Gig work is getting less profitable
The gig economy is booming in the US, but many workers have found it challenging to make decent money.
Jonathan Raa/NurPhoto
Nearly 100 million Americans could be working in the gig economy by 2027.
While it provides a flexible way to make money, experts say it's risky to rely on it.
Inconsistent pay and unpredictable algorithms can disappoint some workers.
Americans are flocking to the gig economy for extra cash — but it's not working out for all of them.
While it's unclear how many people work as delivery drivers, babysitters, resellers, freelance writers, or one of many other gig jobs, experts told Business Insider that the number is growing — and that there's no sign of it slowing down.
While these workers are likely happy to have extra income in their bank accounts, the gig economy might not be the solution to people's finances that some think it is. That's because gig work can come with unpredictable pay that's at the mercy of customer demand, worker supply, and secretive company algorithms.
The gig economy is a roughly $1 trillion industry in the US, according to research published earlier this year by Robert Peterson, the John T. Stuart III Centennial Chair in Business Administration at The University of Texas at Austin, and John Fleming, who wrote the book "Ultimate Gig: Flexibility, Freedom & Rewards." It's expected to grow between 16% and 17% each year, four times faster than the traditional economy, their research shows. By 2027, the research projects nearly 100 million Americans — roughly 40% of the adult population — will participate full-time or part-time in the gig economy.
The delivery app Shipt released a delivery challenge featured on Roblox's popular "Driving Empire."
It felt like gamified gig work, with the mindset of a "Fast & Furious" driver racing against the clock.
But the game also serves as an interesting parallel for recent debates around the gig-work economy.
Back-to-school shopping is just around the corner — that means sharpened pencils, fresh rubber erasures, pristine notebooks, and loose-leaf paper.
It can be an arduous task for parents and their kids. But the delivery company Shipt has a game with Roblox that the company says will exchange the stress of back-to-school shopping for a simulated experience parents and their kids can enjoy.
In the game, which is featured as a challenge on Roblox's popular racing game, "Driving Empire," gig work is gamified. Players race against the clock to deliver school-supplies orders to customers — essentially playing the role of a Shipt delivery worker.
The game may have been designed for family-friendly fun, but I couldn't help but think about the debates circling the gig-work economy. Things are heated between apps and workers over how they should be paid and between workers and customers over how much they should tip.
"The purpose of Shipt's new Driving Empire game is to create a unique digital experience that builds modern-day connectivity for millennial parents and their families on the global Roblox platform," a Shipt spokesperson said.
Shipt did not answer questions regarding its gig workers.
The delivery app, owned by Target, partnered with game developer Voldex to create the game, which is available through Friday, alongside deals on school supplies, snacks, and household items that run through Labor Day.
The game from Shipt follows in the footsteps of other retailers that have been tapping into metaverse marketing through Roblox, a gaming platform that has a largely child-age audience. Home Depot, Walmart, and Chipotle have all released gaming experiences on Roblox, where players could make Chipotle burritos or use Home Depot supplies to build birdhouses.See more
"The economy has changed so much in that people used to drive for Uber for nine hours so they could have $100 so they can go to the bar this weekend with their friend," Charles Rosenblatt, president of fintech company PayQuicker, which helps facilitate payments to gig workers, told Business Insider. "Now, I'm going to drive because my electricity bill went up and I don't have the money to pay my bills anymore and need to supplement my income in a separate way."
Related video: AI should make the US economy stronger, create more jobs: Brad Jacobs (Fox Business) Duration 3:58 View on Watch
Business Insider spoke with experts about the state of the US gig economy, where it's heading, and what people should know before diving in.
Benefits of gig work
Across all demographics, gig workers are looking to have greater flexibility, diversify their income stream, meet new people, and explore interests in their free time. But many who have replaced their office jobs with various gig jobs haven't quite figured out how to make it work for them. Many have gone into gig work thinking they can make ends meet by working one or two gigs, but have struggled to make enough to pay bills or plan for the future.
Among gig workers, 60% work multiple gigs — 23% work three or more — spending around four to eight hours per week on a job, according to the research. Additionally, less than 10% of gig workers make over $2,000 a month.
"The great majority of people are looking at how better to leverage their time," Fleming told BI, referring to gig workers.
'The house always wins'
Some gig workers don't realize how little they're earning, Alexandrea Ravenelle, assistant professor of sociology at the University of North Carolina, told Business Insider. That's because it can be difficult for gig workers, particularly ride-hailing and delivery drivers, to calculate their true profits.
When Ravenelle speaks with students who work as gig drivers, she said they typically don't realize how little they take home once expenses like gas, depreciation, maintenance, and insurance are tallied up. Vehicle expenses can amount to between $4 to $8 per hour, gig drivers previously told Business Insider, compared to hourly pay from as low as $9 to $12 an hour to as high as $23 to $28 an hour.
"I end up pointing out that they would quite frankly be better off getting a job at McDonald's," Ravenelle said.
In addition to uncertain pay, gig workers can face fluctuating customer demand and competition, along with tweaks to platform algorithms that can change the rules of the game. It's why gig workers should be careful of growing too reliant on any single platform, experts told Business Insider.
"When it comes to the gig economy, the house always wins," Ravenelle said. "You might think that you're making plenty of money, but at some point, you'll have something that goes wrong. You will get deactivated from that platform, you'll move down in the queue, or you'll get impacted by a change to the algorithm."
About 43% of gig workers surveyed by Peterson and Fleming said that less than 10% of their annual household income came from gig work.
Workers also need to be more strategic about seeking out opportunities, particularly those that offer upward mobility or better pay and bonuses, as opposed to just settling on one or two gig jobs, Rosenblatt said. This could entail taking up gig work at a traditional company — Fleming estimates over 50% of traditional companies are engaging gig workers.
Peterson told BI as the gig economy grows, it becomes increasingly unclear who will train these workers. For example, many companies won't invest the time and resources into training a worker who will only work for eight hours a week and colleges don't frequently inform students on how to best navigate gig work, Fleming said.
Peterson said he anticipates more companies adopting internal talent platforms to get employees to bid on jobs to make extra money, instead of having to train and keep track of outside employees. This potentially could lower the number of gig employees working in more traditional sectors.
Still, such shifts in the gig economy could push workers more into building their own brands or products, Rosenblatt said.
Where gig work is heading
The experts Business Insider spoke to said that they expect increasingly more people to work three to five gigs that touch on their passions. For example, people don't need to work 40 hours a week for a ride-hailing company when they can devote 10 hours to that and reserve the other 30 for writing, photography, or real estate.
"Part of that is the income piece, but part of that is people basically curating their life," Rosenblatt said. "It's a lot easier for someone to go and do 10 extra work hours driving for Uber or DoorDash or selling Tupperware than going to your boss and asking them for a 20% raise so you can feed your family."
What's more, people are increasingly looking to gig work for instant pay gratification, Rosenblatt said. About 83% of gig workers surveyed stated that when looking for new gigs, it's important to be paid immediately for performance, the report found.
Rosenblatt anticipates affiliate sales and other influencer-type work that can be done from home will grow over the next few years, coupled with a pivot away from gig jobs like delivery driving that require extra expenses like vehicle upkeep. He also expects an increase in direct selling, whether it's for coffee or CBD.
"I don't see gig work disappearing," Ravanelle said. "I see it continuing to grow, and I think that we are going to need to really rethink our strategy as a society in terms of ensuring that workers have economic stability and then have access to benefits if their only income is coming from 1099 work."
Nearly 100 million Americans could be working in the gig economy by 2027.
While it provides a flexible way to make money, experts say it's risky to rely on it.
Inconsistent pay and unpredictable algorithms can disappoint some workers.
Americans are flocking to the gig economy for extra cash — but it's not working out for all of them.
While it's unclear how many people work as delivery drivers, babysitters, resellers, freelance writers, or one of many other gig jobs, experts told Business Insider that the number is growing — and that there's no sign of it slowing down.
While these workers are likely happy to have extra income in their bank accounts, the gig economy might not be the solution to people's finances that some think it is. That's because gig work can come with unpredictable pay that's at the mercy of customer demand, worker supply, and secretive company algorithms.
The gig economy is a roughly $1 trillion industry in the US, according to research published earlier this year by Robert Peterson, the John T. Stuart III Centennial Chair in Business Administration at The University of Texas at Austin, and John Fleming, who wrote the book "Ultimate Gig: Flexibility, Freedom & Rewards." It's expected to grow between 16% and 17% each year, four times faster than the traditional economy, their research shows. By 2027, the research projects nearly 100 million Americans — roughly 40% of the adult population — will participate full-time or part-time in the gig economy.
The delivery app Shipt released a delivery challenge featured on Roblox's popular "Driving Empire."
It felt like gamified gig work, with the mindset of a "Fast & Furious" driver racing against the clock.
But the game also serves as an interesting parallel for recent debates around the gig-work economy.
Back-to-school shopping is just around the corner — that means sharpened pencils, fresh rubber erasures, pristine notebooks, and loose-leaf paper.
It can be an arduous task for parents and their kids. But the delivery company Shipt has a game with Roblox that the company says will exchange the stress of back-to-school shopping for a simulated experience parents and their kids can enjoy.
In the game, which is featured as a challenge on Roblox's popular racing game, "Driving Empire," gig work is gamified. Players race against the clock to deliver school-supplies orders to customers — essentially playing the role of a Shipt delivery worker.
The game may have been designed for family-friendly fun, but I couldn't help but think about the debates circling the gig-work economy. Things are heated between apps and workers over how they should be paid and between workers and customers over how much they should tip.
"The purpose of Shipt's new Driving Empire game is to create a unique digital experience that builds modern-day connectivity for millennial parents and their families on the global Roblox platform," a Shipt spokesperson said.
Shipt did not answer questions regarding its gig workers.
The delivery app, owned by Target, partnered with game developer Voldex to create the game, which is available through Friday, alongside deals on school supplies, snacks, and household items that run through Labor Day.
The game from Shipt follows in the footsteps of other retailers that have been tapping into metaverse marketing through Roblox, a gaming platform that has a largely child-age audience. Home Depot, Walmart, and Chipotle have all released gaming experiences on Roblox, where players could make Chipotle burritos or use Home Depot supplies to build birdhouses.See more
"The economy has changed so much in that people used to drive for Uber for nine hours so they could have $100 so they can go to the bar this weekend with their friend," Charles Rosenblatt, president of fintech company PayQuicker, which helps facilitate payments to gig workers, told Business Insider. "Now, I'm going to drive because my electricity bill went up and I don't have the money to pay my bills anymore and need to supplement my income in a separate way."
Related video: AI should make the US economy stronger, create more jobs: Brad Jacobs (Fox Business) Duration 3:58 View on Watch
Business Insider spoke with experts about the state of the US gig economy, where it's heading, and what people should know before diving in.
Benefits of gig work
Across all demographics, gig workers are looking to have greater flexibility, diversify their income stream, meet new people, and explore interests in their free time. But many who have replaced their office jobs with various gig jobs haven't quite figured out how to make it work for them. Many have gone into gig work thinking they can make ends meet by working one or two gigs, but have struggled to make enough to pay bills or plan for the future.
Among gig workers, 60% work multiple gigs — 23% work three or more — spending around four to eight hours per week on a job, according to the research. Additionally, less than 10% of gig workers make over $2,000 a month.
"The great majority of people are looking at how better to leverage their time," Fleming told BI, referring to gig workers.
'The house always wins'
Some gig workers don't realize how little they're earning, Alexandrea Ravenelle, assistant professor of sociology at the University of North Carolina, told Business Insider. That's because it can be difficult for gig workers, particularly ride-hailing and delivery drivers, to calculate their true profits.
When Ravenelle speaks with students who work as gig drivers, she said they typically don't realize how little they take home once expenses like gas, depreciation, maintenance, and insurance are tallied up. Vehicle expenses can amount to between $4 to $8 per hour, gig drivers previously told Business Insider, compared to hourly pay from as low as $9 to $12 an hour to as high as $23 to $28 an hour.
"I end up pointing out that they would quite frankly be better off getting a job at McDonald's," Ravenelle said.
In addition to uncertain pay, gig workers can face fluctuating customer demand and competition, along with tweaks to platform algorithms that can change the rules of the game. It's why gig workers should be careful of growing too reliant on any single platform, experts told Business Insider.
"When it comes to the gig economy, the house always wins," Ravenelle said. "You might think that you're making plenty of money, but at some point, you'll have something that goes wrong. You will get deactivated from that platform, you'll move down in the queue, or you'll get impacted by a change to the algorithm."
About 43% of gig workers surveyed by Peterson and Fleming said that less than 10% of their annual household income came from gig work.
Workers also need to be more strategic about seeking out opportunities, particularly those that offer upward mobility or better pay and bonuses, as opposed to just settling on one or two gig jobs, Rosenblatt said. This could entail taking up gig work at a traditional company — Fleming estimates over 50% of traditional companies are engaging gig workers.
Peterson told BI as the gig economy grows, it becomes increasingly unclear who will train these workers. For example, many companies won't invest the time and resources into training a worker who will only work for eight hours a week and colleges don't frequently inform students on how to best navigate gig work, Fleming said.
Peterson said he anticipates more companies adopting internal talent platforms to get employees to bid on jobs to make extra money, instead of having to train and keep track of outside employees. This potentially could lower the number of gig employees working in more traditional sectors.
Still, such shifts in the gig economy could push workers more into building their own brands or products, Rosenblatt said.
Where gig work is heading
The experts Business Insider spoke to said that they expect increasingly more people to work three to five gigs that touch on their passions. For example, people don't need to work 40 hours a week for a ride-hailing company when they can devote 10 hours to that and reserve the other 30 for writing, photography, or real estate.
"Part of that is the income piece, but part of that is people basically curating their life," Rosenblatt said. "It's a lot easier for someone to go and do 10 extra work hours driving for Uber or DoorDash or selling Tupperware than going to your boss and asking them for a 20% raise so you can feed your family."
What's more, people are increasingly looking to gig work for instant pay gratification, Rosenblatt said. About 83% of gig workers surveyed stated that when looking for new gigs, it's important to be paid immediately for performance, the report found.
Rosenblatt anticipates affiliate sales and other influencer-type work that can be done from home will grow over the next few years, coupled with a pivot away from gig jobs like delivery driving that require extra expenses like vehicle upkeep. He also expects an increase in direct selling, whether it's for coffee or CBD.
"I don't see gig work disappearing," Ravanelle said. "I see it continuing to grow, and I think that we are going to need to really rethink our strategy as a society in terms of ensuring that workers have economic stability and then have access to benefits if their only income is coming from 1099 work."
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