The Evolution Of Work

The Normalization Of Self-Employment

As the Gig Economy Comes of Age, Can Choice and Need Find a Working Balance?

by Sir Nigel Wilson and John Godfrey

Sir Nigel Wilson was knighted in the Queen’s New Year’s Honours list 2022 and is currently a member of the UK government’s Levelling Up Council. He has been a member of the Prime Minister’s Business Advisory Group for two Prime Ministers and has chaired and served on a variety of UK government commissions. He was appointed Group Chief Executive of Legal & General in 2012 and holds a PhD in Economics from Massachusetts Institute of Technology (MIT). John Godfrey is Director of Levelling-up at Legal & General Group, Having joined Legal & General in 2006, he served as Head of Policy for Prime Minister Theresa May, where from 2016-2017, he and his team were responsible for advice on a broad range of UK domestic and Brexit-related issues. For more on Legal & General’s research on the U.S. Gig Economy, please visit our research hub here

As the gig economy expands, the normalization of self-employment has shifted the center of gravity for American workers and employers alike. This new relationship to work delivers changes in both personal and financial arenas as gig workers navigate a rejiggered and constantly evolving model of employment, tipping the norm at least in the U.S. to work as entrepreneurship, versus simply “a job.” As we noted in the first released part of our research on gig work, the gig economy is here to stay—it has become an established standard.

But as a model for work, has the gig economy reached its optimal form? We believe there’s some way to go. In the second part of our study,[1] we zeroed in on survey responses that highlighted the pros and cons of gig work. While there was much positive news to report, survey respondents also pointed to the drawbacks of gig work. We hope our findings will help define worker needs and outline a blueprint for the gig economy’s next stage of evolution—how it can become sustainable for those in it and grow into a work model that benefits American workers and businesses alike, shedding some of the negative factors that critics have laid out.

Grown… And Growing

As we’d previously observed, the number of gig workers in America isn’t only sizable—it’s poised to grow considerably over the next several years. Currently 59 million people fall under the broad category of “gig worker,” and this number is projected to rise to 85.6 million by 2027. In today’s America, if one were to get together with a small group of friends, chances are that one or more would be currently engaged in gig work of some kind.

In examining the identities and aspirations of gig workers across all income brackets, our research suggested that self-employed worker satisfaction remains remarkably high. In the short term, less than one in ten (9 percent) showed an immediate desire to take up, or return to, traditional full-time employment. A clear majority of participants saw gig work not just as a temporary stop-gap—68 percent envisioned themselves doing gig work for the foreseeable future. These findings challenge the most frequently heard criticism aired by gig work skeptics: that these workers were pushed into the gig economy out of necessity and that they’d much prefer to be employees. In fact, most of the workers we surveyed weren’t in the gig economy because they couldn’t find traditional employment: it was a conscious choice.

Motivations for workers to enter the gig economy are various – indeed, it’s hard to pin it down to any one factor or circumstance. They are as diverse as gig workers themselves. While 19 percent of participants chose gig work because they eschew corporate settings, a sizable portion of respondents (35 percent) realized they could make more money freelancing than by working a “regular” job. This figure balloons to 54 percent when examining the segment that earned more than $100,000 annually. Topping the list of motives was flexibility—increasingly, modern Americans want to tailor their work life to life outside work. Moving location and not wanting to work unreasonable hours also factored in. But in some cases, especially for the highest paid, gig work means grinding to maximize financial gain; for others, ‘flexibility’ means being able to spend as much time as possible with friends and family—gig work gives them the freedom to do so.

Quintessentially American

Motivations for workers to enter the gig economy are various – indeed, it’s hard to pin it down to any one factor or circumstance. They are as diverse as gig workers themselves...

Despite an inherent level of insecurity, the rising preeminence of gig work in this country makes more sense when viewing the practice as “quintessentially American.” The United States was founded on the ideals of independence, freedom, and self-reliance, and gig work can embody these principles. Many of today’s American gig workers exist as quasi-small business owners—able to control their own rates, hours, and with whom who they work. By comparison, the United Kingdom—a country economically similar to the United States—has a much smaller proportion of its labor force, only 6.2 percent of the population, employed in the gig economy.

Nonetheless, self-reliance can be a double-edged sword. Some gig workers we spoke with take pride in not having an employer to dictate their rates and schedule—but then there are others who point to the lack of retirement savings and health insurance contributions that employer could have provided. More than two-thirds (67 percent) of all gig workers surveyed claimed that not having access to retirement plans was a key drawback to making their living this way.

Americans are notoriously bad at saving for retirement—according to the Federal Reserve, only 36 percent of American adults say their retirement savings were on track for fulfilling their life goals. The pandemic has further exacerbated Americans’ retirement troubles. A 2021 study concluded that one-third of all citizens who planned to retire were delaying these plans due to losses suffered from Covid-19.

Inherently Exploitative?

There are also significant concerns among gig workers when it comes to health insurance, as 62 percent of those surveyed resented having to pay for their medical care out of pocket. Critics of the gig economy see the lack of health insurance and retirement savings as evidence of gig work being inherently exploitative—they view companies such as Uber and Grubhub using buzzwords like freedom, independence, and flexibility as a shiny facade hiding the precarious and overburdened nature of these companies’ employees.

American legislators are looking to remedy the inherent insecurities in the model, attempting to make it easier for gig workers to receive health care in an efficient and cost effective way. Thanks to the American Rescue Plan (ARP) passed in March of 2021, enrollment on Stride (a benefits platform for gig workers) was six times as high in April 2021 as the year before. Since the enactment of ARP, the price of health insurance premiums for rideshare and delivery workers has plummeted to from $171 to $80. This has led to independent contractors choosing higher quality plans—60 percent are now enrolling in Silver, Gold, or Platinum plans, up 33 percent since before ARP.

The insurance industry itself has also evolved to provide gig workers with more comprehensive benefits—partly to shrug off criticism from industry skeptics, partly to create a more satisfied and therefore loyal workforce. For example, Fiverr’s original business model was a platform where creatives could offer their services for $5. However, not unlike Etsy, over the past several years Fiverr has evolved into a fully professional freelance marketplace. The company gives independent contractors the path to comprehensive benefits by partnering with Wealthsimple for retirement savings, EHealth for health insurance, and Visor for tax assistance. These strategic partnerships have created a sustainable workforce that casts work at Fiverr as dignified, long-term employment rather than a side hustle.

We see the next several years as pivotal to the health and culture of the gig economy. Rapid fluctuations in the stock valuations of Uber and other gig work providers have cast doubts on whether these organizations can balance being profitable in the long term while providing worker satisfaction. Our study has certainly identified flaws in the gig economy, but the research also points to a bright future for the emerging work model, in the main. We hope that this new era of labor in America ushers in an increased sense of flexibility, transparency, and profitability for the gig economy—a balance between choice and need.




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