Understanding the Gig Economy

03A39643

Some believe that by the year 2020 40% of all jobs will be part of the Gig Economy. So what is this phenomena and how can you take advantage of it?

 

 

It’s all in the name

The “Gig Economy” is a morphed description of old titles like the “peer-to-peer” business model and crowd sourcing. What it refers to is the ability to control when and where you wish to work. Quite like the musicians of old who worked their music gigs, this gig concept is spreading far and wide.

 

Where the Gig is exploding

Icon cab Cab services. Cab services like Uber and Lyft allow workers to activate their ability to take riders through a phone app. Once activated, you can arrange to pick up fares close to your location.
Icon home Home rental. Want to make a few dollars renting space in your home or apartment? Many services exist to make your home available when you want. Your peer-to-peer service provider matches what you offer with those who need accommodation.
Icon truck Delivery services. The options in this area are vast and expanding. You can offer to pick up and deliver meals, groceries, dry cleaning, pets and more. Even bicycle delivery services are available to you when you wish to earn a few extra bucks.
Icon paper Financial services. Even your savings can be put out on a “gig” service. Places like Lending Source and Funding Circle provide a platform to match lenders with those who wish to borrow your money for a time.
Icon stopwatch Referees and game officials. Want to earn money officiating sporting events? Many services are popping up that allow officials to enter their available schedule and locations they are willing to travel to officiate games. They are then assigned games and paid through the same on-line app.

 

Does it work for you?

This new way to match labor supply with demand is becoming more popular. Here are some things to consider before getting too involved in the gig economy.

Icon question Contractor versus employee. Almost all these service companies treat you as an independent contractor. You are responsible for your Social Security and Medicare taxes. You must get your own benefits and send in estimated tax payments.
Icon question Part-time versus full-time. If you are a recently retired worker, picking up some part-time gigs will keep you socially connected and earn some extra income. Making this a full-time occupation can be more of a challenge.
Icon question Legal landscape. As the gig economy booms, so does the potential for legislation that changes the landscape. Many local cab companies are trying to squash services like Uber. Local hotels are trying to limit the ability for you to rent lodging. Worker’s liability coverage also needs to be considered if something goes wrong.
Icon question Urban versus rural. Gig opportunities tend to be located in large metropolitan areas. Depending on this employment for your income in remote areas might be tough.

 

What’s next

The problem the gig economy solves is more readily matching supply with demand. This puts the old business models at risk. Anticipate more attention in this area as legislative action tries to balance the power of this new job creation device with a dramatic redefinition of employment no longer centered within vast company payrolls.

US Taxes Inc