The gig economy: most of us have heard of it, many of us work in it, but few truly understand what it is. While it's easy to write "the gig economy" off as a buzz phrase used by techies and startup founders, it's an important concept that has far-reaching implications for employees and managers in most sectors.

what is the gig economy?

According to the Bureau of Labor Statistics, the gig economy is a workforce based on "single projects or task[s] for which a worker is hired, often through a digital marketplace, to work on demand."

The New Yorker calls the gig economy the "on-demand, peer, or platform economy." Embodied by companies like Uber, TaskRabbit, Airbnb, Handy, Thumbtack, and Fiverr, the gig economy operates by offering marketplaces based on ratings and payment systems routed through apps.

These gig-based platforms offer people with a wide selection of skills and abilities to earn money by performing "gigs" for other people -- be that picking up groceries or providing a lift to the airport.
The people who participate in the gig economy come from a massive selection of backgrounds. While some are part-timers looking to make some extra money outside their day job, others are full-time gig economy devotees who make their living solely from on-demand work.

The Brookings Institution reports that the number of "Nonemployer firms" (gigging freelancers) grew by 69% between 2010 and 2014. This increase has been most notable in large metro areas, which have seen 50% or higher growth in Nonemployer firms specializing in industries like ground transportation and room-sharing.

how has the gig economy impacted labor and the labor market?

The reported effects of the gig economy vary depending on who you talk to. There's no question that, in the last several years, the gig economy has exploded to epic proportions, which is both a blessing and a curse.

On one hand, workers who were previously unable to find a job can now make a salvageable living performing "gigs" on their own time. This opportunity provides a high earning potential, lots of flexibility (perfect for families and students, for example), and freedom from the dreaded 9-5 job. According to Recode, 30% of the U.S. workforce is currently self-employed, and those numbers are projected to balloon in coming years.

On the other hand, though, the gig economy has effectively destroyed or replaced long-standing industries and impacted many payrolled workers in the process. Uber, for example, is putting the taxi industry on notice, while Airbnb is causing ripples for hotels throughout the country and the world.

The gig economy offers freedom, yes, but it also does away with things like job security, benefits, paid sick days, and pensions. This can create a tenuous environment for employees and can make things like retirement more precarious.

the future of the gig economy

While there are some definite drawbacks of the gig economy, one thing seems certain: it's going to continue to grow. Since this is a near-guarantee, companies and freelancers are now shifting their focus to how the gig economy is regulated, and working to ensure that workers' rights are maintained.

As long as equality and fairness are protected in the gig economy, this brave new world of mass self-employment stands to offer notable benefits for both employees and the companies that rely on them.

We have created a new report full of data-driven insights into how the flexible labor market is evolving and why this is so important for modern employers. You can download it below.