Hot Job Market for Giggers

May lead to lukewarm overall economy

Rural Northern Colorado resident Leslie Lovejoy worked for decades as a freelance graphic designer and massage therapist, enjoying the flexibility that gig work gave her schedule. That was until she and her husband, a self-employed house painter, applied for a home construction loan. The banker told Lovejoy she needed to show standard income from a “real” job to qualify for the loan.

“When you are doing gig-type work, you are sacrificing a lot, and unfortunately that’s where the job growth has been,” said Jessica Valand, director of Workforce Development for Northwest Colorado with the Colorado Department of Labor & Employment (CDLE).

Working in the gig or freelance economy is appealing to many self-motivated individuals due to the flexibility, variety and work-life balance. The fourth annual Freelancing in America study released in October, commissioned by Freelancers Union, notes the freelance workforce grew at a rate three times faster than the U.S. workforce overall since 2014 and estimates that freelancers represent 36 percent of the current U.S. workforce.

A gigger may work as anything from web designer to DJ to Uber driver, and some workers paste together a decent salary wearing different hats in more than one occupation. Or consultants in skilled areas might excel despite navigating the tricky waters of different clients.

"Part of what is driving the increase in 1099s (form of payment) is a growth in part-time jobs. Workers need to fill those hours with income somehow,” Valand noted. “A growth in part-time, typically un-benefitted jobs has a direct relationship to the need for workers to engage in informal earning platforms to plug the holes.”

Valand reasons that the large growth in the gig economy might not be healthy for the overall economy long term. Labor laws and employee protections in the U.S. have not kept up with the gig revolution. She points to a common benefit in the European Union where businesses contribute retirement funds to contingent workers through an Individual Savings Account that follows the employee across jobs.

“A lot of people don’t necessarily understand that when you are doing a gig-type job, you are not an employee in the traditional sense,” said Valand, who earned a master’s degree in economic development from the University of Denver. “The difference for someone who is employed, as compared to someone who is earning income but isn’t anyone’s formal employee, is huge – both in terms of total compensation and their ability to access basic worker protections like unemployment insurance, health care or Family Medical Leave.”

Freelance workers may enjoy working from home in their sweat pants with only their dog as an officemate, but those same workers may get hit at tax time since a 1099-MISC does not include withholding. They may suffer paying for health care coverage or have to depend on a spouse’s benefits. They must be proactive money managers without the safety net of sick leave or employer-sponsored 401(k) plan.

Business owners may save about 30 percent in benefit costs when hiring independent contractors instead of regular employees, but utilizing consultants may lead businesses to struggle with attracting and keeping good talent, Valand said. She encourages employers to think in terms that one “real dynamo” full-time benefitted employee can provide the same work outcome as three part-timers. That full-time employee may be more likely to contribute to the community or buy a house.

“What is arguably not great for either workers or business is a proliferation of low-wage, part-time, un-benefitted jobs that are increasingly hard to fill or retain competent staff,” Valand said, noting the problem is pronounced in Colorado’s mountain resort communities with historically low unemployment rates. According to CDLE statistics from October, 81,366 people were unemployed in Colorado with 214,890 job openings. 

Steamboat Springs Restaurant Group owner Rex Brice, whose company includes seven restaurants and a catering service, could depend on seasonal employees in his tourist-driven environment, but he tries to hire as many full-time employees as possible with some level of benefits even if the employees serve across several restaurants.

“There is no question that we would rather have one benefited, full-time employee than multiple part time,”
Brice said. “On the front end it may appear it is more costly to employ that person, but on the back end it actually is not, because of training, turnover, ability and skill to do the job, efficiency and quality of work.”

Valand said she is hopeful for future solutions “that promote and protect the middle class, ones that lead to a strong workforce in a new economy that is increasingly based around gig-type work.”

Categories: Economy/Politics