Gig Economy Workers Struggle with Lack of Benefits – NerdWallet

In today’s swiftly evolving marketplace, the concept of the “gig economy” has become a buzzword, encapsulating the shift towards a more flexible and independent work structure. Yet, despite its widespread discussion, pinning down a clear-cut definition or estimating its size presents a significant challenge.

The Bureau of Labor Statistics (BLS), which serves as the beacon for U.S. workforce data, openly admits the complexity of defining or quantifying the gig economy. According to a 2019 blog post, the BLS does not explicitly categorize workers within the gig economy. Instead, it focuses on delineating subgroups such as independent contractors, on-call personnel, and other segments like contingent or temporary workers, alongside “electronically mediated workers”—those securing employment via platforms such as Uber and DoorDash.

One constant thread linking the diverse participants of the gig workforce is, unfortunately, the pervasive lack of benefits that are often standard for traditional full-time employees. This includes crucial aspects like health insurance, paid leave, and contributions to retirement funds.

Noah Lang, the CEO of Stride, a firm providing essential tools for independent workers to better handle components of their financial lives such as health insurance and savings, states, “Our benefit system is revealing its fragilities.”

Individuals are drawn to gig work for myriad reasons. While some engage in gig work due to the absence of full-time opportunities, others are attracted by the flexibility that freelance tasks offer. Regardless of their motives, Lang highlights, “this entire demography grapples with financial uncertainty, primarily because they are excluded from the traditional benefits system established within this country.”

In a recent survey conducted by Stride in conjunction with Mastercard, alarming statistics emerged: 75% of the independent workers surveyed did not have access to any form of employer-sponsored benefits. Moreover, a striking 92% reported an absence of health benefit contributions. This survey scrutinized a pool of independent “1099” workers—which refers to the tax form used to report income earned outside of traditional employment—and some “W-2” employees who, despite formal employment, find themselves bereft of substantial benefits.

Among those surveyed, the most yearned-for benefit was retirement savings, with 20% citing this as a priority. The lack of paid time off (PTO) starkly underscores the tale of their professional reality, driving them towards relentlessly continuous work schedules—27% reported that they seldom, if ever, take any time off.

The pervasive financial insecurity extends to issues of savings, with six out of ten respondents admitting that their job earnings alone do not suffice to cover monthly expenses. This predicament forces them to seek alternative income streams or resort to credit cards to bridge gaps. Evidently, charting a path towards achieving significant savings objectives like retirement seems an arduous task for gig workers, as highlighted by the Stride survey.

Age also plays a role in the saving patterns and objectives among gig workers, with priorities shifting from acquiring a car among the younger cohort to establishing an emergency fund or securing retirement stability among older demographics.

Lang notes a flicker of hope, as some large-scale employers of gig workers begin to provide financial tools and occasional contributions to savings or healthcare. Policy advancements are also on the horizon, offering a glimmer of systemic change. Yet, the reality remains that a significant portion of the gig workforce is significantly underserved, rendering a mobilization for better compensation and benefits.

Though app-based drivers and delivery personnel are often the face of the gig economy, they form just a fragment. The gig economy spans across diverse fields, incorporating on-call healthcare workers, real estate agents, and a wide array of freelancers. Recent studies by platforms like Upwork and consulting firm McKinsey & Company shed some light on the sheer magnitude of the gig economy, underscoring its significant footprint in the U.S. job market.

The pandemic era notably accelerated the growth of gig work, catalyzed by the surge in delivery services and the shift towards remote work. “What we witnessed was not a new trend, but an intensification of an existing one,” Lang observes. Despite the diversity within the gig workforce, the overarching theme remains—a benefits system rooted in antiquated employment models struggling to meet the needs of today’s dynamic job landscape.

As we traverse this evolving employment terrain, gig workers embody the broader quest for a more adaptable benefits system that reflects the changing nature of work. In this quest, they navigate the precarity of their positions, championing the fight for a more inclusive and equitable workplace. The gig economy, thus, stands as a testament to the fluidity of work in the modern age, challenging traditional notions and pushing for a comprehensive redesign of worker support systems.

(Photo by Mario Tama/Getty Images)