More than salary, gig work serves as a primary source of income for many
- The gig economy trend is flying high as workers pull out of their full-time jobs and transition to gig platforms, a new report from Marqeta and Branch shows.
- Gig jobs come as a no-strings-attached option for professionals, who find competitive wages, flexibility, faster payouts, and the fringe benefit of being their own boss alluring.
In America, around a third of the working population operates in the gig economy.
The gig economy was already growing before Covid-19, but as the pandemic wreaked havoc and disrupted businesses, the gig economy gained more popularity becoming a desirable career path competing with the traditional 9 to 5 employment model. The trend is flying high in the post-pandemic world as workers pull out of their full-time jobs, leaping to one to two gig platforms to pick up work, a new report from Marqeta and Branch shows.
Gig jobs over traditional employment
Workers are increasingly turning to the gig economy or short-term work because of the flexibility that traditional roles don’t always provide. This comes as a no-strings-attached option for professionals, who find competitive wages (78%), working hours flexibility (68%), faster payouts (52%), and the fringe benefit of being their own boss alluring.
The number of workers who have left or plan to leave full-time employment to join the gig economy increased by 40% – rising from 35% to 49% over the past year.
“While many workers are turning to the gig economy for their primary source of income, we’re also seeing a lot of workers hold onto traditional jobs and supplement their income with gig work to meet their financial goals,” said Atif Siddiqi, CEO of Branch.
“When unexpected price increases or an emergency emerge, workers can turn to gig work for additional income to meet those needs and feel better prepared to weather economic fluctuations,” he added.
With difficulty in filling roles amid a tight labor market, companies are leveraging high-skill platforms in large numbers. But what makes employees loyal to a gig platform and stick to it?
The gig economy does experience high churn rates – with some startups having seen turnover as high as 500% per year in the last few years – because people hop from platform to platform to try and earn more.
With this in mind, platforms try to retain their talent by keeping them motivated to stay on their platform to pick up gigs and by providing them with competitive perks.
What workers look for most out of a gig platform varies: flexible schedules (55%), speedy payments (10%), and more opportunities for increased pay rates (25%) – including the ability to bargain for better wages and working conditions – are some of the top cited reasons to stay affiliated with a gig platform.
Gen Z: gig in or go out
The optimism regarding the gig economy expands across various demographics. More options for income at their disposal can increase the work-life balance over the full-time work that Millennials and Gen Z seek.
However, the current period of financial uncertainty is far from drawing to a close, resulting in rising concerns for Gen Z who are now skeptical of getting on with their future goals, like buying homes or retiring early. This plays a key factor in their decision to have independent jobs or multiple jobs compared to their older counterparts.
More than half (58%) of Gen Zers are interested in the independence of gig work giving them a sense of when they’ll get paid. 19% of Gen Z gig workers indicated instant payments and systems that don’t create delays for them as a major driver of their inclination toward gig jobs.
Is the grass always greener for gigs?
Gig work has gained traction for a number of reasons but non-traditional work can also create financial challenges. Despite higher earning opportunities, prices and inflation have also been keeping apace.
Though there may be early signs of inflation cooling down, work-related expenses such as gas and auto maintenance (47%) in addition to personal expenses including home/rent affordability (73%) and groceries (57%), have been taking a toll on workers’ finances.
This leaves gig workers with little to no savings for emergency expenses and susceptible to financial hardships if they miss work. Additionally, it also makes saving for their distant future or retirement harder.
The number of gig workers with no emergency savings rose to 37%, up from 31% a year ago. Millennial gig workers are especially skating on thin ice, with 41% reporting having $0 saved.
Faster payments, more inclusivity
Gig workers are on the lookout for quick and cost-effective ways that provide instant access to funds.
A majority of gig workers, especially those working for platforms operating across multiple countries are embracing digital wallets. Through one connection, companies can disburse workers’ earnings instantly to a bank account, via a card or a digital wallet. This solution is already deployed by a number of companies, including Uber, whose Uber Pro Card is in the works in collaboration with Branch. The debit card enables drivers and couriers to use rewards and discounts to manage their day-to-day work and personal finances.
Instant payout options also equate to greater financial peace of mind for many (82%) – 65% of workers are confident enough to leave their physical wallets at home and count on their phones to receive and send payments.
In the case of financial services, gig workers make challenging customers for banks and financial institutions as the nature of their erratic incomes makes it difficult to lend to them. As a result, they don’t end up being the popular choice to qualify for consumer loans and mortgages.
Currently, 40% of gig workers have their primary accounts maintained at traditional financial institutions. However, 34% have transitioned to a digital bank for their primary banking needs. Besides, 83% are willing to explore financial services offered from the gig platforms they work with, hoping for faster operations and inclusion – by not getting their creditworthiness assessed on employment, steady paychecks, or other traditional metrics to gauge risk.
“Due to convenience and familiarity, consumers are increasingly likely to rely on familiar brands and trusted employers for banking services,” said Simon Khalaf, CEO of Marqeta. “What we’re seeing is an expansion of the relationship that customers typically had with a bank to one that they can have with companies in any industry, including with their employer or gig platform.”