Does the Gig Economy Mean the End of the Steady Paycheck?

January 31, 2017

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The way we work is changing. These days, more and more Americans are participating in what’s been dubbed the gig economy. They’re saying goodbye to traditional employment arrangements in favor of something new. But, these workers aren’t just leaving behind sullen coworkers and long commutes. For many, this shift also means the end of regular paychecks and the peace of mind that comes with them.

Recently, a report from The Century Foundation, A New Safety Net for An Era of Unstable Earnings, examined the changing landscape of employment and what it means for workers. Here are a few key findings:

Earnings instability is a real problem for many American households.

Unemployed workers aren’t the only ones who worry about making ends meet in the current economy. Underemployment and low pay are also a problem. Those who have alternative work arrangements frequently face earnings instability. These workers can expect to experience huge changes in earnings month-to-month, which causes a host of difficulties. On average, the report found, these workers experience monthly earnings fluctuations of $2,300 – $2,600 over a five year period. Gig-economy workers benefit from increased flexibility, but they also have to face greater economic insecurity.

The Great Recession caused temporary economic instability for many.

The report found that many American households saw significant changes related to their earnings at some point during the Great Recession. Although many workers have regained a measure of economic security since, this period really took its toll. The report found that between the years 2008 and 2013, three out of five primary earners (workers who are the top earner in their household) experienced a 50 percent drop in their month-to-month earnings at some point. It takes a while for the typical family to recover from such a hit, especially when it isn’t anticipated.

Do You Know What You're Worth?

Gig economy workers experience more earnings instability than others.

The report found that contingent workers (freelance, temporary, on-call, self-employed, or other members of the nontraditional workforce) are nearly twice as likely to experience “earnings volatility” than other workers with standard arrangements. As more and more workers move into this category, economic programs and policies should adjust to meet these workers’ changing needs.

“We’re just scratching the surface to understand how to come up with a better set of market-based and government solutions,” Andrew Stettner, one of the authors of the report, told In These Times. “We’ve created a whole new view of the world that now applies to only about half the working people in American. We have this huge divide we need to hammer on. It should concern everyone.”

For more information, read the full report: A New Safety Net for An Era of Unstable Earnings.