By 2020, 43% of the US workforce will be in the gig economy, according to Intuit.
The number of Americans working for themselves could triple by 2020, according to FreshBooks.
Why is it that small business accounting software providers have such an interest in the gig economy? Haha, that was the simple question.
More difficult to answer: Is that good or bad?
Me and the Gig Economy
I’ve always been a big fan of the gig economy. Before launching my own contracting agency, I’ve worked as a contractor myself, and I still do for exceptionally interesting projects.
In the past fifteen years, I’ve worked for small companies, led ad interim software development teams, transitioned from a software developer to a business analyst, and then to a product owner. Worked with banks, hedge funds, and software shops. Fifteen years of contracting helped me become what I am today: a self-directed, independent professional who finds purpose in serving his clients.
Most times, I’ve seen myself having a lot of pull in negotiations with companies. And while with big banks daily rates have become standardized and less negotiable in recent years, many of my corporate clients still show some flexibility when I refer exceptional candidates.
But then again, my gig economy is not everybody else’s. An underpaid worker who spends his free time working as an Uber driver just to make ends meet is in a very different position. So, to avoid confusion here’s my very private definition of the gig economy:
My (personal) definition of the Gig Economy
- Instead of being employed by a bank, I do a gig of one, three, six or twelve months on a client’s project. Sometimes, people call this contracting, sometimes freelancing. Companies call it contingent workforce. I call it whatever – it’s just what I do.
- I typically do one gig at a time. I’ve tried diversifying into multiple smaller projects. But it’s just a hassle. Difficult to manage, expensive context switches. Not worth the trouble in my view.
- When working on a contract, I’m typically on site with my client, and working together with project teams comprising permanent employees, consultants, and other contractors.
- I’m paid on a daily or hourly rate. Payrolling is done through an agency (ipub, my own agency in my case), and the agency makes sure all mandatory deductions and social benefit contributions are done. I have a pension plan, sick pay, and I pay taxes like any employer. But when I chose to work less in a given year, I earn less, and vice versa.
Free as in Freelancing
Why is this working out for me? Simple: similar to the reasons quoted in the McKinsey report. Here are a few hints:
- Focus on personal growth: Different clients, projects, technologies, and people make my life more interesting and diverse. My network is bigger, and I’m forced to stay at the forefront of technology.
- Being a specialist: Many companies lack an expert track, and – being a permanent employee of such a company – the only way to advance one’s career is by going into general management. Yawn! Contracting lets me position myself as a specialist, avoiding discussions about rank, org chart, number of direct reports and such.
- Full flexibility: With most gigs, I have some flexibility regarding working hours and days off. I have enough time to work on side projects such as my open source package, data.tree. Or to go to (self-chosen) conferences, seminars, etc.
And you’re paid more! some of you might think.
Well, it depends. Compared to staff level that’s probably true. After deductions, my salary is comparable with that of middle management, where I would probably be had I chosen a corporate career. In a nutshell, contracting allows me to do what I like and do best, while avoiding the bullshit job trap.
And what about Job Security?
Job security in big corporations is a myth. In my primary sector, banking, the hire and fire mentality has left many employees without a job. And go ask that 50-year-old middle manager how easy it is to find a new job.
Society and the Gig Economy
Though one thing is true, in my opinion: Our social structures, institutions, and safety-nets are currently centered around employers and permanent jobs, and not so much around individuals. This may currently be an individual problem for contractors. But it may also become a problem for societies at large: According to the study by Intuit cited above, the share of self-employed work could rise to 43% by 2020. While I personally have doubts whether this will really happen, it is clear that shifts in the way we work will require adjustments to our social systems.
So: How to Survive in the Gig Economy?
There is certainly no free lunch, and interesting work with good remuneration will always require continuous education, hard work, and endurance. Nevertheless, there are a few things that can make your transition into the gig economy easier. I usually recommend the following to the young contractors that work through ipub:
- Personal brand: Write a blog, build a portfolio of work done. Whatever works for you.
- Soft skills: Build a diverse network. Keep it fresh. Learn how to communicate effectively. Learn how to deal with conflicts, and how to communicate under stress.
- Influence without authority: This is tightly related to the points above but often forgotten. As an independent professional, you don’t have a title or a prominent spot on the org chart. So you need to learn how to influence without formal authority.
And when things get tough…
But even if you follow this advice, there will be times when things become difficult. Sometimes, intervals between projects last longer than desired. Will I run out of money? Do I still have the right skillset? Am I needed and loved? I’ve certainly been there. Being self-confident helps for sure. Additionally, the following have helped me:
- Having my own office: a place where I can go to. Where I can study, meditate, where I don’t get on my wife’s nerves. A temporary desk in a co-working space is another great option.
- Having my regular routines: getting up early, meditating, writing my journal, planning my day meticulously. Doing regular exercise.
- Contributing: I find purpose by contributing to open source projects. By mentoring startups. By donating to FinTechs in emerging economies. Between projects, I can extend these activities.
- Networking: Sometimes I don’t have any projects on the go. Even so, I plan at least one business lunch per week. And one MeetUp event (usually around FinTechs, Blockchain, or Storytelling).
Not surprisingly, this coincides with the findings of the Harvard Business Review.