A young woman wearing headphones is sitting at a desk researching the gig economy with a laptop and tablet, focused on her work. She is writing with a stylus on the tablet. The background features indoor plants.

What do 58 million Americans have in common? They’re part of the gig economy, and they’re transforming the way business is conducted and service is provided across industries, from food service to finance. 

We’ll give you the scoop on the gig economy and examine why it has exploded in recent years. 

What is the gig economy?

‘Gig economy’ is a term that describes the segment of our economy made up of non-full-time jobs, which are also known as gig work. The gig economy encompasses many different types of labor, including temp work, freelancing, contract work, side hustles, and more–essentially, anything that’s not a permanent W2 job. Gig work is usually short-term.

The gig economy offers benefits for workers and businesses alike. Gig workers enjoy greater flexibility and more control over their time and the type of work they do. Companies can tap into the gig economy to gain access to specialized skills at an affordable price and adapt quickly to shifts in the market. 

Characteristics of the gig economy


Workers in the gig economy are autonomous, meaning they are not employees of the businesses or customers they serve. The terms of work within the gig economy, like pricing, hours, and commitment level, are dictated largely by workers rather than companies. 


Technology has made it incredibly easy for people to work from anywhere. It also facilitates connections between customers who are in need of a service and workers who possess the required skills. Thus, technology has been a significant driver of the gig economy’s expansion. 


Gig work is highly transactional–a service is performed, and a payment for that precise service is issued. This contrasts with most full-time jobs where an employee’s workload and duties may ebb and flow over time while their salary remains consistent. 


Because of gig work’s transactional nature, it’s also very flexible. A person in the gig economy only works when their skills are needed and can dictate the times that they’re available. In a full-time job, on the other hand, most workers must be present for a specified time frame regardless of how much work they must do. 

The gig economy by the numbers

McKinsey’s recent American Opportunity Survey gives us some great insights into who makes up the gig economy. 

According to the survey, 36% percent of employed people, or about 58 million Americans, are independent workers. That’s a big jump from 2016, when around 27% of workers were independent. Most of these people say gig work supplements another job or job rather than being their primary source of income. 

Gig economy participants skew younger, with the 18- to 24-year-old age bracket accounting for the highest percentage of gig workers. The gig economy is also fueled mainly by immigrants, with nearly 60% of first-generation Americans saying they work independently. 

Payroll company ADP analyzed the gig economy using payroll data on 1099 workers and temp employees. The study found that nearly all of the 75,000 companies analyzed used gig labor in some form, proving that the gig economy is not only expanding but is almost universal. 

Eight reasons the gig economy is expanding

Workers demand flexibility

Flexibility ranks side by side with money as the most important factor today’s workers look for when choosing a job. If they can’t get it from a traditional employer, more and more people are turning to gig work to find the flexibility they’re looking for. A quarter of gig economy participants say flexibility is the main reason they’re independent. 

There’s a low barrier to entry

While this doesn’t apply to all gig work–some doctors, after all, are considered independent contractors–a large portion of jobs in the gig economy can be completed with little to no experience. Gig work, like giving rides, shopping for groceries, and delivering food, is accessible to most people. 

It helps companies adapt quickly

If the pandemic taught businesses anything, it was that being able to pivot in response to the market is key to survival. Gig workers help companies adapt to the shifts they’re experiencing, like scaling up the workforce in response to rising demand or bringing on consultants to fill expertise gaps during periods of rapid growth. 

It helps businesses get off the ground

It’s never been easier to start a business, and there are more entrepreneurs today than at any point in recorded history. The gig economy allows new business owners to access specialized skills as the business requires them and only pay for what they need. This keeps overhead low and allows fledgling companies to invest more in growth. 

It can supplement traditional income

A dollar doesn’t go as far as it used to. For example, according to the USDA ERS, the average U.S. household’s grocery bill rose 11% from 2021 to 2022, an unprecedented year-over-year increase. As a result, more people are working multiple jobs to make ends meet. Gig work allows people to supplement traditional W2 income on their terms, working when it’s convenient according to their schedule and other obligations. 

It makes life more convenient

People have been outsourcing tedious tasks for as long as there have been housekeepers, but technology makes the process of paying for personal assistance more seamless than ever before. Thanks to the gig economy, you can outsource everything from picking up your dry cleaning to putting together Ikea furniture, and busy people are happy to pay for the convenience.

It’s enjoyable

Believe it or not, personal enjoyment is a huge motivator for the gig economy’s growth. In the McKinsey survey we mentioned earlier, a quarter of respondents said their main reason for doing independent work is because it’s enjoyable. 

Gig workers are also far more optimistic than their W2 peers. Independent workers have an average score of 114 on McKinsey’s Economic Opportunity Index, which rates a person’s perception of their economic prospects on a scale of 1 to 200. The national average is 97. 

It’s lucrative

The very name “gig” work calls to mind the image of a moonlighting musician playing for tips in a local bar. In reality, many gig workers make far more than a few extra bucks in a tip jar. One-third of independent workers earn more than $150,000 a year. This includes lawyers, financial professionals, healthcare workers, and other specialists who operate as independent contractors. 

Potential downsides of the gig economy

The gig economy is not without its negative aspects. Here are a few downsides that come with the rise of independent work. 

Deterioration of traditional workplace relationships

There’s something to be said about the camaraderie that develops among a team of coworkers and the trust that forms between a good manager and their reports. It’s what makes coming to work worthwhile during challenging times. With the rise of the gig economy, these relationships have taken a hit. In addition to being detrimental to company culture, the feeling of being all alone can be damaging to independent workers’ mental health. 

Loss of transferred knowledge

When you work in an office full of people, you can’t help but overhear conversations where your coworker tactfully handles a problematic client or your manager delivers constructive criticism. These soft skills, which help make you a more well-rounded worker, are often learned by osmosis, but that doesn’t happen when you’re working by yourself from your kitchen table. 

There’s also the loss of institutional knowledge–training, information, and skills that are methodically handed down from senior workers to more junior ones. This puts companies at a disadvantage and prevents younger workers from receiving valuable mentorship. 

Devaluation of employees

Many companies have already scaled back their benefits from what they used to be. Pensions, which were once common perks, are mostly a thing of the past. Because companies don’t have to offer gig workers any benefits or protections, some argue that the gig economy encourages organizations to cut corners even further, which can be harmful to all types of workers. 

Now that you know the ins and outs of the gig economy, are you interested in making the leap into independent labor? These posts can help:

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Pete Newsome is the founder of zengig, which he created after more than two decades in staffing and recruiting. He’s also President of 4 Corner Resources, the Forbes America's Best Staffing and Recruiting Firm he founded in 2005, and is a member of the American Staffing Association and TechServe Alliance. In addition to his passion for staffing, Pete is now committed to zengig becoming the most comprehensive source of expert advice, tools, and resources for career growth and happiness. When he’s not in the office or spending time with his family of six, you can find Pete sharing his career knowledge and expertise through public speaking, writing, and as the host of the Finding Career Zen & Hire Calling podcasts. Connect with Pete on LinkedIn