The gig economy has undoubtedly been one of the biggest trends to affect the workforce in the past few years. Indeed, in the UK alone there are an estimated 1.1 million people working in the sector. Not all gig workers are alike however, so a recent paper by Prudential makes fascinating reading.
They attempt to analyze the gig economy across three generations of American worker: Millennials, Generation X and Baby Boomers, to explore how each generation approaches their work, what their motivation is and how the nature of the work impacts their life.
Understanding the gig economy
The paper builds upon previous work undertaken by Prudential into understanding the gig economy, and attempts to understand how the nature of the sector impacts different people at different stages of their life. Perhaps unsurprisingly, the analysis found that people use the gig economy very differently at the various stages of their life.
For instance, Millennial gig workers were most likely to proactively work in this way as they found the flexibility and freedom of the work most in line with their long-term aspirations. By contrast, gig workers in Gen X and Baby Boomer generations were much more likely to enter into gig work because of circumstances outside of their control. This then contributed to a general sense of dissatisfaction with their circumstances among Gen X gig workers, who were much more likely to prefer to move back into a traditional, full-time job.
The report expressed particular concern about the financial implications for this group as their precarious situation makes it hard to save sufficiently for their retirement. Indeed, a worrying 63% of Gen X gig workers revealed that they were struggling financially, which is comfortably more than those from the other two age groups.
The inconsistent nature of gig work made it difficult for Gen Xers to budget, with presumably many at this stage of life trying to raise a family or buy a house. This was compounded by the relatively low earnings revealed by the report, with Gen X gig workers earning over $7,000 less per year than Baby Boomers, despite working more hours.
“Gen X gig workers seem to face the most financial wellness challenges, but do not have as much time to shift their career paths and improve their financial lives,” Prudential say. “These findings are a call to action for advisors, employers and policymakers, who collectively have the ability to help gig workers set up retirement savings plans, acquire adequate insurance coverage, and develop budgets.”
By contrast, the financial outlook for Millennial gig workers was more positive, as the report suggests they’re more likely to live in households with multiple sources of income. They were also more likely to do a range of gig works from a wider range of platforms.
Boomers were also more likely to have a range of different sources of income together with a number of employer-sponsored benefits. As this age group is also likely to have children who have left home and a house that they own, their gig work was more akin to pocket money than a main income.
The report follows an earlier piece, published last year, by the Royal Society for the encouragement of Arts, Manufactures and Commerce, which examined how gig workers can enjoy the benefits of the freedom and autonomy gig work provides, without the stress and worry from the insecurity. It reminded us that many of the employment rights and protections are wound up with traditional employment, thus leaving gig workers in a precarious position.
With the rise in gig work part of a larger trend towards the freedom and autonomy provided by self-employment, the report suggests that policy makers need to rethink the model whereby traditional employment is the basis of a secure foundation.
The report urges policy makers to rethink the foundations of social and economic security so that they are not predicated on people being in traditional forms of employment but rather good work, regardless of its nature. They also recommend that the lack of systemic support for atypical workers be addressed.
The rise in gig work has started some interesting discussions about the future of work and how people can be protected so that they enjoy good work rather than a precarious race to the bottom. The nascent state of the gig economy means that these are conversations that have a way to go yet, but it’s at least good to see that they’re conversations we are having.