The Gig Economy

“Gigs” or “side hustles” are usually short-term projects or jobs that people do to make extra money, but many Americans have turned gig work into their main source of income. According to the 2023 Upwork report, 64 million Americans are gig workers - a stunning 38% of the U.S. workforce! Thinking of joining the already 64 million Americans in the gig economy as an independent contractor or freelancer? Ameris Bank is here to help learn more about important things to know before diving in and the factors that have contributed to the rise. 

The pros and cons of gig work

There is a wide range of gig work from renting out a room on a short-term rental site and selling clothes online, to driving for a rideshare company, being a freelance writer or even teaching as an adjunct professor at a university. People have gravitated toward this type of work due to its flexibility and increase in independence. Gig workers can typically choose their own schedule which for many means working from home. On the other hand, since gig workers are most likely classified as self-employed for tax purposes, the majority don’t receive regular benefits like health insurance, retirement benefits or paid time off. 

Factors that have contributed to the rise of the gig economy

The recent rise of the gig economy is likely due to a few important factors:

• Technology: As technology advances and the number of gig workers increases, many companies’ applicant pools also have increased since they no longer have to hire based on someone’s proximity to their location. 
• Economic: For some employers, it is more cost effective to hire part-time workers during a busy time of year or for a specific larger project than to have full-time employees. Additionally, there has been an increase in the number of times people change careers compared to previous years, and people have also started to take on multiple positions as the cost of living has increased. 
• Environmental: The pandemic truly changed the way of the world and significantly increased the number of people working in these gig roles - from an increase in delivery services needed for those staying home to many losing their jobs, forcing them to turn to part-time positions.

What to know before entering the gig economy

There are always unknowns whenever you enter a new job or try something new and gig work is no different. If you are considering gig work, make sure to keep these things in mind before diving in.

1. Research how much you will make: You won’t be working for free so the most important thing is finding out how much you can expect to get paid. Rates may vary by experience, demand or location, and a cut in your pay may get deducted depending on your employer or the platform you are doing gig work through. Additionally, you’ll want to find out how often you are going to get paid so that you know when to expect each paycheck. This will not only help with bill payment scheduling, but also creating a revised budget and savings plan. Keep track of how much you’re spending or simply adjust your savings strategy with helpful savings calculators from Ameris Bank. 
2. Be prepared for potential costs: Some gig work may require you to foot the bill for certain expenses related to the job. For example, you may be responsible for expenses like car insurance, gas, and regular maintenance and repairs if you are transporting goods and services. Once you know how much you will be getting paid, deduct any of these costs from your estimated income to ensure there are no surprises. 
3. Keep taxes in mind: Since gig work isn’t your traditional 9-5 job, neither is how payroll taxes get handled. Normally, employees automatically get taxes withheld by employers from each paycheck, but that may not be the case with gig work. Remember to budget for taxes, as most gig workers are responsible for handling the math themselves. Learn how you can maximize and make the most of your tax refund.
4. Be aware of potential scams: Gig work is on the rise and scammers are unfortunately well aware of this. Be vigilant about what you click on and lookout for red flags. If you’re asked to share extensive personal information via email or over the phone, asked to pay money upfront, or if pay for a gig just seems too good to be true, it’s most likely a scam. Unfortunately, there is an increase in scams of all types and sometimes they are difficult to spot. 
5. Is gig work for you?: Times are changing and your typical 9-5 jobs aren’t the only way to make a living. The employment pool is shifting, and the gig economy is on the rise, especially since the pandemic.

If you are looking to get a side hustle started or maybe just want a little more information, connect with Ameris Bank’s knowledgeable team to help guide you through your journey. 

Published August 2024

The opinions voiced in this material are for general information only, and are not intended to provide specific advice or recommendations for any individual.