As gig work tops $1 trillion in the U.S, workers demand more real time payouts
- Pandemic related loss of income has spurred an increased interest in gig economy work.
- Branch and Marqeta’s report shows that 94 percent of gig workers associate faster payouts with financial security.
Significant reductions in working hours during the pandemic have forced many Americans to migrate towards gig and contract work to compensate for lost incomes.
In 2020, gig economy workers represented around 35 percent of the U.S workforce which roughly amounts to around 57 million people. According to freelance network Upwork, gig work contributes around $1 trillion to the American economy annually.
Last week, employee payments firm Branch and card issuing platform Marqeta released their gig payments report which surveyed around 1000 workers who had picked up gigs and contract work over the past six months. Limited cash flow during the pandemic influenced around 85 percent of workers to pick up additional work.
78 percent of respondents reportedly had less than $500 saved for an emergency. Among top financial concerns, gig workers ranked household and rent related affordability at the top of the list up to 47 percent, followed by utility bills at 27 percent.
“Nearly one-third of gig workers have $0 saved for an emergency, and many workers are living paycheck-to-paycheck. Access to faster pay is absolutely essential and a question of survival, “ said Marqeta’s chief marketing officer Vidya Peters.
“People need access to instant payments after a job is completed to allow them to buy food for their families or put gas in their cars. Many people are underbanked or unbanked, and fast payments for gig work are critical for their livelihoods. Companies can strive to offer faster payments with zero fees, providing critical financial peace of mind for gig economy workers.”
Workers prioritized higher pay and faster payouts as their primary motivations for taking on gig work. 87 percent of workers were more likely to choose one gig platform over another if they could get paid instantly without fees and 94 percent associated faster pay with greater financial wellbeing.
About 4 in 5 gig workers want greater flexibility when they get paid. Over 70 percent of gig workers prefer to receive their pay within the same day they work. According to Branch CEO Atif Siddiqi, the gig economy has been instrumental in shaping faster on demand payments to workers. Despite this, however, employers face numerous delays and gaps in paying independent contractors.
“There are fees for both platforms and gig workers. Even when using newer payment platforms, companies typically incur a fee per user per month, and potentially a fee for ACH or instant transfers for paying their contractors,” said Siddiqi.
“Contractors have to pay a transaction fee to get their earnings right after a job or have to wait till the end of the week to get paid. Waiting for funds can mean having to choose between groceries and getting gas to get to work or delaying a bill and needing to pay a late fee.”
Faster payments aside, gig economy workers also lack access to a wider range of employee benefits and services. “Payment companies need to anticipate the needs of gig workers across the entire lifecycle of their work history and offer a much greater breadth of services,” said Billy Marsden, co-founder of employment data platform Argyle.
“We’re starting to see innovation in the fleet management side of things with gig companies offering easy auto lending for gig workers, for example, and auto insurance specifically for gig workers.”
“Innovation can’t just be limited to loans and cash advances,” he said.