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Has the Gig Economy Jumped the Shark?

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Wed Sep 18 2019

Has the Gig Economy Jumped the Shark?
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Back when the gig economy was heating up, the Great Recession was at its worst, and people were desperate for any sort of income that could help them sustain their families. The money seemed great and the perks were even better—drive people around a few hours here and there and pay for their cars or drive full-time and replace the money they were making before they lost their jobs. But as workers for these startups became more plentiful, wages lessened and the perks suddenly weren’t so appealing.

These days many gig employers experience 500 percent turnover in a year, and the companies that contract with them struggle to find workers willing to work long hours for little pay. Gig jobs were once hailed as the jobs of the future, but now they are often little more than a side hustle.

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Gig apps have given people the opportunity to use the things they already have—usually cars and homes but sometimes skills or other types of property—to make a little extra money on the side. If you have a house you aren’t using on the weekend, why not rent it out to travelers who want to experience your town like a local? Likewise, if someone needs to be picked up from the airport and you’re already going that way in your mostly empty car, why not make a little money on the side?

Many gig workers started to use their employable skills to freelance for companies that didn’t want to hire anyone full time, which has led to some questionable results in some cases. Highly regarded media outlets replace full-time writers and editors with freelancers, and 92 percent of freelancers can’t afford to take a nonworking vacation.

Currently in the United States, 75 million gig workers—from dog walkers to handymen to drivers and more—and 47 percent of working Millennials do some sort of gig work. But between 2014 and 2018, pay for even the most active gig workers fell sharply: $2,500 a month for active Lyft and Uber drivers in 2014 fell to $1,277 a month by 2018.

As the economy has improved, many gig workers have found themselves ditching the uncertainty of the gig economy for more stable traditional employment. While Uber is trying to combat this trend by offering to pay college tuition for its top drivers, they also recently squashed efforts by those drivers to unionize for overtime and healthcare.

Employers are finding that regular workers are more dependable and easier to integrate into a business than freelancers who could evaporate at any moment for a better gig. Turnover for traditional employees is lower—an average of 3.5 percent versus 500 percent for some gig employers—making it less costly to onboard and retain a traditional worker than to find a freelancer to do the same job.

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Trainers looking to hire for a new position understand that traditional employment is a better choice for companies and employees in most cases. Learn more about the future of the gig economy below.

Source: Online Schools Center

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