The term “gig economy” is most commonly used to refer to jobs such as driving for a ride-sharing service, deliveries, or walking dogs. But the truth is, it’s a lot more expansive.
What exactly is the gig economy and who is in it? Here’s what to know.
What is the gig economy?
The gig economy is an area of the labor market that consists of temporary, contractual or freelance jobs. The IRS defines it further as “an activity in which people earn income by providing work, services or goods on demand”, often through an app or website.
The gig economy extends across almost all industries and represents a large part of the workforce. A 2020 Survey on behalf of Upwork found that 59 million Americans freelanced in the past 12 months.
What is gig work?
Gig work is very different, so pinpointing it is not always easy. Common examples include renting a room on a short term rental site, selling clothing online, driving for a carpooling service, and Deliveries for Amazon Flex or another service. It also includes jobs like freelance writing, tutoring, design, nursing, and more.
A “gig” (sometimes called a “sideline”) is generally a short-term assignment, project, or job that a person accepts Earn extra cash. But many work long-term or as a main source of income. Some gig workers are paid per task or assignment. Others earn an hourly rate.
What is a gig worker?
A gig worker is someone who works as an independent contractor or freelancer in the gig economy. Gig workers are usually classified as self-employed rather than employees for tax reasons. Because of this, they do not receive regular employee benefits such as health insurance, retirement plans, or paid time off.
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What you should know about working in the gig economy
Working in the gig economy can involve flexible working hours or the ability to set your own salary, depending on the job. However, this can also mean irregular income, under-performance, and complicated taxes. When considering gig work, there are a few things to keep in mind:
Research the pay. Prices may vary based on location, experience and demand. Also, the platform through which you get gig work can cut your revenue. It’s also a good idea to find out how often you get paid so you know when to expect each paycheck. Please visit the company’s website, reviews, and the Better Business Bureau page for more information.
Be aware of possible costs. Some performances require you to pay certain expenses related to the job. For example, you can be hooked for insurance, gasoline and car maintenance when transporting goods or people.
Budget for taxes. Traditionally, employees automatically receive wage taxes that are withheld by their employers. Most gig workers, on the other hand, are responsible for doing the math themselves. To build Self-employment tax in your budget so you don’t get a surprise invoice when it’s time to submit.
Watch out for fraud. Gig work is in high demand – and scammers know it. Be on the lookout for red flags. If you are asked to pay upfront or a position promises to pay more than your skills and experience warrant, it is likely a scam.