The Gig Economy Is Here To Stay In 2021

The gig economy has been tagged as a mainstream option for regular incomes as the world has come to a grinding halt due to the COVID-19 pandemic. How about you?

The resurgence of the gig economy is attributed to the uncertainty of the coronavirus spread and hence the economy.

In recent times, people have been attracted to gig jobs as they offer both flexibility and less commitment than traditional work models. It has become an appealing option for the American workforce and considers it as the future.

The gig economy is more beneficial in terms of efficiency, lower customer complaints, and higher satisfaction of the gig workers themselves.

The Early Scare

A year back, the gig economy was in danger especially in California where the then-governor Gavin Newsom signed Assembly Bill 5 (AB5) into law on September 18, 2020, wherein companies were ordered to classify workers as freelancers rather than employees who were otherwise misclassified as “independent contractors” rather than employees.

The intent however was a good one since too many companies had hired freelancers to commit their work as full-time employees, but minus the benefits of PTO (paid time off) or health insurance. On January 1, 2020, the new law took effect and required companies to reclassify contract, freelance, and contingent workers as full-time employees eligible for benefits with a guaranteed $12 to $13 state minimum wage and protections under the state’s employment law.

The Silver Lining

The law was exempted for some jobs including “creatives” (artists), fishermen, travel agents, accountants, stockbrokers, lawyers, grant writers, architects, doctors, real estate agents, insurance agents, tutors, truck drivers, and manicurists.

The law was still a blow for freelancers in California as the flexibility was at risk and many states are thinking about following the same.

Time is Ripe

As the job opportunities have dried up and the losses are adding up each passing day citizens are seeking ways to stay afloat given the current situation.

Many are rethinking their job goals as promotions, long working hours, no leaves – vacations and personal time have become the norm for people who are employed.

The gig economy has become an attractive alternative solution for both workers and employees alike, offering both lower commitment and flexibility than traditional work models.

What To Expect From The Gig Economy?

There is a tendency for more traditional job employees to switch to gig works. WFH (Work From Home) has already established itself as mainstream with major companies using freelance contracts to lower labor costs. The small and medium-sized companies will for sure follow suit just like larger companies do.

Labor markets are driven by demand and contract workers almost certainly have a chance to make use of the situation in the days to come.

Banishing The Stigmas

Gig workers have always been subjected to a lot of biases but as more workers of all types join the gig economy they will give tough competition to their traditional peers.

In the ensuing days, gig workers may wear multiple roles up their sleeves. They will project themselves as driven self-starters.

Regulations Will Gain Steam

As mentioned earlier, the law passed in California will slowly be implemented across states in the U.S. The laws might be rewritten for gig workers as the current labor regulations are formulated around the traditional employment model.

For instance, most laws regarding benefits that a company must provide are based on the number of hours an employee works. But it is not the same even for full-timers, the Department of Labor’s guidelines for classifying someone as an independent contractor is complex. In the future, benefits regulations may pay heed to determine which workers must be given benefits.

Labor regulations can get more serious with retirement benefits. Because most gig workers are devoid of pension or 401(k) benefits, they’re largely left to plan for their retirement. Although gig workers do a significant contribution to Social Security in the form of mandatory self-employment taxes, retirement structures will need to expand in order to protect gig workers. The fact that gig workers could qualify for unemployment benefits in 2021 reflected a change in the rules that acknowledges the importance of this growing segment of the workforce.

Bottom LineThe gig economy will rule the jobs in the coming years and being prepared to take up various jobs is the key to make the most of it. As laws get stricter gig workers will be secured with benefits like healthcare. A model that will be similar to traditional employees who negotiate a 40 hour work week and weekends off will soon be a demand by gig workers too. Overall, in spite of the changes in the job scenarios, it is always advisable to have a reliable income source or an emergency fund that can help you sustain through trying times.

By Karthik V