What is the "Gig Economy"

If you have been following discussions about the labor markets and jobs, you may have come across the term “gig economy”. It has entered the public debate over the past 2-3 years. Respected publications such as the New York Times and Wall Street Journal have covered the rise of “gig economy.” Even the President and presidential candidates are discussing it , visiting companies that lead “gig economy” and trying to formulate their position on this trend.

But what is “gig economy” and why should Boomers care? Isn’t it some latest technology driven trend that is just for younger generation? One of our readers thought that “gig economy” somehow related to musicians playing gigs.

Gig economy refers to a phenomena in our current labor market where more Americans are making their livelihoods through some form of freelance or contract work. Working as a freelancer does not have the hallmarks of the traditional employment such as medical insurance or a 401(k), but it does offer flexibility and autonomy to anyone willing to strike out on their own.

However, these are perhaps less of a concern for Boomers that have some safety net from Social Security and retirement assets. The gig economy can work particularly well for Boomers looking to supplement their retirement income while having flexibility to set their own time, pick projects that are of interest to them and provide adequate compensation for their skills. It provides a way to quickly respond to unplanned economic needs or extend the long term security by providing income stream to reduce drawdown of retirement assets.

Internet and mobile communication are the biggest enablers of the gig economy. Uber, Lyft, Etsy and other providers have developed a suite of applications and capabilities that enable virtually anyone to start performing gigs, often by using their own car, house or some other assets. Great thing about it is that in the gig economy you don’t have to come up with a lot of money to start up earning income. All you need is a willingness to do some work and basic technology tools such as a computer or a smart phone.

Boomers must also recognize that the gig economy goes beyond driving for Uber or selling craft on Etsy. As the freelance work is becoming a more acceptable mode of work rather than just a means of temporary or supplemental income, more and more opportunities are opening up for all sorts of jobs. Freelancing today can mean working part time virtual assistants, accountants, or customer service managers. Small businesses are jumping on the freelance bandwagon because it offers them a way to control cost while accessing the right resources.

The gig economy offers Boomers a set of economic opportunities they wouldn’t otherwise have. Those who are not ready to retire can now find ways to stay working, have flexibility and do what they enjoy .

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