The term “gig economy” describes one-time tasks and services performed for a fee, as opposed to traditional employer-directed jobs performed for a wage. Many people conversationally refer to gig work as “gig jobs,” which can confuse things. Gig work is not a job in the traditional sense. Gig workers are independent contractors, not employees. Most gig economy work (94%)[1] is facilitated by third-party platforms (like Uber and Taskrabbit) that connect gig workers with clients.
Key Takeaways:
- The gig economy is a catch-all term for a wide variety of short-term or one-time tasks that are ideal for people interested in non-traditional work schedules.
- Gig work income varies widely by work type and customer demand; income can range from $8 to over $20 an hour.
- Gig work does not include benefits like health insurance, and gig workers need to manage administrative tasks like filing their own taxes and purchasing insurance.
The Rise of Gig Work
Gig work has always been a part of the US labor market. In the age before smartphones and the internet, gig work was an informal arrangement with a lot of payment happening “under the table” (i.e. not reported to or traceable by the IRS for tax purposes).
What transformed informal gig work from a casual arrangement to a full-blown gig economy was the development of third-party, middleman-style platforms (like Uber) that connect gig workers to clients and process payment transactions. It is hard to say exactly how many gig workers are working in the gig economy. One 2021 Upwork report put the figure at 59 million US workers.
Official government figures are much lower. According to IRS numbers released in a 2023 report, about 5 million people reported income from gig work on their taxes. The most recent Bureau of Labor Statistics (BLS) survey of workers in “alternative working arrangements” is from 2017, and shows just 1% of US workers relying on platform gig apps. An updated BLS report is expected sometime in 2024.
Top Gig Jobs
Since 2016, research institutions from McKinsey to individual universities have estimated that anywhere from 16% to 35% of US workers are involved in some form of gig work. Gig work can take many forms. If there is a service or task you can think of that someone would rather not do themselves, there is a platform where gig workers provide that service.
The most popular gig jobs in 2024 include:
- Freelance design or writing: Many freelance marketplaces (Freelancer and Fiverr, to name just two) connect creative workers with customers in need of one-time creative projects.
- Courier services: Consumers are willing to pay for on-demand delivery of everything from restaurant food to groceries to packages. Gig work is available for local delivery (as with Uber Eats and Instacart) or for longer delivery distances (as with Amazon Flex).
- Rideshare driving: Rideshare driving is what most people think of when it comes to gig work. With rideshare, customers hail drivers for one-time rides using a smartphone app (like Uber or Lyft).
- Vacation rentals: Renting a home or spare room as an informal innkeeper (as through Airbnb), is another popular gig economy revenue stream.
- House or pet sitting: Platforms like TrustedHouseSitters connect consumers with verified and reviewed house or pet sitters in their area. Customers can review sitters on the platform, which also handles the payment details.
- Childcare: Sites that connect babysitters to families with children are very common—Care, SitterCity, and Babysitter.com are all popular.
- Odd jobs: For handyman-style tasks from house painting to clearing out a garage, there are platforms like Jobber and Taskrabbit. For gig workers with special skills or equipment, there are platforms specifically for landscaping, housecleaning, and more.
How Much Do Gig Workers Make?
The amount of money gig workers make varies based on the task performed and customer demand. Some gig work also involves tipping as a part of compensation.
A common feature of the gig economy is surge pricing, which is increased prices when demand is high. Nearly 60% of gig workers say that gig work is their main source of income, and about the same number of gig workers say they earn a living from their gig job, but have little savings.
According to the study by resume service Zety, most gig workers (63%) earn between $7.25 and $14.99 per hour from gig work, while 8% report earning $20 or more per hour. However, other studies have found that 14% of gig workers report earning less than the $7.25 federal minimum wage.
Factors That Influence the Gig Economy
Several factors led to the development of the gig economy, from the proliferation of smartphones to increased worker demand for flexible work arrangements. While smartphones and digital payment tools are well-established foundations for the gig economy, other variables—like national wage rates—can have an ongoing impact on the gig landscape.
Smartphones
Smartphones enable customers to order a meal or schedule a dog sitter from the palm of their hands. In 2023, 90% of Americans reported having smartphones. That number is an enormous leap from 2010 when only 23% of Americans reported using one.
Digital Payments
Gig platforms need digital payment technology to accept payments from customers and distribute payments to independent contractors. Without the simultaneous rise in digital payments, gig platforms could not have grown as quickly as they have or reached as far as they currently do.
Platform Proliferation
Airbnb was founded in 2007 and Uber debuted in 2009, introducing the idea of sharing your home or car with strangers to earn extra income. In the 15-plus years since, gig platforms have emerged to manage an increasing number of tasks. There are platforms for childcare, dog walking, pet sitting, lawn care, and more.
The Great Resignation
Between November 2021 and April 2022, an average of 4.5 million workers per month left traditional jobs to pursue work that offered more autonomy and a better work-life balance. Many publications dubbed this trend “The Great Resignation” or “The Big Quit.” However, The Big Quit slowed in the last half of 2022. Current quits are back to pre-pandemic levels. However, future spikes in quits and terminations will likely increase interest in gig work in the short or long term.
Wages
Some experts tie the end of The Great Resignation to a wave of wage increases in the latter half of 2022. When wages are low or stagnant—as they have been—more traditional workers tend to leave employment voluntarily and enter the gig economy. Wages spiked at a year-over-year increase of 9.3% in early 2022; then they returned to normal levels, around 5% year over year. Data from Bank of America shows when the rate of wage increases dropped in 2024—down to 4.4% year over year—gig work rates increased.
Gig Economy Criticisms
The gig economy often makes headlines for challenges experienced by gig workers and consumers. The gig economy formalized some informal transactions and disrupted industries like food service and taxi services. There have undoubtedly been growing pains.
No Worker Benefits
Gig work is not protected by the same employment laws that apply to traditional jobs. Gig workers are not entitled to overtime pay or employer-provided health insurance. There is no paid time off if they are sick or injured. You hear many stories of gig workers working while sick or injured, like a bike delivery worker continuing his delivery routes with a broken foot so he could keep up with his rent.
Harsh Working Conditions
On gig worker forums, it is common to hear of constant monitoring and pressure to meet unrealistic or unreasonable expectations (like delivering 46 packages in three hours, as one delivery driver recently wrote on Reddit). Gig workers can feel pressure to deliver value to their platform companies to maintain a high rating on the platform and gain more favorable assignments.
According to a recent study by ADP, gig workers estimated they give an average of nine hours and 28 minutes of unpaid work every week to remain in their platform’s good graces; that’s two hours more than traditionally employed workers in the same study. While platforms advertise flexibility, many gig workers report only getting access to the best routes, shifts, or clients when they log regular hours on the platform. In many cases, gig workers report working when they would prefer not merely to maintain a good reputation on the platform.
Illusion of Security
The high-profile design of the platform apps and websites can give the appearance of security. But most gig platforms only do a cursory check on workers joining their service. And when it comes to customers, most platforms only verify payment details to prevent fraudulent payments. Many platforms wait for reports of risky, dangerous, or rude behavior from both workers and customers before anyone is blocked from using the service. The apps can give a false sense of security to both workers and customers.
At the end of the day, most gig work involves strangers interacting with one another. And with the gig economy, that can mean welcoming strangers into your home or car or entrusting them with your family members.
Worker Misclassification
Organizations like the Economic Policy Institute aren’t sure that gig workers using the platforms are truly independent workers since gig platform workers have no control over their payment rates. Most gig platforms—like rideshare apps—do not show platform workers their clients in advance, and often, they cannot decline to work with a client. Some organizations claim that these qualities make platform gig workers employees, rather than independent contractors.
Little Regulation & Oversight
Laws and regulations have been slow to catch up to the quickly expanding gig economy. Most laws and regulations have developed in response to complaints from businesses whose models were disrupted by gig platforms or from gig workers. Many of these regulations that have attempted to mitigate the impacts of the gig economy have been delayed by lawsuits from the gig platforms themselves.
For example, in 2021, New York City attempted to cap the fees third-party food delivery platforms could charge partnering restaurants. Subsequent regulations to raise the minimum wage for couriers and require platforms to share customer data with partnering businesses soon followed. All of these proposed regulations are still only proposals; lawsuits from the gig platforms have delayed any changes in oversight.
The lack of transparency into gig workers’ day-to-day tasks and earnings makes it difficult for lawmakers to craft meaningful policies to address inequalities in the gig economy. A former commissioner of the US Bureau of Labor Statistics (BLS), Erica Groshen, recently told CNN, “We all need that information to guide our investments, to guide our career choices, for our policymakers to make good policy decisions. All of this relies on the data, and we’ve been shortchanging ourselves on that.”
Gig Economy Scams
The gig economy connects strangers, usually for one-time tasks or services. So, it is not uncommon to hear about dishonest behavior from both gig clients and gig workers. These are some common gig economy scams to watch out for:
Rideshare Passenger Payment Scam
If you are a rideshare driver and a passenger asks to put their destination address into your phone themselves, you could be in trouble. Your passenger could be an unscrupulous fraudster who, instead of entering an address into your GPS app, opens your digital wallet or payment apps to transfer money from your account to a third party. Depending on the app in question, you may not be able to recover the funds.
If you are a rideshare driver, do not, under any circumstances, hand your personal device to a passenger. Even better, use a completely separate smartphone for your rideshare work, one that does not have any of your personal payment apps or other information on it.
DoorDash Order Not Delivered Scam
Like the rideshare scam above, this one is directed from the customer to the gig worker. It starts with an order placed for delivery with a note instructing the driver to “leave package on the front step.” Then, when the courier arrives at the address on the order, someone walks up to the driver to intercept the order. The customer later claims the order was never delivered. And if the driver doesn’t take a photo of the delivery, they can be out the fees for the whole delivery.
A missed delivery can also reduce a courier’s rating on the app, which can prevent them from being offered the most lucrative gigs. In this situation, the best thing for a courier to do is to get a photo of the delivered package, even if that means following the posted delivery instructions to the letter and capturing the correct image.
Airbnb Bait & Switch Scam
In this scenario, your Airbnb host contacts you after you have paid but before you check in to let you know that the room or home you have booked is no longer available. To make things right, the host offers another venue, usually at a higher price or lower quality (sometimes both). If you accept the switch, however, it’s hard to submit a complaint to Airbnb for a refund.
It can be incredibly inconvenient if this happens to you while traveling. But to protect yourself and stand the best chance of getting a refund, you should decline the switch and report the host to Airbnb.
Gig Economy Benefits
The gig economy is not all doom and gloom; there are pros to balance many of the cons. There are reasons that millions of people perform gig work part-time or full-time.
Low Barrier to Entry
If you have an internet connection and a computer or a vehicle, a spare room to rent, or merely some free time on your hands, you could get involved in the gig economy. Most gig platforms only require identity verification via one or more government-issued IDs to get started.
High Consumer Demand
Consumers invested in the gig economy in a big way during the COVID-19 pandemic. It permanently changed consumer preferences. Consumer demand for gig services for everything from grocery delivery to dog walking has only intensified. In 2024, Uber’s Monthly Active Platform Consumers (MAPC) grew to 149 million, up 15% from 2023. Trips on the platform also increased by 21%.
Good Transitional Work
The gig economy offers opportunities for career changers, students, or workers who are in between jobs. People who need to earn extra money or find themselves unexpectedly jobless due to layoffs or business closures can turn to gig work to earn income while they search for their next position.
Frequently Asked Questions (FAQs)
The gig economy is a complex concept. These are some common questions I hear about the gig economy and gig work.
People are divided on whether the gig economy is a good or bad thing. However, it is clear that the growth and development of the gig economy has changed the employment landscape around the world, possibly irreversibly. Gig workers report enjoying the flexibility that gig work offers, but many also feel that performance metrics that are expected of them are unrealistic. Consumers report enjoying the convenience of using gig platforms but dislike the rising costs of service fees.
Uber is a classic example of the gig economy. It is a third-party platform that connects service providers with customers looking for an on-demand service; either driving or local delivery. The Uber platform connects the driver and the customer and processes the payments between the two parties.
On-demand driving, on-demand tutoring, and renting out a private residence are three classic gig economy “jobs.” Though calling these tasks and services jobs belies the gig nature of the work. By design and definition, gig economy tasks and services are not jobs in the traditional sense. All gig economy service providers are independent contractors with no employer setting their schedule or providing benefits.
Bottom Line
The gig economy connects consumers with one-time service providers, on-demand. Using digital technologies like smartphones and digital payments, third-party platforms enable a frictionless experience for consumers and independent contractors. The gig economy has been growing since 2009 and shows no signs of slowing down. With more gig platforms emerging every year, and workers continuing to prize flexibility, the gig economy is expected to keep growing.
