Gig Economy: An Independent, Autonomous Eco-System flourishing in 2020

Statistics for Those Who Choose This Type of Work and Are Happy With It - Part 2

As mentioned in yesterday’s post, for some, gigs are a personal choice, for others, it is a matter of financial survival.  Whatever the motivation, choice or necessity, freelance professionals are driven to excel and perform better than the day job they once held.

The numbers presented in this edition, focus entirely on those who chose this mode of life and don’t consider changing it anytime soon, if ever.

• 75.7% would not quit their gigs for a full-time job. (PYMNTS) 

• 64% of gig workers say they are doing their preferred type of work. (Gallup) 

• 60% of gig-dependent workers lack alternative employment because they don’t want or need one. (PYMNTS) 

• 37% of full-time Independents are aged 21-38. (MBO Partners) 

• People who actively chose their working style reported greater satisfaction than those who felt forced by circumstance. (McKinsey) 

• 41% of gig workers say they were hired because they have unique skills to complete an ad hoc project. (PYMNTS) 

• When asked to define their preferred future employment, around 45% chose remaining independent and adding clients as needed to increase their income, compared with only around 20% who preferred finding a full-time salaried position. (BCG Henderson)

The top three priorities across all types of voluntary gig economy workers are: spending time on more meaningful and interesting tasks, being self-employed, and fitting full-time work more flexibly around private needs. As a result, they also reported higher happiness and satisfaction levels with their work than people in traditional full-time employment, despite the fact that they were more likely to work more than 45 or even 60 hours a week, and to earn slightly lower salaries. (BCG Henderson)

• 63% of freelancers think that having a diversified portfolio of clients is more secure than one employer and have an average of 4.5 clients per month. (Upwork)

• The number of high-earning independents—those who report earning $100,000 or more and likely work in highly skilled fields—keeps growing. In 2018 there were 3.3 million of them, which is about 21% of all full-time independents. (MBO Partners) 

• 44% of full-time independents find work via word of mouth, with social media (12%) and online commerce marketplaces (like eBay, Etsy, or Airbnb) a distant second or third. (MBO Partners) 

• Only 4% of full-time independents identify online job platforms that match buyers and sellers of services as their top method of finding a job. (MBO Partners)

• 79% of full-time independents said they were happier working on their own than at a traditional job. (MBO Partners) 

Gig Economy Statistics—Employers’ Perspective

The gig economy makes it easier for companies to access top talent. This is advantageous for both parties.

Companies economize on employee benefits and office overheads while cooperating with the human resources they need (and, most likely, lack in-house) on a specific project. On the other hand, freelancers can add another company to their portfolio thus building their credibility and brand.

Roughly 40% of executives worldwide expect freelance workers to account for an increased share of their organization’s workforce over the coming five years. And 50% agree that corporate adoption of gig platforms would be a significant or highly significant trend. (BCG Henderson)

• The external workforce is critical for sourcing hard-to-find skills. Nearly three-quarters of executives cite the importance of gig workers in sourcing skills that are in scarce supply, with 91% saying this will be the case in three years’ time. (SAP Fieldglass)

• 62% of executives say external workforce enables them to improve the company’s overall financial performance. (SAP Fieldglass)

• 33% of organizations report extensively using alternative arrangements for IT, 25% for operations, 15% for marketing, and 15% for research and development. (Deloitte)

• Gig workers are mainly employed by businesses (53%.) (PYMNTS) 

Gig Economy Stats—Gig Workers by Necessity

The gig economy has many faces. For some, it’s not so much a choice, but the only way to make ends meet.

Now — Even though work arrangements within gig economy are notorious for not giving people the security some of them need, it’s thanks to the gig economy itself that they are able to make any money at all. Well, every cloud has a silver lining. 

• Out of those doing gig work as their primary source of income, 58% would have difficulty handling the unexpected expense of $400, compared to 44% of those doing gig work to supplement their income. (Report on the Economic Well-Being of U.S. Households in 2018) 

• 80% of gig employees whose gig work is the primary source of income say that an unexpected expense of $1,000 would be difficult to pay. (Edison Research) 

• Full-time freelancers dip into savings more often (63% at least once per month versus 20% of full-time non-freelancers.) (Upwork) 

• 45% of those who rely on gig work as their primary source of income have an Anxiety Index Score over 50, compared to only 24% of those employed but not in the gig economy. (Edison Research) 

Gig Economy 

One particularly prominent group of gig workers consists of app-based drivers—Uber and Lyft. Here’s a look at some statistics for this group: 

• The Uber driver W-2 equivalent hourly wage is roughly at the 10th percentile of all wage and salary workers’ wages, meaning Uber drivers earn less than what 90% of workers earn. (Economic Policy Institute)

Half of New York City’s app-based drivers support children and provide the bulk of their family’s income. 40% of drivers have incomes so low they qualify for Medicaid and another 16% have no health insurance; 18% qualify for federal supplemental nutrition assistance (nearly twice the rate for New York City workers overall). (New School and the University of California Berkeley Report)

• The app companies have been able to expand their workforce by drawing principally immigrants without a four-year college degree who face restricted labor market opportunities. (New School and the University of California Berkeley Report) 

• 60 to 65% of New York app drivers are full-time, without another job, and about 80% acquired a car to earn a living by driving. (New School and the University of California Berkeley Report) 

• Uber drivers earn the equivalent of $9.21 in hourly wages—less than what is earned by 90 percent of all other wage and salary earners, and below the minimum wage in 13 of the 20 major urban markets where Uber operates. (Economic Policy Institute) 

• About 16% of all drivers have no health insurance coverage. (New School and the University of California Berkeley Report) 

• For the Uber drivers working 50 hours a week or longer, real before-expense hourly earnings fell about 30% between 2014 and 2017. (New School and the University of California Berkeley Report)

Uber aims for public valuation of up to $100 billion. (Wall Street Journal)  This final stat is particularly interesting in the light of the ones that come before. Uber may have grown to be the largest ride sharing company in the world but its business model is easy to replicate and it has no real competitive advantage or unique assets.

In fact, surveys reveal that about 70% of drivers work for both Uber and Lyft. So, it seems like Uber’s business model is entirely dependent on large numbers of people who have no good reason to feel attached to the company—either because of the type of contract or competitive wages.

Gig Economy Stats—Impact of Technology

As we’ve already established, the gig economy isn’t a new phenomenon. The thing is, though, that thanks to the recent technological boom it has become accessible to a large number of people.

The stats below show the extent to which modern technology influenced this industry: 

• 15% of independent workers have used a digital platform to earn and these platforms have grown rapidly in the past few years. (McKinsey)

• Those who sell goods are most likely to use digital platforms—in this case, by listing on e-commerce marketplaces such as eBay and Etsy. (McKinsey) 

• Between 25 and 40% of those who earn independently by leasing assets use digital platforms such as HomeAway, Airbnb, or VRBO. (McKinsey) 

• Platforms for offering services, such as Uber, TaskRabbit, and Upwork, were used by only 6% of independent earners in the United States and the EU-15 (McKinsey)

• 69% of gig workers aged 18-24 use the Internet in their job hunts, but only 42% of those aged 64+ do the same. (PYMNTS)

Traditional contingent staffing firms make up the core of the market but online talent networks are growing quickly and it’s estimated they now manage over $2 billion in outsourced activity, employing hundreds of millions of people in every geography of the world. (Deloitte)

• Freelancers are finding more work online—71% say the amount of work they obtained online increased this year (up 5 points since 2016). (Upwork) 59.1% of gig workers use digital marketplaces to find new opportunities (PYMNTS) 

• Online Platform Economy has continued to grow. Between 2013 and 2018, transportation platforms have grown to dominate in terms of both the number of participants and total transaction volume. (JPMorgan Chase)

• Most participants in the Online Platform Economy are active just a few months out of the year. (JPMorgan Chase) 

• Among those who generated earnings through transportation platforms at any point in a year, 58% had earnings in just three or fewer months of that year. In the other sectors (non-transport industry, selling, and leasing), engagement was even more sporadic, with less than 20% of participants generating earnings in more than half the year. (JPMorgan Chase) 

• Online platform earnings represent a major source of income (54%) for families during the months when they participate. However, platforms are not replacing traditional sources of family income. Among those who have participated in the Online Platform Economy at any point in a year, average platform earnings represent roughly 20% of total observed take-home income in any month of that year. (JPMorgan Chase)

• Workers whose main job was in the transportation and utilities industry were more likely to do in-person work, and those in professional and business services and in information were more likely to do online work. (BLS)

• The Online Platform Economy is growing but there’s no evidence that it is replacing traditional sources of income for most families. Even if platform work could in principle represent the “future of work,” most participants are not putting it to the type of use that would usher in that future. (JPMorgan Chase) 

Gig Economy Statistics—Developing Economies

Undeniably, the spreading of the gig economy is a worldwide phenomenon and the number of participants is significant in almost any country in the world.

Although the stats below focus entirely on the Indian market, they reflect a larger trend characteristic of the other developing economies. 

• As many as 72% of all gig projects were in large corporates and professional service firms in 2018-19 compared with 52% two years back. (The Economic Times India) 

• Delhi added 560,600 people to its gig economy in the six months to 31 March, an 88% jump from 298,000 people in first half of FY2019. The gig economy, led by food delivery firms Swiggy and Zomato, and ride hailing firms Uber and Ola, thrives largely unregulated, even as drivers and delivery boys work with little job security and few benefits. (Livemint)

The gig economy in India with respect to workers not getting any social security, insurance, etc. is an extension of India’s informal labour, which has been prevalent for a long time and has remained unregulated. (Livemint)

• 70% of employer's used gig workers at least once or twice for solving organizational issues in 2018. (The Economic Times India)

• 2019 report by NobleHouse, a platform that connects businesses with skilled human resources talent, found that 73% of its respondents wanted to opt for freelance work over a conventional full-time job. (QZ)

• A 2017 EY study on the “Future of Jobs in India” found that 24% of the world’s gig workers come from India. (QZ)

• India is home to the second largest market of freelance professionals (about 15 million) who constitute about 40% of total freelance jobs offered worldwide. (ICRIER Future of Work in the Digital Era: Potential and Challenges for Online Freelancing and Microwork in India)

• An analysis of online occupations in India measured by the online labour index projects reveals that software development and technology have the highest share, followed by the creative and media sector. (EY)

India is emerging as the third largest online labor market. Online Labour Index survey 2016 shows that India-based employers represented 5.9% of all projects/tasks posting for online 39 labor of which 45% were for software development and technology projects. This trend suggests the changing nature of employment in the IT-BPM sector. This trend was reaffirmed as 45% of the survey respondents viewed new ways of working such as freelancing as an important mega-trend shaping the industry. (EY)

Key Takeaways for Now and the Future...

With more and more participants, the gig economy has significantly changed the contemporary business landscape—to the point where new legislation had to be introduced to regulate it. 

Even though it’s notoriously hard to measure, it draws more and more people, becomes increasingly accessible worldwide, and creates new opportunities for employers to attract and cooperate with top talent on crucial projects that call for highly specialized skill sets.

For many gig economy participants, the gigs they do allow them to supplement their monthly income. However, there are some who make their primary living out of the gigs—this group consists of highly skilled professionals who cooperate with various businesses. Finally, the gig economy also comprises people who have families to support and no other option to make a living.

NOW… enter the age of COVID-19 and what is likely to be a changed economic landscape worldwide, but especially in the USA.  

Layoffs and a new age of down-sizing will spur the growth of the independent freelance professional across all sectors of the economy.  Even if the economy recovers rather quickly, and we have no idea of what quick means, businesses that survive this time, will emerge with new ideas of how they can function leaner and more efficiently.  For example, work-at-home concepts will become the norm rather than the exception or only in times of emergencies.  

There will be a glut of office space nationwide as leases mature and business opt for smaller spaces to accommodate daily essential workers, while the majority of teams will be home based utilizing web/video conferencing for meetings and team communication.  Full-time employees will look and act a lot like a gig worker.

The near new economy will actually function at a higher level of productivity with a distributed decentralized workforce.  Companies will recognize that independent contractors functioning in roles once occupied by a full-time employee, can come onboard with the skills and expertise required for projects, and the company has peak performance and productivity for only a limited time for limited engagements.

Specialized freelancers have always been part of the global workforce.  The near-term future and the lessons learned from the Pandemic, will prove that limited-term professionals will become a larger percentage of a companies core capabilities and competencies. 

Get prepared to be part of a future economy that thrives on limited engagements at the highest levels in a company org-chart… from technical, sales, marketing, financial to C-suite executives.