7 Predictions for the Gig Economy in 2020
What’s the future of the gig economy? Depending upon whom you ask, it’s either lemons or lemonade. Either way, it’s fair to anticipate that freelancing and contract work will continue to provide a large percentage of American jobs in the next decade. This type of employment has also impacted both thriving and struggling economies all over the world.
As with all disruptive economic forces, it’s also easy to predict that stakeholders in the gig economy will continue to explore opportunities and wrestle with pitfalls during 2020 and beyond. People with a strong interest in the gig economy will include freelancers, businesses, and of course, lawmakers.
Seven Gig Economy Forecasts for 2020
If you’re concerned about the future of freelancing, take a few moments to explore seven predictions for the gig economy in 2020 and beyond.
1. Gig Economy Growth
Not so long ago, people struggled to find the sort of flexible opportunities that freelancing offers. Recently, CNBC reported that the gig economy employed just about one out of three American workers in 2019. These 57 million freelancers represent an increase of about 3 million workers since 2016. While some people freelance to supplement their main income, others rely upon freelancing as their sole source of support.
It’s interesting to note that NASDAQ predicted a larger increase, up to 43 percent of the workforce by 2020, in their 2016 report. It’s fair to anticipate continued growth in the gig economy; however, increases may not meet forecasts from a few years ago. Obviously, this kind of employment doesn’t suit every worker or fit every position. Also, the legal status of freelancers still needs clarification, and these regulatory issues may have slowed down growth.
2. Gig Economy Startup Opportunities
A few notable gig economy startups from the past include Uber, 99Designs, and of course, WriterAccess. These companies focus upon serving as intermediaries between freelancers and businesses or people who need services. These kinds of services will probably continue to emerge to serve other industries.
Financial Times believes that a new class of startups will find opportunities in serving the needs of workers and the entities that hire them. For instance, they may offer such important services as negotiated benefits packages. These kinds of services may grow in the future if the federal and state governments choose to classify gig workers differently. Other opportunities for services could include shared workspaces and online apps and tools to manage projects.
3. Legal Issue Clarification
Issues involving the classification of gig workers has provided one recent impediment to the growth of the gig economy. For example, some freelancing companies dropped their California talent because of concerns over the implementation of the new state law, AB5. Certainly, freelancers from California and all over the country have justified concerns at this time.
Still, an LA Times analysis says the new law did not directly cause these terminations; instead, it was the way some companies chose to interpret it. It might also be unfair to ignore a few bad actors that prompted this legislation. In any case, it’s past the time for more discussion about the issues that generated these new rules and may prompt other states or even the federal government to get involved in the future.
Mostly, it may be time to modernize the way employers and the law classify workers to keep up with a changing economy. Organizations such as The Hamilton Project have proposed a new worker class to more clearly define gig workers and their relationship with companies.
4. More Competition for Traditional Employers
As the gig economy has boomed into a larger piece of the employment landscape, some traditionally employed workers have found the flexibility attractive enough to prompt them to consider switching. Parents, family caretakers, and plenty of others have started to understand the benefits of having more control over their schedules and their employers. While freelancers sacrifice benefits and in some cases, job security, they gain the ability to set their own hours. Just as important for many, they can choose who to accept work from.
Because of this, traditional employers have expressed concerns over employee loyalty. Forbes has predicted that businesses will increasingly respond by offering more non-traditional working arrangements, scheduling alternatives, and control over career tracks. At the same time as employers and lawmakers debate the definition of employees vs. freelancers, some traditional jobs may start to look more like freelancing.
5. Preparation From Schools for the Gig Economy
Contract and temporary jobs have always served people as a way to gain experience and get their foot inside a corporate door. As the gig economy continues to expand, Harvard Business Review made the case that colleges should note the change and do a better job of preparing students for alternative routes to their chosen career fields. These days, the gig economy provides businesses with more than creative talent, including human resources, accounting, software, engineering, and even executive officers.
Even if working inside the gig economy isn’t the first choice for some students, it’s better for them to view these opportunities with an open mind and know how to hit the ground running. Particularly in competitive fields, freelancing experience can help a traditional job seeker stand out much more than one with no on-the-job experience at all. In addition, some freelancers will discover that a freelancing careers suits them better than traditional employment. Freelancing can also give recent graduates a chance to try their hand at various opportunities in order to learn what they want or don’t want out of their careers.
6. The Rise of Alumni Labor Clouds
In contrast to freelancing as an option for recent graduates, it’s important to note that almost 10,000 people from the baby boomer generation retire each day, taking all of their years of experience with them. This brain drain has occurred simultaneously with a skill shortage in a variety of fields. In response, some corporations have worked to entice their alumni retirees into joining internal labor platforms. Other companies have banded together with similar organizations to pool these valuable resources, so they can constantly draw upon an in-demand labor force for all levels of work.
Retirees who join these skilled labor pools can have a chance to earn extra retirement income and enjoy more flexibility than they did as traditional employees. Right now, both younger and older workers account for the most growth in the gig economy.
Because of retirement freelancing opportunities and other circumstances, Glassdoor predicted that boomers may actually become the fastest growing segment of the workforce once again. The Bureau of Labor Statistics reported that 20 percent of over-65 Americans were either employed or seeking employment, and this represents an increase from 12 percent two decades ago. In addition, surveys suggest that older workers do not diminish opportunities for younger workers and contrary to some popular opinions, are still able and eager to learn from their younger associates and bosses.
7. The Gig Economy Will Go Global
So far, these predictions have centered mostly upon the United States. The gig economy has taken off slower in some other regions but has begun to change economies all over the world. The World Bank blog mentioned some examples of gig platforms that have helped connect people in less developed countries to both skilled and less-skilled jobs, giving them a path out of poverty.
Today, the US, UK, Canada, and Australia originate the most gig jobs and provide many of the world’s freelance workers. At the same time, gig workers also commonly come from such countries as India, Bangladesh, Pakistan, and the Philippines. In more developed countries, freelancing may offer skilled people a chance to work flexibly or earn extra money. In some less-developed economies, it can also provide a way to rise out of poverty. For example, the World Bank article noted that refugee women in Jordan have begun to sell home-cooked meals through a food-delivery platform. In South Africa, thousands of people have found work through a domestic-services website.
As the gig economy has expanded, other countries also have concerns about social protections and regulatory compliance. Major concerns include tax reporting, health insurance, unemployment benefits, and fair wages. Some of this will come from the market, which underscores potential opportunities that may come out of challenges. For example, small businesses and freelancers in China can get health insurance by using AliPay, a payment platform from the nation’s largest fintech company.
What’s the Future Impact of the Gig Economy?
As we noted in a previous post, the gig economy actually has a long history. Jazz musicians coined the term to define their typical kind of work engagements. The sudden boom in popularity has increased attention from all sorts of workers, a variety of businesses, and even the government.
Maybe partially because of recent debates about classifying workers, freelancing hasn’t quite continued to grow at the same rate as predictions suggested a few years ago. Still, the benefits of freelancing to workers and businesses are impossible to ignore. Freelancing offers a 21st Century solution for flexibility, productivity, and scalability. The gig economy will probably continue to provide a large part of the overall economy and increase in size nationally and globally.
Here’s Your Ticket to the Gig Economy in 2020
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Marilyn K does not own a crystal ball; however, a diverse set of clients have asked her to provide well-sourced prediction articles for the 2020s. After graduating from The University of Texas with a business statistics and information systems degree, Marilyn K worked in software development, support, and training for 20 years, mostly in the energy industry. She also spent about half of a decade working in insurance, finance, and related marketing. After that, Marilyn pursued self-employment as a website developer, online marketer, content producer, author, and writer.