What is the Gig Economy?

Ezra Cabrera | January 21, 2022


    Key Takeaways

    • “Gig economy” is a relatively new term that refers to a free market where individuals (skilled or not) work on short-term, temporary jobs. Gig is a borrowed term from the performing arts that refer to paid individual appearances
    • The advantages of working in the gig economy include flexibility, independence, the chance to try out different careers at minimal risk, and a low barrier to entry. But it also comes with particular downsides such as the lack of benefits, filing your own taxes, and inconsistent rates or income.
    • The most significant contributor to the gig economy is the transportation business (i.e., Uber, Lyft, Grubhub, DoorDash, etc.). People may also offer professional services like computer programming and web design, tutoring, or writing and work as a freelancer.

    The gig economy has been generating a lot of buzz in almost any industry today. People are ditching their 9-to-5 jobs and switching to temporary or “gig” jobs. By doing so, they get to control their working hours and be their own boss.

    The term ‘gig economy’ might be relatively new, but the concept of an independent workforce has been around for a long time. When the technology became more advanced, it provided another market for independent contractors and freelance workers to sell their services, regardless of where they are in the world. For businesses, this expanded market gives them access to a larger pool of highly qualified talents.

    According to Statista’s projections, approximately 86.5 million or 50.9% of America’s workforce will be freelancing by 2027. The numbers are more likely to increase in the following years.

    But what is the gig economy, exactly?

    Gig Economy Defined

    The gig economy is a term used to define a free market where individuals or ‘gig workers’ work on short-term, temporary projects. The term ‘gig’ is originally a term from the performing arts community where musicians, actors, or comedians are paid for one-time appearances or “gigs.” Often, gig workers land a project from platforms or apps, like Uber or Upwork. Others may sell their services themselves and handle multiple clients at once.

    There is a wide range of jobs classified under the gig economy. It can include anything from driving someone or a group of people to their desired destinations to administrative tasks. After the gig worker completes a task or a job, they then move on to the next project. They may get paid on a per-hour or per-project basis.

    The majority of the people in the gig economy usually have another job which is their primary source of income. Some may do gig jobs on the side to earn extra cash. However, some may also enter the gig economy in the hopes of making it their full-time employment (i.e., web design, computer programming, etc.).

    The Advantages and Disadvantages of Being a Gig Worker

    Like other forms of working arrangement, being a gig worker also comes with advantages and drawbacks. We’ll discuss both sides of the coin below.


    1. Greater Flexibility

    Perhaps one of the most significant benefits of being in the gig economy is that you get to control your time, choose where you work, and choose the people you want to work with, giving you greater flexibility. With that, you can set the working hours that work best for you and determine the deadline for the tasks.

    For instance, some freelancers or gig workers may prefer working at night at home where they’re more productive. This option may not be available in a traditional job.

    2. Joining the gig economy is easy

    The gig economy has a relatively low barrier to entry. Some of the jobs may not require any experience or portfolio. For example, Uber and Lyft only require applicants to have a vehicle with updated auto insurance. In some cases, food delivery drivers such as those that work with Uber Eats, GrubHub, and DoorDash can use bicycles to deliver orders.

    However, for jobs that require skills such as web designing, programming, content writing, and others, the clients may prefer hiring those who can show an established portfolio and prior experience. If you have this, you can simply advertise your services on the internet and have people contact you. You won’t have to worry about going through a tedious and lengthy administrative or hiring process.

    3. A chance to try out different careers

    The gig economy offers many ways for people to try on or juggle different jobs with minimal risk. Although many people may enter the gig economy for the primary purpose of earning some extra cash, some people may get into it to try out new careers.

    For instance, if you’ve always had a passion for computer programming and have the skills for it, you can look for companies that might be willing to hire a programmer. Or, if you’ve always wanted to teach children, you can get a part-time tutoring job online to hone your skills and gain experience.

    4. Independence

    Lastly, being a gig worker means that you won’t have to work in an office under pressure. Since you’re an independent contractor, you can work anywhere you feel like you’re most productive. Plus, with no one looking over your shoulder, you can finish the task at your own pace, ensuring that the job is done properly.


    1. No benefits

    As an independent contractor, you are not bound to any company or employer. It also goes without saying that you won’t get to take advantage of traditional workers’ benefits. This includes health insurance or a retirement plan. While you can still get these, you will have to pay for the premiums out of your pockets.

    2. You file your taxes

    Unlike traditional employees where the company they work for automatically deducts the taxes from their income, you will have to file your taxes and account for your 1099 deductions yourself as a gig worker. Some may hire an accountant to do their taxes, but again, this means that you will have to pay for the service yourself. While you can always do it alone, hiring an accountant reduces your chances of making mistakes when filing your taxes and getting penalties from the IRS.

    3. Inconsistent rates

    A lot of factors can influence the rates of gig workers. For instance, some clients may pay less, especially if they’re a startup, while others may pay more since they won’t have to pay for benefits on top of the salary. Project size can also influence the pay.

    Moreover, gig workers could also bill by the hour. With that, they can get paid for the extra hours on the clock (e.g., meetings or phone calls outside regular work hours).

    For transportation gigs like Uber and food delivery apps, factors like the time of the day can affect their total pay at the end of the day. Food delivery drivers usually earn more during lunchtime or dinner, where more people generally order in. They may earn less if they operate outside peak hours.

    What are the Most Common Gig Economy Jobs?

    As mentioned, you can find a lot of jobs in the gig economy. This can range from being an Uber driver to computer programming. If you’re looking to dip your toes in this economy, here are some jobs to consider:

    1. Driver

    Transportation services are perhaps the most common gig for those looking for a side hustle. Lyft, Uber, Grubhub, and DoorDash, for example, are the most used services every day, making them one of the most significant contributors to the gig economy.

    One of the most significant benefits of working as a driver in the gig economy is that you won’t need to earn a particular skill. Unless you’ll be working as a truck driver, you’ll only need a regular license to participate as a delivery or passenger driver.

    2. Programming and web design

    Many companies are starting to build their digital presence these days to boost their marketing strategies. While some may prefer to build a whole IT team dedicated to that, smaller companies usually opt for outsourcing skills to save money. With that, they may look for a freelance computer programmer or web designer that will help them build and optimize their website.

    Sometimes, companies will only need programmers and designers to address a specific issue on their website. This makes your job easier as you already know what to do and how to fix it.

    If you have a degree or a certification in computer programming, web design, or both, this could be an excellent gig to try out. As you build your portfolio, you’ll eventually be able to accept more clients and raise your rates.

    3. Handyman

    Homeowners, especially those that don’t have a background in home repairs, may constantly ask for help from handypersons to help them with common household problems. If you’re pretty handy and have a knack for fixing things at home, working as a handyman in the gig economy could be an excellent fit for you.

    TaskRabbit could be a great place to sign your services up. These apps connect people to ‘taskers’ to help with anything from moving furniture to mounting or installing appliances in their homes. Once an offer comes in, they will instantly be connected to the nearest “Tasker” to assist them in whatever repairs they need doing. They’re usually paid hourly (minus a minimal service charge), and they get to keep 100% of the tips.

    4. Tutoring

    If you have a background in education or expertise in a specific subject, you could offer some tutoring to students who might need help. You can sign up on platforms like Chegg, TutorMe, and VarsityTutors, which connect you to students that might need tutoring in a particular subject. With these types of work, your hourly rate could start at $20.

    The best part about tutoring is that you can work anywhere – even from home. You can conduct online tutoring, which is relatively popular these days. You can also accept multiple students and schedule them around your working hours, so you’ll have a chance to earn more.

    5. Writer

    Digital marketing agencies may also need writers that can help them write educational articles designed to target a specific niche. Other companies may also hire writers to help them with corporate reports and company-related content. If you have advanced writing skills, some clients may also hire you as an editor and proofreader.

    Depending on the client and project, you can get paid on a per-hour or per-project basis. If you prefer one over the other, be sure to communicate it with your client before starting the relationship.

    Where to Find Gigs

    The answer depends on what specific type of job you’re looking for. If you’re looking to earn extra income through driving or delivery, you could sign up to become a driver for Lyft, Uber, Grubhub, Uber Eats, DoorDash, or Postmates. People who might be interested in running errands can sign up to be a Tasker on TaskRabbit.

    For professional services like computer programming or writing services, job and employment platforms like Freelancer, Fiverr, Guru, or Upwork can be a great place to find gigs.

    The Bottom Line

    Whether you’re looking for a side hustle to earn an extra income or you want to switch careers, entering the gig economy might be a viable option for you. While it does offer greater flexibility and independence, it also comes with a particular downside, including lack of benefits, being responsible for filing your taxes, and inconsistent income/rates.

    If you’re new to the gig economy, you can expect your rates to be much lower than the others. However, as you accept offers and jobs, you’ll eventually be able to build your skills, expand your knowledge, take on more clients, and earn more.

    With that, it’s always important to weigh in the benefits and drawbacks before considering taking on a job or switching careers. This way, you’ll be able to make a more informed decision in the future.

    About the Author

    Ezra Neiel Cabrera has a bachelor’s degree in Business Administration with a major in Entrepreneurial Marketing. Over the last 3 years, she has been writing business-centric articles to help small business owners grow and expand. Ezra mainly writes for SMB Compass, but you can find some of her work in All Business, Small Biz Daily, LaunchHouse, Marketing2Business, and Clutch, among others. When she’s not writing, you’ll find her in bed eating cookies and binge-watching Netflix.