What is a Gig Economy?

We’ve noticed over the past several months a new buzz phrase gaining steam: “the gig economy.” So just what is the gig economy, and how does it affect you as a recruiter?We first encountered the phrase back in August when Huffington Post printed an excerpt of Richard Greenwald’s book Labor Rising, The Past and Future of Working People in America. According to Greenwald, “gig economy” refers to a trend that has emerged over the past few years where workers “jump from job to job, career to career, project to project working as consultants.” In the excerpt, he refers to the gig economy as “the most fundamental economic shift of the past 50 years” and compares it to the 1950′s when a large portion of the American workforce shifted from blue collar to white collar work.Now the phrase “gig economy” has popped up again in a report fromMarketplace, a public radio program that focuses on business and the economy. According to Marketplace, a third of the American workforce is working a non-traditional or contract positions. As a result, “the idea of working nine-to-five for 40 years is going the way of the pension and the gold watch.”Freelancers Union CEO Sara Horowitz told Marketplace that the gig economy represents a major shift in the labor market. In the past, freelance and contract work were only used in professions such as media and graphic design, but now Horowitz says the gig economy has touched every profession.The struggling economy has been a major driver of this trend, economist Ken Goldstein told Marketplace.“It not only relieves them of having to pay for the whole benefit package, but also, if things indeed worsen, they can let these people go because there’s no commitment to keeping these people,” Goldstein said.In other words, client companies need cost savings and workforce flexibility, especially as they face healthcare reform and the potential fiscal cliff. What this means for recruiters is that more and more clients may be wanting to fill open positions with contractors rather than direct hires. If you are not offering contract staffing, they may go to your competitors to fill those positions.