Busy small business owner

How the Gig Economy is Changing Employment

Busy small business owner

App-based companies provide us with the power to order a taxi, a new wardrobe, a maintenance man, or a burrito (with guacamole) all in the palm of our hand. The impact and popularity of these companies have even produced an entirely new string of economic strategy known as the gig economy.

Comprised entirely of independent contractors, these “gig companies” hardly ever use full-time employees, and instead, hire temporary workers who are in charge of their own hours and work spaces. Interested workers and gig companies work together to find jobs that suits their locations and their skill sets.

The services that these companies offer are considered “on-demand:” quick, convenient, and cheap for users. As such, freelancers, contract workers, and temp agencies have thrived from the creation of these apps because gig companies are attracted to the short-term aspect of their employee pool.

By pulling employees from temp agencies, companies like Uber are able to act like an employer without actually paying for the benefits that come with hiring full-time workers. Instead, temp agencies provide high quality workers with little effort under independent contracts, which allow employees freedom with their hours while still earning above-minimum wages.

At the same time, people are able to work for these companies even if they are not trained in a particular skill set. Postmates, a food ordering and delivering service, for example, only requires workers to have a driver’s license in order to adequately do the job.

This flexibility allows employees to balance more than one job because they are not bogged down by strict contracts or schedules. They can use their jobs at gig companies strictly for extra cash without having to worry about giving up time they don’t have.

Although these employment opportunities seem convenient and worthwhile, Uber and Lyft have experienced much turmoil regarding their employment strategies. According to the Seattle Times, by classifying its drivers as independent contractors, Uber avoids paying millions of dollars in taxes and prevents its workers from accessing employment protections, such as wage and hour standards, safety requirements, anti-discrimination laws and the right to form a labor union.

People who sought employment at these gig companies feel ripped off if they find that they are working an extensive number of hours per week without the benefits that come with a “normal” job. Additionally, the fine print within the independent contracts proves to be far stricter than one expects.

Fast Company reported of two women filing law suits against the cleaning company Handy after they were misinformed of their responsibilities and were misclassified as independent contractors. Yet, gig companies argue that their initial flexibility is what attracted applicants to the job in the first place.

The unique model of gig companies allows them to hire employees of all different backgrounds and skill sets. Retirees, students, and parents find that these jobs work perfectly with their busy—or lax for retirees—lifestyles because they aren’t under any obligation to stick to a regular job schedule.

Because certain demographics within their employee pool are hired because of the very fact that they need a balance of freedom and money, gig companies find it hard to change their standards strictly for those who actually need part-time or full-time paid benefits.

While gig companies are currently dealing with some bumps in the road, their business model will not cease in popularity. In fact, 40 percent of Americans are projected to be independent contractors by 2020—a number that would not be possible without the help of temp agencies and freelancers.

Your unique pool of employees does a lot to keep the gig economy running. But, you shouldn’t have to worry about funding them. See how factoring can help you get payroll funding fast!