The number of “gig economy” contract workers has grown in recent years, with 57 million Americans taking on freelance work in 2019. During the COVID-19 pandemic, even more workers joined the gig economy, as those who lost their full-time jobs began freelancing to make ends meet.
While there are plenty of perks to being a gig worker — being your own boss, setting your own hours and working on projects you’re passionate about, to name a few — there are multiple things to consider before pursuing work as an independent contractor or freelancer. Here's what you should know about gig workers and whether this career path is right for you.
What is a gig worker?
Gig workers are independent contractors or freelancers who typically do short-term work for multiple clients. The work may be project-based, hourly or part-time, and can either be an ongoing contract or a temporary position.
To earn enough money to make a living, gig workers typically take on multiple jobs or gigs at a time. Some do freelance or contract work on the side of their traditional jobs in order to make extra money or gain skills in another field.
Gig work is the primary source of income for more than one in 10 workers. While employers receive W-2 tax forms, gig workers are given a 1099-NEC form come tax season and are typically responsible for paying self-employment taxes to the Internal Revenue Service.
[Read more: 7 Resources for 1099 Contractors During the Coronavirus Pandemic]
How do gig workers find freelance jobs?
With the number of freelance job listing sites out there, as well as corporate America’s shift toward using contractors to supplement its workforce, the gig economy has become easier than ever to participate in. Some of the most common 1099 job opportunities include rideshare driving (Uber, Lyft), delivery driving (DoorDash, GrubHub, UberEats), creative work (writing, editing, graphic design), software development and web design.
Gig workers usually find work through the internet and apps. Employers will post their company’s individual needs on job boards and be paired with a gig worker best suited for the position. The wages, skillsets and gig worker’s suitability for the project can be taken into account to be matched with an employer.
[Read more: Job Hunting in a Pandemic? How to Improve Your Chances of Landing a Job]
Gig work is the primary source of income for more than one in 10 workers.
Pros and cons of being a gig worker
There are many factors to consider when becoming a gig worker. Here are some of the pros:
- You will be your own boss. Gig workers only have to answer to themselves and the work they take on.
- You can work a flexible schedule. Working as a contractor or freelancer allows you more freedom than you would get with a 9-to-5 job. For instance, you can go grocery shopping in the middle of the day, take a long lunch break or work around your children’s school and activity schedules, as long as you deliver to your clients on time.
- You decide which jobs to accept. Gig workers have the ability to take on only the jobs they want to and decline any project that doesn’t suit their interests or desired pay.
- You can focus on your own passions. With more flexibility as a gig worker, you’re able to start your own side hustle or find time to pursue your passion projects.
However, there are a few downsides to gig work:
- You’ll owe self-employment taxes. One of the biggest challenges gig workers face is setting aside enough of their earnings to cover taxes like FICA and Social Security that are normally covered by a corporate employer.
- Clients can drop at any time. Freelance clients can come and go, with or without warning, and you may find yourself losing a sizable chunk of your income if one of them drops out.
- You’ll need to work hard to brand yourself and build a client base. Because gig work isn’t always steady, you’ll constantly need to be marketing yourself and looking for new projects to sustain your income.
- You’re typically not eligible for employer-sponsored benefits. Unless you have a particularly generous client, you will likely not be eligible for any kind of employer-sponsored health insurance, retirement savings plan or other benefits as a 1099 worker.
[Read more: Working as an Independent Contractor? These Resources Will Help You Manage Your Taxes]
Despite the challenges, gig work is an increasingly popular career path and one that can be quite rewarding if you’re willing to put in the effort of building a business. If you’re interested in joining the gig economy, do your research and understand how you can best serve the marketplace with the skills and talents you have.
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