What Is the Gig Economy?

The term “gig economy” gets thrown around most often in reference to jobs like driving for a rideshare company, making deliveries or walking dogs. But the truth is, it’s much more expansive.

What exactly is the gig economy and who is included? Here’s what to know.

What is the gig economy?

The gig economy is an area of the job market consisting of temporary, contract or freelance jobs. The IRS further defines it as “activity where people earn income providing on-demand work, services or goods,” often through an app or website.

The gig economy spans virtually every industry and represents a large part of the workforce. A 2020 survey commissioned by Upwork found that 59 million Americans had freelanced within the previous 12 months.

What is gig work?

Gig work varies widely, so it isn’t always easy to pinpoint. Common examples include renting out a room on a short-term rental site, selling clothes online, driving for a rideshare company and making deliveries for Amazon Flex or another service. It also includes jobs like freelance writing, tutoring, design, caregiving and many more.

A “gig” (sometimes called a “side hustle”) is generally a short-term task, project or job that a person takes up to make extra cash. But many do gig work long term or as a main source of income. Some gig workers get paid per task or assignment. Others earn an hourly rate.

What is a gig worker?

A gig worker is someone who works within the gig economy as an independent contractor or freelancer. Gig workers are typically classified as self-employed, rather than employees, for tax purposes. For this reason, they don’t receive regular employee benefits such as health insurance, retirement plans or paid time off.

Make money and leave the rest to us

allstocksnews.com tracks your spending, recurring bills and more.

What to know about working in the gig economy

Working in the gig economy can come with flexible hours or the ability to set your own pay, depending on the job. However, it can also mean irregular income, a lack of benefits, and complicated taxes. If you’re considering gig work, keep a few things in mind:

  • Research the pay. Rates can vary by location, experience and demand. Plus, the platform you get gig work through may take a cut of your earnings. It’s also a good idea to find out how often you get paid, so you’ll know when to expect each paycheck. Check the company’s website, reviews and Better Business Bureau page for details.

  • Be aware of potential costs. Some gigs require you to pay for certain expenses related to the job. For example, you may be on the hook for insurance, gas and car maintenance if you transport goods or people.

  • Budget for taxes. Traditionally, employees automatically get payroll taxes withheld by their employers. Most gig workers, on the other hand, are responsible for doing the math themselves. Build self-employment tax into your budget so you don’t face a surprise bill when it’s time to file.

  • Watch for scams. Gig work is high in demand — and scammers know this. Be on the lookout for red flags. If you’re asked to pay money upfront, or a position promises to pay more than your skills and experience warrant, it’s probably a scam.

Avatar
Editorial Staffhttps://allstocksnews.com
AllStocksNews provides you the latest stories in Finance, Crypto, Politics, and many more. So, stay tuned to know more about the finance sector.

Latest Posts

LEAVE A COMMENT

Please enter your comment!
Please enter your name here