The Future of Enterprise Work: Was the Gig Economy Overhyped?

In 2008 when the housing market crashed and a subsequent recession hit, the gig economy was just beginning: Travis Kalanick had just sold his first successful company, and Airbnb and TaskRabbit both launched that same year.

Since then, hundreds of companies have launched that depend on the work of independent contractors. When the gig economy first took off, many analysts believed that the future of work would be completely altered, with a large percentage of workers subsisting on freelance work. Today, however, now that unemployment is down and the economy is up, NewtonX decided to take a look at whether or not the gig economy really has replaced traditional work models.

The scope of this analysis focused solely on enterprise workers — those who work in an office setting or who freelance for businesses that reside in an office setting. The survey did not include drivers, factory employees, or manual laborers. NewtonX deployed the survey to 10,000 employees who met the work requirements, as well as 500 executives around the country. The data and insights in this article were sourced from NewtonX analyses.

Just Because the Recession Ended Doesn’t Mean the Gigs Did

In 2005, freelancing accounted for just 10% of U.S. employment. But by 2017, 36% of the population reported freelancing — a number that is likely an underrepresentation of the total percentage of people who have freelanced.

Last summer, however, the Labor Department concluded that the gig economy had hardly changed the US labor market at all. One reason for the discrepancy is that the Labor Department doesn’t accounts for people who work “side gigs” — part time jobs in addition to full-time employment at all. And NewtonX found that the vast majority of enterprise workers, while mostly full-time salaried employees, also work side gigs.

The Labor Department’s data shows that 90% of American workers hold traditional jobs — which is hardly any change from 2005. However, because the survey only asked about workers’ primary sources of income, employees who also consult or do freelance work would not be counted as participants in the gig economy. Indeed, NewtonX found that freelance work accounts, on average, for just 17% of enterprise workers’ incomes.

68% of Enterprise Workers Have Freelanced In the Past Year – But 90% Still Hold Salaried Jobs

The NewtonX survey indicated that companies are more lax with ownership over their employees’ time than in previous years — and employees are likewise less tied having a single employer. Indeed, the majority (61%) of executives stated that they did not care if employees freelanced during off-company hours, and 68% of enterprise workers said they have freelanced in the past year.

When asked what their reasons were for freelancing 46% said “earning additional income,” 13% said “keeping options open”, and 7% cited “networking.” However, despite most enterprise gig economy workers being driven by financial reasons, the median salary for respondents was $62,000 — a livable wage by most people’s’ standards in the U.S.

This desire to pad financial security and keep options open may be a lingering effect of the 2008 recession, particularly now, as fears over another pending market crash are heightening. Employees are finding safety in redundancy (if they lose one job, at least they have another), and employers are benefitting from new access to part-time talent outside of their organizations.

The Gig Economy Will Grow as Millennials Age

Many millennials were just entering or exiting college when the recession hit. Because of this, they have experienced less job security and institutional trust than their predecessors. This, combined with the growth of gig opportunity platforms and changing employer sentiments, indicates that the gig economy will continue to thrive — if not as a main form of income, at least as a secondary one.

Business leaders should take advantage of their access to outside talent for specialized work and consulting. Likewise, individual employees can expand their portfolios, increase their incomes, and establish networking connections outside of their primary employer.

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