The State of the Gig Economy
The term Gig Economy was just beginning to enter the job lexicon when Diane Mulcahy drafted a syllabus for a course on the topic in 2012. What began as an experimental class with low enrollment soon became an MBA course named by Forbes as one of the 10 Most Innovative Business School Classes in the country.
Drawing on her experience teaching the course, Mulcahy wrote The Gig Economy in 2016. The book—a guide to navigating short-term jobs, contract work, consulting projects, and freelance assignments—has been translated into five languages, proving the concept’s global appeal.
Since the start of that course, and the publishing of the book, the gig economy has only grown. The 2017 MBO Partners State of Independence in America study found that the number of self-employed Americans age 21 and older rose 2.8 percent from the previous year and is expected to continue growing. “We will see more people working independently, whether that’s people working full-time jobs with a side gig, or people assembling a portfolio of gigs,” says Mulcahy.
As full-time jobs continue to disappear, Mulcahy shares her thoughts on where the gig economy is headed and why it’s more important now than ever to stop thinking about full-time jobs and start thinking about rewarding work.
Avoiding the Full-Time Trap
“Some people don’t want to deal with managing their own career, or sense of security and financial stability so they outsource it to their employer,” observes Mulcahy. “They get into a full-time job and they think that means they are safe and financially secure.”
For these employees, their perception is that a full-time job equals security. “If you tell them they don’t have security, it shakes a fundamental tenet of their work life,” she continues. “I often ask employees, ‘What about your employer makes you feel like they’re a good steward of your life? Why do they deserve to receive control of fundamental aspects of your life?’ ”
Changing the full-time mindset is critical at a time when the average employee tenure is 4.2 years, according to the 2016 Bureau of Labor Statistics. This number is down from 4.6 years in 2014, and will likely only slide further.
As members of the gig economy know, maintaining your résumé, network, and skills is an ongoing process. Full-time employees need to do this, too. “You don’t know how long you’re going to hold a job,” stresses Mulcahy. “You have no idea what the company will do next, if it will be merged, acquired, change strategy, conduct a layoff, or shift to new markets.”
She underscores the point with a story from one of her Babson College students: “I was teaching a class one spring and all the students went off for spring break. One student came back and said, ‘When I was away, my company got acquired. My new CEO is 28, I have a whole new management team and I don’t know if I have a job.’ This is what happens in our economy—corporate changes can come about without warning or notice.”
“Companies are being forced to adapt to the way the workforce is changing,” explains Mulcahy. “Companies—even if they would prefer full-time workers or are reluctant to make changes—are realizing they are better off incorporating independent workers. There are many benefits for employers who hire independent workers—filling persistently unfilled positions, accessing skills and expertise that aren’t available locally, and the ability to staff up and down according to business needs—and more companies are realizing that.”
Among all the jobs created between 2005 to 2015, 94 percent fall into the alternative work category. This includes independent contractors, workers provided by contract firms, and on-call workers.
New Startup Opportunities
Mulcahy points out several companies that are capitalizing on opportunities to make life easier for the self-employed population. “There are so many labor platforms matching workers with projects, and many are specific to industries, sectors, and types of work,” she says.
There are, of course, the well-known gig economy platforms, such as Uber, Airbnb, and TaskRabbit. But, there are platforms for professional fields, too, such as Legably for lawyers, Freelance Physician for doctors, and Movidiam for creatives.
Companies also are launching products to help contractors on what Mulcahy calls “back office tasks.” QuickBooks Self-Employed from Intuit offers easy ways to invoice clients and pay quarterly taxes, while Stride Health is trying to make it easier for self-employed individuals to find the right insurance plans. The company also introduced an app to help contractors track mileage and other expenses to maximize tax deductions.
Outdated Government Policies
“Right now, we have a labor market that supports one type of working: as a full-time employee, in a full-time job, for a single employer,” begins Mulcahy, noting independent workers are taxed additionally, aren’t protected by harassment policies, and have a harder time getting health insurance.
Too often, companies misclassify employees as contractors, whether to dodge taxes or because the classification is too vague. Concrete definitions of employee and contractor are necessary, but it’s only the beginning.
“We need to create a labor market that supports anyone who works,” she emphasizes. “It’s in our interest as a nation and economy to encourage work, however individuals choose to work, when and where they choose to work, and however much they choose to work.”
“The impact of the gig economy on education is completely disruptive. It’s why I tell my MBA students to stop looking for a job,” says Mulcahy, noting it doesn’t make sense for universities to continue to prepare students to be a full-time employee when full-time jobs are declining and independent work is growing.
“Babson is the only school I know of presenting, in any systematic structured way, an opportunity for students to get into the mindset and acquire the skills they need to succeed in the gig economy,” she notes.
Mulcahy underscores the need for universities to teach students the skills—financial, business development, marketing, contract negotiation, project management—needed to run their own business. After all, that’s what gig economy workers are doing. Helping students put together a portfolio of gigs rather than placing them in full-time jobs with a single employer is more in line with economic trends. Students also really can benefit by having side gigs—such as volunteer work or client projects for credit—while in school, to gain experience and develop skills.
For full-time workers, it’s largely the same: you always need to be thinking about, and preparing for, your next gig.
“You need to have something on the side that’s expanding your skills and network, and creating future opportunities,” urges Mulcahy. “The idea you can get one single full-time job and settle in and get complacent and not worry about anything else is incredibly risky. There is no job security.”
Posted in Living Entrepreneurship