, after building trust with a few clients, showing off your work performance, and making a portfolio, you can sustain yourself on word-of-mouth. 

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How do gig workers get paid?

Gig economy workers don’t receive a salary like in traditional full-time jobs. Usually, they agree to a price for their services and invoice their clients upon completion of their work. 

There are no rules for how a contractor can price their services, so long as both parties agree that the terms are fair. Here are some common ways freelancers can bill their clients:

  • Hourly rates. Some workers will track their hours and charge only for the time it takes to complete a project. This is a useful billing method to avoid underselling your work — especially if you don’t know how long a project will take. If a freelance graphic designer charges too little for a product that takes 30 hours to create, they could make near minimum wage — or less. 
  • Fixed prices. Others will charge only for the goods or services delivered, regardless of how long it takes for them to complete it. This is great for more experienced freelancers who are better at estimating turnaround times. A writer who can produce three $150 articles in a work day will earn more than if they charged by the hour. They could raise their hourly rate, but this could scare off clients who fear being overcharged.
  • Mixed. Contractors can mix up their invoicing to fairly cover the scope of their work. For example, a web designer can charge a fixed price for a website and an hourly rate for subsequent revisions. Other workers may also charge for the cost of raw materials used to build a product and then hourly for the labor, like a carpenter doing home renovations.

As many as 16% of Americans were gig workers at least once in their lives, but very few of them used gig work as a primary source of income. And the ones who gigged full-time usually earned less than their colleagues in traditional roles. 

But not always. A minority of freelancers made decent salaries — sometimes up to $100,000 per year. And yet, gig workers (82%) say they’re happier working on their own rather than for a larger company, despite the lower pay.

What are gig workers vs. independent contractors?

In the eyes of the IRS, there’s no meaningful difference between gig workers and independent contractors. The agency classifies both under the umbrella of “self-employed individuals” — workers who earn income by selling goods or services on their own behalf.

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What are some common gig economy jobs?

The gig economy now spans most industries. Anyone willing to market their skills and collect an invoice with their name on it can consider themself a gig worker. Here are some industries where gig work commonly occurs:

  • Computer and IT. Computers and technology require highly technical skills that not everyone possesses. These “gigs” include services from information security engineers, software developers, and network analysts.
  • Writing. Content writers, resume writers, journalists, and UX copywriters often sell their skills as independent workers. You may have even read some of their work without knowing it.
  • Designers. Companies might not feel the need to hire an in-house design team. Having a reliable freelancer on-call lets them personalize their brand — via marketing materials, graphic designs, or entire websites — on short-term contracts. 
  • Finance. Some individuals find gig work as mortgage brokers, accounting assistants, or other finance-related professions. During tax season, some fully-employed accountants will give up their evenings and weekends to help people navigate their finances outside of their firm or regular clients.
  • Tutors. If you speak a second language or have a passion for teaching, tutoring could be a great side gig for you to earn some extra cash and help people build their skills. 

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The pros and cons of gig work

How do you know if freelance work is right for you? Based on the information above, we know there are some appealing and less-appealing parts of this work style. Here’s what to keep in mind when deciding for yourself.

Pros:

  • Independence. As a gig worker, you get to be your own boss. You answer only to yourself and your clients, and you have the freedom to choose what projects you take on.
  • Flexibility. Contracting means you get to set your own hours. As long as you meet your deadlines and attend required meetings, there’s no reason you can’t buy groceries in the middle of the day.
  • Variety. Working gigs lets you try different things. You can learn to apply your skills in different sectors and meet teams from across your industry — or industries. If you’re a writer, you could move from tech to nutrition to technical content in the span of a week. 
  • Passion. Freelancing allows you to work on projects you care about. As long as you’re meeting your financial goals, you can focus on the skills and clients you want. 

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Cons:

  • Limited perks and benefits. Full-time employees usually receive benefits, including dental and health insurance, from their company. As a freelancer, you’ll have to pay for these things yourself. There’s also no such thing as a “paid vacation” — you’ll have to say no to certain projects and forego income if you want time off.
  • Risk of burnout. Some gigs pay less than others. If you’re in a less lucrative industry (or you’re just starting out), you’ll have to put in more time to earn your desired wage. This can lead to poor work-life balance and potentially burnout.
  • Inconsistent income. Your relationship with your clients is business-only. While consistent client work is common, they can quickly choose not to employ you if they don’t need your services anymore.
  • Extra marketing duties. On top of the day-to-day tasks of your work, you’ll also have to market yourself. This can take time away from your passion projects or add on to already long days.
  • Income taxes. Normally, in more traditional roles, companies will pay an employee’s income tax and contribute to social security benefits on their behalf. But people in the gig workforce have to manage and pay their taxes on their own. You’ll also have to look into the self-employment tax, which could feel like a hit.

Does gig work make the dream work?

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What is gig work if not an opportunity to be independent? It allows you to pick your own clients, work on your own schedule, and pursue projects you care about (after you’re established). This sounds extremely alluring — especially if you’re used to working in stifling work environments. 

But before jumping in, you should have a clear plan. It can take a while to grow your client list, so make sure you can support yourself in the meantime. Save up enough money before quitting your job to pursue independence with less anxiety. 

You’ll also have to learn to think like a business owner. As a gig worker, you’re responsible for your networking, marketing, financial planning, and negotiations with clients. You’ll need to factor this entrepreneurial mindset into your workday alongside your actual client work.

That doesn’t mean it’s impossible. If you have the skills and are willing to in the effort, you can stand out in the talent marketplace to succeed as a gig worker. 

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Published October 31, 2022

Erin Eatough, PhD

Sr. Insights Manager

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