The Gig Economy – Are Freelancers Helping or Hurting Economic Stability?

Over the last decade, the freelance/gig economy has been rapidly developing, and has completely changed how people approach jobs, wages, and creating personal financial stability. Digital platforms such as Uber, Doordash, Fiverr, and TaskRabbit have allowed millions of people to independently complete short-term jobs at their own disposal, allowing for time and location flexibility, along with a more independent-leaning work routine. However, critics argue that the rise of the “gig-economy” undermines the job stability that has supported millions of families and the growth of our economy for decades. Put simply, the gig-economy can be beneficial to certain people in specific situations, whether it be financial, geographically, or demographically, but it also exposes flaws in how modern economies protect their workers.

 

The main benefit of freelance work is the flexibility. Individuals participating in gigs such as delivering products, food, providing online services, teaching, or other have an easier way to balance their jobs with other responsibilities. Everyday factors of life such as caretaking, studying, taking care of a family, or trying to be productive in other aspects apart from one’s current form of employment, such as creating a business, become easier with freelance work. For example, the college student that only has 2 lectures per day on Thursdays and Fridays with 3 hour breaks in between can deliver pizzas to customers around his or her college town, making passive income while earning a degree. The digital marketer who has 2 kids can recruit employees and resources needed to start his first digital marketing website service firm, while building credibility on Fiverr developing ads and slideshows for companies using external marketing services. The point is, there are countless situations where freelance work can be more beneficial than a constant and steady form of employment, whether it be temporary or a continuous form of income. The level of autonomy one can get from gigs is rarely found in steady jobs. 

 

Apart from the flexibility aspect, many online forms of freelance work offer a wider marketplace for many skill-based workers. For example, Etsy allows producers to sell handmade goods globally, giving artisans access to clients more quickly and accessibly. Without this form of trade, an artisan may find himself working for a studio or stationary kiosk without the outreach that could otherwise be achieved with online freelance platforms. Both of these factors make economies more productive, connecting producers and consumers more efficiently under the right situations. Additionally, freelance workers promote entrepreneurship, rather than workers only settling to find work in already established companies.

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From a macroeconomic perspective, freelance work not only provides contractors with more flexibility but businesses that depend on gigs as well. Companies such as Uber or Doordash organize freelancers and connect them with customers, asking for a fraction of their profits in return for organization, credibility, and promotion. The difference is that freelancers work depending on their personal schedules and how much they need the money, businesses however operate in response to consumer demand. In times of hardship, such as periods of recession like the 2008 financial crisis, people are saving money rather than spending more, so naturally businesses lose many customers and clients. Companies employing hundred or even thousands of workers and producing at mass scales deal with immense losses, not to mention the thousands of workers that get laid off. Freelance-based first however can simply hire less gigs at no large costs, and remain stable as they are able to adjust supply to demand more quickly. Theoretically, businesses like this make economies more flexible and therefore more stable in times of trouble.

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However, this comes at the expense of the freelancers which may find it harder to find gigs. For example, when your house costs are skyrocketing and you’re trying to save enough to get through a turbulent period that you have no idea how long will last, you’re probably not gonna be hiring a contractor to remodel your patio. Additionally, unlike more secure employees, independent contractors aren’t entitled to benefits from their employers such as health insurance, retirement contributions, and unemployment compensation. This was especially evident during COVID when many full-time employees could rely on employer benefits or government aid, while countless freelancers were eluded from unemployment programs.

 

Additionally, algorithmic management, using data and automation to control gig work, has created new challenges. Freelance platforms are starting to use algorithms to determine prices for jobs, assigning jobs, and deactivating workers based on performance metrics. This lack of transparency and communication between workers and employers makes contracts more difficult as the freelance platforms wait to see what their algorithms tell them instead of signing contracts right off the bat, leaving the freelancers no say in the argument, making it harder for freelancers to negotiate terms and pay. While this may seem helpful to freelance platforms, this could lead to abusive conditions, and a race between freelancers to compete for low-paying gigs, lowering the pay standard for specific jobs. 

 

Despite these problems, the advantages of having freelance-based platforms and companies, along with independent contractors in our economies are why this form of employment has essentially always existed and will continue to exist in the future. For developing countries and rural areas, digital gig platforms can create access to global labor markets and promotion, providing opportunities that were previously unattainable. For everyday people trying to leverage their skills and time, freelance work offers a convenient solution, despite less stability. 

 

In the end, the gig economy represents both progress and instability in modern economies. It fosters innovation, independence, and efficiency, but also threatens to deepen inequality and financial insecurity under certain conditions. To maximize the benefits, workers and employers must continue to communicate and negotiate situations that benefit all, and prevent this specific economy from falling into a race downwards.