Discover how the Gig Economy has evolved further and opened the door to new opportunities.
Frequently, working with contract and freelance workers means that you're working with a small-business owner who is also a skilled professional. Entrepreneurship and contract work go hand-in-hand, and today more people are taking advantage of that opportunity.
Historically, contract workers filled specialized roles in a few areas like marketing, IT, and administration departments. For many segments of the working population, freelancing opportunities were not available. However, as the “gig economy” has made contract work open to a broader population, it has also revealed many previously unrealized benefits of freelancing.
According to two recent studies, when communities see growth in freelance and contract work opportunities, entrepreneurship increases while unemployment claims fall.
For the study “Launching with a Parachute: The Gig Economy and Entrepreneurial Entry,” researchers studied nearly 1,200 U.S. cities at the point when ride-hailing services entered the market. They found that the arrival of these businesses is often a gateway to more gig economy opportunities beyond ride-share to include broad B2B or B2C task fulfillment services.
Following the arrival of the gig economy in a city, the research found “an increase of 4-6% in new business registrations.” Small Business Administration loans made to newly incorporated businesses also rose about 5% after ride-hailing became available.
According to the report, “findings suggest that the arrival of the platform-enabled, on-demand gig economy, with its flexible work hours and low entry barriers, plays a substantial role in spurring entrepreneurial entry. It does so by providing a hedge against income volatility in the form of income fallbacks, and by providing a potential income supplement to those who engage in entrepreneurial activity.”
The research found that contract work helps people overcome the primary barriers to entrepreneurship, which are a lack of funding and an inability to secure business insurance. Before these types of freelancing opportunities were available, most people who needed supplemental income had to turn to low-income jobs with rigid hours.
“I’m not surprised by these findings,” said Elizabeth Eiss, Founder and CEO of the talent curation and freelance recruiting platform ResultsResourcing. “I have worked closely with top-quality contract talent for years by helping to match freelance candidates to jobs posted by our clients. I am consistently impressed by the drive and determination exhibited by these business-owner workers.”
A second report, Gig-Labor: Trading Safety Nets for Steering Wheels, found that areas with a thriving freelance scene can help lower the demand for unemployment insurance (UI) while reducing both credit card debt and delinquency rates. According to the report, workers who have the option to turn to gig-economy and contract work “are less likely to apply for UI benefits, rely less on household debt, and experience fewer delinquencies.”
Both of these reports indicate that freelancing provides opportunities beyond the old-world, stereotypical view of someone hoping from gig to gig. Contract work can promote entrepreneurial spirit both through job opportunities and supplemental income. These opportunities also benefit the local community through lowered unemployment rates and less unpaid debt – as well as generating more economic activity in the community.
“Every business owner knows the drive, determination, and dedication it takes to run a successful business,” said Eiss. “Since contract workers are, increasingly, established small businesses, these freelancers are motivated to do reliably great work on every job they take because their brand depends on it.”
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