A new sort of technological marketplace that has been growing significantly since 2010, the gig economy has proven to play an important role in the lives of millions of Americans. Whether they use it for work or consumption, many people are constantly connecting as a consumers/worker pair in the gig marketplace.
These workers are typically someone that is utilizing a side hustle to bring in an extra source of income on top of their normal full-time job. Or it is somebody that relies on gig work as their only source of income.
Table of Contents
- What is the Gig Economy?
- Taxes on Self-Employed Income for Gig Workers
- List of Top Gig Economy Companies
- Why are Gig Economy Jobs Important?
What is the Gig Economy?
The newly popularized term describes the short-term independently contracted jobs that people use to complete small tasks by being paired with the task through a website or application. These types of employment provide people to be their own bosses as they are considered independent contractors.
This provides the opportunity for these workers to become their own bosses and select their hours they would like to work based on availability of jobs or tasks. With the greater access to technology and increased efficiency of platforms, it is becoming easier and easier for workers to find jobs either locally or globally depending on the type of freelance work they are performing.
Like a freelancer, the independent contractor does not rely on income from a salary or wage paid by a normal full-time employer. This person can charge agreed upon fees for the services they provide to another payer.
Taxes on Self-Employed Income for Gig Workers
You can go ahead and skip through this section if you are not concerned with nerdy tax rules. Otherwise, enjoy!
They must take the money they earn and report it to the IRS and pay their own social security and Medicare taxes on their income. While a normal employee receives the W-2 tax form, the contractor receives a 1099 for the income they earn.
From this tax form 1099, the taxpayer then must add this income onto their standard income tax reporting form 1040 (used to file a normal income tax with the federal government) as a “Schedule 1” and “Schedule C” reported additional income.
Then that contractor must pay his or her own social security and Medicare taxes for the employer and employee side which adds up to a total of 15.3% of income. If you’re income is less than $400, then you are not required to pay any of these taxes. If your income is over $137,700 then you do not pay the Social Security portion (6.2% employee and 6.2% employer, so 12.4% for a self-employed contractor) on the extra income over that amount. There is no limit to the amount of Medicare tax you pay on income, so the contractor must pay 1.45% employee and 1.45% employer, so 2.9% total for self-employed.
List of Top Gig Economy Companies
Many of these top companies also provide gig economy apps which make the process even simpler for lots of the jobs where workers utilize the app during the job they are working. Whether the platform is designed for delivery services, online freelance work, or going somewhere to work a short term job, these companies are extremely efficient in the way they create seamless connections between the workers and the consumers.
Let’s look at some notable top gig companies that are creating thousands of new flexible jobs for Americans.
Driving Service Companies
Founded in 2009, the first of its kind to compete with the well established taxi cab companies, Uber has become a verb to some people by providing an application that enables users to see many great features on Uber while waiting for their driver to pick them up. The big key to the success of Uber is treating the drivers as independent contractors that pick their own hours and which users they would like to drive.
Founded in 2012, the top competitor of Uber, Lyft provides the same sort of service as driving service to people through their user friendly application. Like Uber, Lyft also leverages an algorithm that best matches drivers to riders based on location.
Food Delivery Companies
After becoming renamed from UberFresh to UberEats, and running on its own separate application from Uber, the company became a big player in the on-demand food delivery market in 2015.
Recently acquired by Uber for $2.65 billion, Postmates was established in 2011 as a similar on-demand food delivery gig company.
Founded in 2013, DoorDash is another important player in the on-demand food delivery gig industry.
Founded in 2012, Instacart is a grocery delivery company that uses a worker to go pick up a list of groceries for a consumer and drop it off for them within a specified time frame.
Short-Term Job or Freelance Gig Companies
Founded in 2008, this company pairs consumers that need short-term help on everyday tasks. By going away from the standard large company model of hiring workers to do jobs, Task Rabbit enables anyone that is willing to complete small jobs to be matched up with consumers who would prefer to pay someone for it.
Founded in 2010, Fiverr focuses more on online freelance work. Connecting online workers with consumers or businesses that would like to hire a short term contractor, Fiverr’s popular services provided include; website building, logo design, and drop shipping.
The now massive tech and delivery company Amazon now has a strong independent contracting platform for gig workers to use their own vehicles. Amazon allows people to contract their own hours and leverage their own cars to go to Amazon warehouses, pickup packages to be delivered, and then bring them to their destinations.
Founded in 2007, Care.com works as a platform to connect skilled caregivers to the people that are in need of assistance. Whether someone needs help with child care, senior care, housekeeping, pet care, tutoring, or special needs care, Care.com is a leading player in providing independent workers the jobs to help people.
Founded in 2011, Rover is one of the first of its kind in being a gig economy company for all things dog and pet care services. By providing a simple platform that puts dog walkers or caretakers in connection with pet owners, Rover has simplified the lives of many consumers who could use an extra hand with pet care.
Founded in 2015, Wag! Is another big player in the dog walking gig company industry.
Home and Property Rental Gig Companies
Founded in 2008, Airbnb short for Air Bed and Breakfast was designed for homeowners or apartment renters to provide short term rentals to consumers inside their own place of living. This company and app has empowered thousands of homeowners and apartment renters to be their own landlord and help cover high living expenses especially in large cities.
Founded in 1995 as a homeowner subscription platform for people to list their property for rental on the website, Vrbo later pivoted to the short term lending like competitor, Airbnb. Vacation Rentals by Owner is what the acronym stands for as property owners can have easier access to a platform that allows them to rent out their places.
Why are Gig Economy Jobs Important?
One of the most important features that makes gig economy jobs important is the simplicity they give people to work as independent contractors. This is an empowering feature that enables people to work flexible hours, leverage assets they already own like their car or home, or even work remotely from their computer.
Important For Workers
Many people really appreciate this flexibility as they use the work as a secondary source of side income on top of their normal full-time job or while still a student. Other people that enjoy the gig flexibility are parents that no longer can work their full time jobs, but now can still easily find work with their busy schedule as a parent. The last group of people are ones that work in the gig economy full time as their only job. These people are not limited by the 40-hour week maximum that normal employees must follow before being paid time and a half (which companies are often not too fond of.)
Important For Consumers
Uber and Lyft came in to challenge the age-old taxicab companies that had been shielded by government regulations. These taxi companies had not advanced much at all technologically for many years while they did not have any competitors.
Now that Uber and Lyft have been adapted all over the U.S., consumers can feel much safer by looking at their driver’s online profile. Consumers are also able to track the driver as they get closer to picking them up. Lastly, consumers benefit from the lower costs from these competing companies and the ability to save money and reduce their carbon footprints by carpooling on the application with other riders (enhanced by the algorithm which finds people going in a similar direction.)
This industry is also important for consumers as they add lots of benefit to extremely busy people or businesses that utilize the services. In terms of food delivery companies, in the past, the only food people could really order was pizza or Chinese food. Now people can order food, groceries, or snacks from any restaurant or store that is relatively close to them and have it delivered on-demand while watching where on the map the delivery driver is located.
The short term freelance platforms are providing businesses with opportunities to outsource much of their work to individual workers at a much lower cost than hiring a large company for some jobs. While companies like task rabbit have made lives for homeowners much easier as they can have some difficult around the house tasks completed by people that are more skilled than their self.
Important For the Economy
The overall economy sees huge benefits accruing from the gig economy. By providing many simple and easy platforms for people to access and quickly find jobs and work, these companies create more new jobs for millions of Americans that are willing to work flexibly.
When people in an economy can quickly move to different jobs and even be contractors for multiple gig jobs at one time, they can more easily adapt to the changing demands of an economy. The U.S. economy is an extremely dynamic environment with constantly changing demands.
Having lots of gig platforms will enhance the ability of people to more seamlessly move to different jobs where they are demanded the most by consumers. These platforms also make it easier for companies that utilize the workers to have quicker access to more workers if they see a changing environment and lots of increased demand for their product or service.
One of the best ways to find jobs in the gig economy will be to download some of the apps for the companies we have listed above and see what type of work is available through your phone for those companies. For the most part, there will be more work available for people that live closer to big cities rather than more rural areas.
These companies treat the workers as independent contractors and therefore do not hire them on as employees of the company. Gig workers are paid their service fee and then must file their own taxes as a self-employed person.
Yes, there are people that work for multiple gig companies in the U.S. For one example, often when you get in the car of an Uber or Lyft driver, some of them will have both company’s logos in their car as they like to work for both depending on availability of jobs. There are not limits on the amount of hours you can work for gig jobs as well since you are not an employee of the company and normally they will have full time workers work 40 hours maximum to avoid paying overtime.