Mythbusting the Gig Economy

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Feb 28, 2018

If 2017 was the year “gig economy” became a household phrase, 2018 will be when businesses adopt this flexible workforce model at scale. Why? We’re in a new era of work, where professional success has many definitions, business agility trumps headcount and technology creates seamless access to both work and workers.

But first, let’s set the record straight on some misconceptions that have plagued the on-demand workforce model and prevented it from achieving critical mass.

Myth: The gig economy is a last resort for the unemployed

Americans aren’t unemployed; they’re underemployed. In fact, the unemployment rate in the US is at one of the lowest points in 17 years. Student loans and healthcare costs are skyrocketing. Minimum wage isn’t exactly a living wage. And our lives are busier than ever, balancing school, family obligations, community engagements, and finding time for personal life.

The gig economy solves these challenges in two ways: flexibility and money. College students can work part time, but their availability ebbs and flows with exams and school breaks. Nurses and flight attendants have great jobs with benefits, but have rotating days off. Full-time parents are available during school hours, while teachers can pick up work after school and on weekends. Retirees may be caring for elderly parents but are looking to add to their savings or supplementing their fixed income.

In all of these cases, it’s not an either-or situation. All have a full-time “occupation” – school, work, caregiving – and are utilizing gigs as a way to add to their income when they can. This talent pool was previously unavailable to businesses who only offered full- or part-time employment with set hours each week.

Myth: The company with the most employees wins

The use of temporary labor has become a permanent workforce strategy for all large businesses. The US staffing industry alone is projected to surpass $125 billion in 2018, according to Staffing Industry Analysts. Two of the biggest reasons? Agility and cashflow. That’s right – just as independent workers are seeking these benefits from their work experiences, so, too, are businesses.

In times of high demand, businesses need to access talent immediately. According to a 2015 CEB report (referenced here), each vacant position can cost an average of $500 per day in lost productivity. While an experienced temporary worker can be on site in days, it takes more than a month on average to fill an open position with an employee. When business levels off, temporary workers move on to the next company that needs them. Full-time employees, on the other hand, continue to create a fixed cost for the business while being underutilized, or they are let go.

Businesses need workforce agility in order to win in today’s volatile business environment. Whether we’re facing a talent shortage or surplus, or an economic upturn or downturn, having a workforce that can flex up or down quickly will actually create business stability in the long run.

Myth: The gig economy workforce model isn’t sophisticated enough for large companies

We’ve already watched the industry develop from gig workers providing rides and running errands to small business owners using an app to fill a shift or two. Mid-size and regional companies were next, using on-demand labor to support bigger projects or events – think staffing a series of store remodels or filling a stadium with hundreds of food vendors.

But in order for this model to be adopted at the enterprise level, the technology needs to be seamlessly incorporated into an organization’s existing systems and workflows. That’s no small feat, considering the depth and complexity of enterprise technology today. As companies begin to integrate their tools with the platforms that can connect them to on-demand labor, we’ll see how another flexible model can complement an already transient workforce.

The gig economy is poised to hit its stride in 2018, as worker and business needs have aligned around flexibility and economics. And, companies seeking agility will begin to leverage technology to incorporate hourly workers into their daily talent mix at scale.

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