With ongoing inflation, employment has become much harder to secure, and the jobless are turning to the gig economy. The gig economy describes temporary, flexible jobs where workers can pick up a job and complete it on their own schedule without having to work a 9-5 shift. Jobs in the gig economy include freelance writing, driving for a ride-sharing service, renting out property for short-term stays, or selling crafts online.
In this article, you’ll learn more about the following:
- What is the Gig Economy?
- Flexibility for Gig Workers
- Motivation for Independent Contractors
- Job security for the Gig Worker
- Worker loyalty while rendering gig work
What is the Gig Economy?
The gig economy means a labor market heavy on short-term contracts or freelance work as opposed to permanent jobs. We're seeing this concept more and more as technology has enabled people to work remotely and find jobs quickly through digital marketplaces.
For workers, a job in the gig economy or freelance economy in an online platform has always been full of tradeoffs. Sure, these individuals doing gig work may not get standard perks like health insurance or a 401k, but they can set their own schedule or own hours, choose their own customers, and work whenever and sometimes wherever they want to provide gig work while making supplemental income.
For a long time, company equity, lack of protection from sexual harassment, and social isolation were some of the tradeoffs a gig worker (which frequently includes Hispanic adults, Asian adults, and/or workers from other countries) had to sacrifice for the independent lifestyle and the chance to earn money offered by the gig economy.
Now that’s changing. Gig workers in the digital marketplace represent approximately 15-25% of global workers today and are expected to account for 35-40% of the gig workforce by 2025.
More and more, public and private companies in digital technology and computer programming (among other industries) are recognizing the advantages of providing workers with equity while the workers are earning money. These are the same perks they would offer other workers who are not providing gig work.
According to a recent Gallup survey, workers offered equity are more loyal and engaged, and highly engaged teams in digital platforms or gig platforms are 14% to 18% more productive on average than low-engagement teams.
But when it comes to equity, gig workers performing contract work or freelance work also have unique needs that other employees don’t, including when it comes to dealing with the Internal Revenue Service.
That’s where Upstock can help. Upstock offers easy, flexible, and effective tools for companies to offer their gig economy workers in the job market equity while establishing that ownership mindset. In turn, they'll inspire motivation and loyalty without relying solely on job offers for gig work with minimum wage.
1. Flexibility for Gig Workers
In the past, companies were sometimes afraid to give equity to gig workers and independent contractors, or project-based workers because the type of equity available was too limiting.
Often, the only choices in exchange for gig work or for gig platform workers were traditional stock options that vested after a certain period of time. This indicated a close relationship between the independent contractor and the company.
But dynamic equity, which rewards independent workers based on their actions, personal services, and the value they add through their gig work, does not imply that kind of relationship at all.
This results in the best of both worlds: gig workers or part-time workers in the labor market with temporary positions get the autonomy and freedom they crave while working their freelance jobs. At the same time, they still have a personal connection to the company they’re working for, among other benefits.
2. Motivation for Independent Contractors
When it comes to gig employees doing independent work in the labour market, the kind of equity offered becomes increasingly relevant just as much as the amount. The typical equity offered to standard employees in an office space, i.e. fixed equity, is offered after a certain time.
Upstock allows your company to safely issue dynamic equity, in which formerly traditional workers are rewarded for completing tasks, receiving points in return. This can be for almost anything.
For example, a company can award self-employed individuals doing freelance writing or drivers for ride-hailing apps and food delivery apps. Ride-hailing drivers who pick up a certain number of orders or who bring in a certain amount of money for the company can earn a set number of points when making deliveries.
This may be equivalent to $50 in company stock. The workers may also earn points for helping a customer, attending a company training, or reading and answering questions about a worker's manual. The possibilities are almost limitless.
Each of these points is an opportunity to give ownership of the company and reward hard work for both self employed staff who work multiple jobs and traditional workers who render paid time in the job market.
Best of all, the self employed worker, as classified by the Internal Revenue Service, can track it all in real time along with its current market value through Upstock’s motivational dashboard.
It’s easy for temporary workers and independent consultants who once had to deal with a lack of benefits and minimum wage to get excited and go the extra mile when they can see the value of their hard work growing over time.
3. Job security for the Gig Worker
Ever since the dawn of the so-called gig economy over a decade ago, gig workers or independent contractors who provide gig work in the gig economy have been fighting for basic worker rights, such as health insurance.
But since gig workers or independent contractors aren’t actually employees, it’s tougher for them to stay engaged with the company that pays their wages, due to a lack of benefits such as health insurance.
Tensions between most gig workers and companies have risen as workers fight for basic job security. When employee benefits and other benefits like company equity, sick leave, retirement plans, stable income, and unemployment insurance are built into the system and workers can easily see and access them, gig workers or independent contractors finally feel like owners while doing their gig work.
Since gig workers already have an entrepreneurial spirit, feeling like owners rather than employees with full-time jobs or traditional jobs puts them on a legitimate career path and the road to a more secure future.
4. Worker loyalty while rendering gig work
The gig economy suffers from high turnover due to a lack of employee benefits. Gig workers traditionally are not very loyal to a single employer. One study from the World Economic Forum and Pew Research Center estimated that turnover cost US employers $680 billion in 2020.
With the autonomy of gig workers doing freelance jobs, it’s easy for them to move on to greener pastures, and the best gig workers are almost always the ones to jump ship.
But research shows that offering company equity can increase company loyalty, no matter whether workers are full-time employees or freelance gig workers as defined by government regulations.
Low engagement teams typically endure turnover rates that are 18% to 43% higher than highly engaged teams. But when a full-time worker or someone working gig jobs feels loyal, they’re more likely to stay longer, crushing the high turnover rates of the gig economy while doing more gig work that can rake in more revenue for the company.
Does your company use gig workers? Get started with a demo to learn how Upstock makes it easy to offer your workers equity.