Along with the rise of the on-demand economy, the global job market has seen a major shift from full-time employment towards an increasingly gig-based workforce.
The Great Recession has been over for more than six years, yet many people are still struggling to find work. According to a recent survey conducted by the Economic Policy Institute, roughly 1 in 10 recent college graduates remains unemployed. But are there really that many college graduates out of a job, or are millions of them actually unaccounted for?
The truth is that these alarmingly high statistics fail to include the large portion of the workforce consisting of freelancers and contract workers, instead classifying them as unemployed. And the discrepancy can’t be understated, as according to Fortune Magazine, there are an estimated 42 million people employed as contract workers and freelancers in the U.S. today.
Why the Shift?
Freelance work was probably not what most college students envisioned as their next step after graduation. However, millions of Millennials witnessed the fragility of job security first hand as their parents lost their jobs in the Great Recession, not to mention the difficulty they faced in landing full-time jobs themselves. It’s not surprising, then, that confidence in the full-time job market is in decline, with many turning to on-demand gigs out of necessity. Millennials also commonly value mobility and freedom in their work, and enter the gig economy by choice.
A survey by Kelly Services states that the majority of people who consider themselves “free agents” are highly educated, highly skilled, and committed to this independence as a lifelong career choice. The survey also states that these free agents enjoy higher levels of overall satisfaction and a better work-life balance than full-time employees.
Simply put, Millennials dread the idea of sitting at a desk from nine to five even more than they hated pulling all-nighters to finish a paper in college. With all of the short-term opportunities to be found on the internet, freelancers and contract workers can enjoy flexible schedules, the freedom to work and relax on their own time, and oftentimes, even the potential to do it all in the comfort of their own homes.
Huge companies such as Uber, Amazon, Lyft, and Postmates also save on costs by hiring contractors and on-demand workers. By hiring contract workers in place of full-time employees, companies annually save thousands of dollars on a range of benefits for each employee they don’t hire.
Dangers of the Gig Economy
Although there are plenty of perks that come with working in the gig economy, the drawbacks do exist. Mainly, companies are able to cut costs at the expense of their workers, who end up losing out on important benefits such as health insurance and 401(k) retirement plans.
A survey by the IRI found that a large proportion of millennials are unprepared for retirement, with 15% listing their strategy as planning to win the lottery and 11% expecting to be gifted money (likely through inheritance). These troubling statistics demonstrate that, without the benefits that more stable employment at established companies can offer, many young people will not be able to take care of themselves in the future.
And that’s just the long-term problem. In their day-to-day lives, freelancers and contract workers are completely reliant on the inconsistent market supply of gigs in order to survive. This problem is made even worse for low-income on-demand workers who end up logging unearthly “on call” hours while trying to make ends meet.
Change for the Future
The rise of the on-demand economy brings with it both positive and negative repercussions — that much is clear. But regardless of whether it is ultimately a good thing or not, the shift is fully in motion, and we Millennials need to be prepared for it. That means saving more for the future, as well as putting the onus on the government to implement laws that protect these workers.
With change and flexibility come chaos and instability, which means it’s time to adjust our well-established ways of thinking about jobs. If we do, the next time we hear about unemployment numbers, a vital, vibrant portion of the American economy won’t be left on the outside looking in.
Longneck and Thunderfoot offer thought leadership services to turn your company executives’ opinions and insights into authoritative content that starts meaningful sales conversations. Learn more about thought leadership here.
(Main image credit: Alejandro Escamilla/Unsplash)