The Gig Economy Offers both Freedom and Challenges for the Workplace

The gig economy is here and is not going anywhere. The economy that offers both freedom to individuals provide a specialty service or product and a challenge to the traditional workforce.

What does Gig stand for? Gig is not an acronym, it is a word the government is borrowing from popular culture that refers to side hustles and additional work performed for supplemental income. The most popular gig work would be by artists, singers and musicians, but this work would also include delivery drivers, copywriters, digital designers, and those lending their services on online work platforms. Another growing type of gig work would be the temporary home and room rentals. 

How many people usually work in the Gig economy? With a rise in inflation rates and the cost of basic living not covered by basic employee wages many people have turned to supplementing their income with Gig work. The number of people engaged in this type of income generation was not closely calculated in previous years, but when after the pandemic was declared in March 2020, the Department of Labor opened up unemployment benefits to entrepreneurs, sole proprietors, IRS schedule C filers and self identified gig workers. This allowed the government to calculate those whose identified a loss of income because of their inability to work due to pandemic hardships such as venues they usually perform being closed down.

How much money can you earn doing Gig work? The gig economy offers an individual the freedom to earn as much and as little as they have time to manage. The beauty of gig work is the fact it is only limited by individual talent and time. With the development of online workplaces that allows gig workers to advertise one-off services many people are turning their talents into income.

Do you have to pay taxes on Gig work? Gig workers are essentially sole proprietors or independent contractors. It is important for the gig worker to keep good workers because the income must be reported to the IRS if they make over $400 annually after expenses whether they receive a 1099 report or not. For those rental income gigs, if they rent the home over 15 days in the year, then they must report the income,  So, even though they have the ability to make as much money as they want it is no longer offers the freedom to be money made under the table.

 What challenges are there for Gig workers and the traditional workforce? According to the Congressional Research Service report, “What Does the Gig Economy Mean for Workers” The gig economy raises new concerns about labor standards, legal implications, minimum wage, retirement savings, benefits, and health care coverage that is traditionally provided by employers to employees. Some U.S. lawmakers are pushing for legislation to provide portable benefits for temporary workers.

Are you a gig worker and need help with keeping accurate records? One of our certified representatives at Rhodes Porter can help.