How workers survive and thrive
for a larger down payment to keep her monthly mortgage payments low.
She’s got the right idea, according to Mulcahy. Gig workers should aim to create a financially flexible life of lower fixed costs, higher savings and much less debt. That may mean downsizing their vision of the American Dream. Increasingly people can access the lifestyle they want rather than own it, such as renting a home and going car-free, Mulcahy said.
Managing volatile income can come down to ongoing business development and networking. Gig workers must make sure to keep business flowing through the development pipeline and writing contracts in a way that ensures ongoing cash flow rather than a lump sum at the end of a project, Mulcahy said.
Mulcahy also advises building a safety net. Access to health insurance through the Affordable Care Act has enabled more people to work in the gig economy.
Saving for retirement is one of the few areas where the independent contractor has an advantage because through IRAs and 401Ks for the self-employed, they can save more quickly and at higher levels than their full-time brethren, she said.
Time management is also a challenge, said numerous gig workers. “Finding time is always the struggle. I’m working on a freelance project this weekend,” said Nay, who is 31.
Jaclyn Rosell is relatively new to the gig economy and still finding her way.
She began selling her artisan soap online full-time last fall after working more than a dozen years in traditional jobs, first in real estate until the crash, and then in retail management and construction. While those jobs easily covered her bills and provided benefits, she longed to work at home, where she could spend more time with her 3-year-old daughter.
Rosell picked up some wholesale clients. Networking with event planners has resulted in more orders for guest and thank-you gifts. For some clients she has provided privatelabel products, and she began making malas with aromatherapy features. Still, navigating the slower summer was “a rude awakening,” with maxed-out credit cards and IOUs, and she contemplated going back to traditional work. But now her calendar is filling up again and she says she has learned ways to better navigate the summer slump next year.
For Nay, the gig economy has helped him build his portfolio of skills faster than he might have with a traditional job, as he’s created websites and motion graphics for national retailers, airlines, health care companies and nonprofits. “I get to move around to different companies, and if one thing falls out, I still have other things I can fall back on — and it keeps me sharp. I don’t think people look so much at where you went to school but they want to see what you have done.”
Economic realities are also driving more people into the gig economy to pick up a second source of income alongside their full-time jobs.
Nicole Dominguez, 44 and a mother of three in Miami, works full-time as a docketing clerk at a law firm but signed up last year for extra work at Liveops, a work-athome call center platform, to finance a trip to visit her son in Japan, who was in the military. But she took to it and stayed with it and her husband joined too.
Dominguez sees her gig job as something she could do in retirement too, and she’s not alone. While millennials are typically identified with gig work, it’s even more prevalent among baby boomers, economists at Harvard and Princeton found. About half of Uber and Lyft drivers are over 50. Airbnb identifies women age 60-plus as their most successful hosts and the fastest-growing community of providers. DogVacay reports that people over 50 constitute 25 percent of their pet sitters.
Contract workers cost employers at least 25 percent less in benefits and give them the ability to hire contract workers only when demand spikes. But employees likely would be more committed to the company vision, and some companies see the value of having their employees under one roof. Training costs can be high, too, particularly if a contractor doesn’t stay.
For the economy, though, the news isn’t all cheery. The cost of health insurance drives some gig workers to forgo it altogether, a risky financial move for them that also could lead to emergency room treatment at public expense. Home ownership has already started to fall nationally and could fall further. Social Security’s safety net could be stretched with fewer paying into the system at the same levels.
The rise of the gig economy has also put the spotlight on the lack of worker protections. A worker might end up being paid less than minimum wage, if a task takes longer than expected. If the worker can’t find a follow-up gig, he or she isn’t eligible for unemployment benefits. Some companies take advantage by hiring contractors to essentially be full-time employees without paying benefits. There’s even a term for it now: Perma-lancing.
Some U.S. lawmakers have begun to introduce legislation that could form the framework for portable perks, such as parental leave, workers’ compensation and tax advantaged retirement savings. Other moves are also in the works, such as in New York, where state lawmakers are considering allowing online job platforms to pay into a benefit fund for the workers who use their apps. New York City, meanwhile, has considered surcharges on riders to pay benefits for delivery and ridehailing service workers.
Yet, this all comes as the economy has already fundamentally changed.
“This is the future of work,” Mulcahy said. “The full-time employee is getting to be the worker of last resort.”