The gig economy is changing the nature of work organization. While this change may or may not be beneficial, understanding its development requires us to examine various preconditions.
These issues include filing taxes easily or not, keeping an accurate budget, and investing for retirement.
Expenses
The gig economy enables employers to access specific skills on an as-needed basis, yet many gig jobs do not provide sufficient financial stability for workers and their families.
For example, gig workers must cover costs related to equipment they need in order to perform their work (such as cars and laptops). Furthermore, they should budget for marketing expenses, such as paying dues to professional organizations or advertising on social media.
As part of their individual and self-employment taxes, gig workers must track and deduct expenses when calculating individual and self-employment taxes, often leaving them in financial straits that leave no emergency savings and make meeting basic needs impossible. Furthermore, many gig workers make less than minimum wage and experience an abundance of economic insecurity.
Taxes
Gig workers do not qualify as employees of the companies who hire them, meaning no income tax withholding occurs from their wages. Furthermore, since their employers don’t pay into social security and unemployment insurance systems for them to contribute towards, many gig workers must set aside savings safety nets on their own.
American consumers have increasingly turned to gig economy work either as their main or supplement to traditional full-time employment; yet government data on this workforce remains scarce.
Gig work can be great for creative professionals looking for new challenges. But it also can provide assistance for people struggling to make ends meet; gig jobs often don’t pay enough to cover basic needs.
Savings
Gig workers must carefully track their expenses, identify those that qualify as tax deductions and save independently – something many workers find challenging without the stability and discipline provided by regular paychecks.
Many individuals opt to work in the gig economy due to its flexibility. Some utilize it as a means to meet financial goals or build experience for a more traditional career; others do it purely for additional income generation.
Gigs can range in scope from short surveys of five minutes or less, to an 18-month database management project. Any occupation that provides on-demand services has the potential to become a gig. According to census data, nonemployer businesses (which include solo professionals) saw substantial growth between 2003 and 2013 — many of these can be considered gigs.
Insurance
Gig workers do not qualify for traditional employer-provided health insurance plans, so they need their own policies. Furthermore, most states don’t offer unemployment compensation in case they lose a job (although 2020’s CARES Act makes an exception).
Even with its risks, many workers choose the gig economy due to its greater flexibility; this enables them to pursue their individual interests while making an income.
Reasons for changing careers may include career dissatisfaction, toxic workplaces or simply wanting to increase income. Gig work can be found in fields like IT, design, consulting, copywriting and architecture; CPA Australia found that SMPs surveyed by them anticipated increasing reliance on gig workers for future needs; many are also promoting gig work via firm newsletters, online promotions or word of mouth marketing campaigns.
Retirement
Gig workers must maintain disciplined spending habits to accurately record expenses and income. Receipts are necessary, as is keeping track of how much petrol has been used – drivers may forget submitting receipts which could have serious repercussions financially.
Many gig workers must rely on their earnings to pay utility bills and living expenses, often creating stress in the form of anxiety and depression as they feel vulnerable about their finances.
Accessing healthcare can be another difficulty for gig workers in the US. Without access to national healthcare schemes like those available in European states, securing healthcare may take longer and be more complex than expected.
