The Gig Economy: Pros and cons of freelancing

The Gig Economy is characterized by many people working as independent contractors for companies that provide a service rather than full-time employees. It can lead to many benefits, but also drawbacks. Some pros include flexibility and freedom to set your own hours according to your schedule which can be difficult with full-time employment or having the ability to work from home instead of during office hours, while some cons include not being eligible for benefits such as retirement funds or healthcare insurance that traditional employees have access to.

However, it is important to note there are both positives and negatives to the gig economy. A major negative associated with a gig economy includes consistent underpayment for work completed, which can cause wages to be less consistent and lower than what they would be receiving as an employee. There is also no guarantee that work will continue or that you will get more work from a company.

In addition, freelancers have limited access to benefits they would receive as traditional employees such as healthcare and retirement funds. However, there are some companies that offer insurance policies specifically for independent contractors in an effort to keep their workers protected. Finally, not being able to work the same amount of hours as regular employees can be tough for people who are accustomed to working a certain number of hours a week, and adjusting can be difficult.

Pros: 

1. The flexibility to create income as needed.

Freelancers can work odd hours or from home with no- or low-cost accommodations. This provides flexibility in their schedules as well as how they earn. Among those considering this option, higher rates of income potential are cited as the motivator for the decision to freelance.

2. Possibility of greater financial independence and freedom.

The gig economy allows individuals to choose the time they spend for work, and it is possible to maintain a self-employed status without having to report earnings and tax obligations to a government agency such as the Internal Revenue Service (IRS) or Department of Labor (DOL). In addition, freelance workers are often paid on a project-by-project basis, which provides more flexibility and financial independence than traditional employment.

3. Job opportunities for those who previously might have been excluded from the workforce.

The gig economy includes certain segments of the population that have not traditionally worked in the labor market, such as students seeking part-time employment, stay-at-home parents, or retirees looking for additional income. It has also provided an opportunity for disabled individuals to supplement their disability benefits and pursue work opportunities despite their medical conditions.

4. Greater control over earnings.

Freelancers are responsible for their taxes and must provide proof the income was earned. In contrast, clients (such as employers or institutions) are responsible for the client's taxes and may deduct the amount of the invoice from current tax liability. If an individual were to freelance and claim this income on their personal tax return, they might be able to reduce how much they owe to the IRS by claiming certain deductions.

5. Increased job opportunities based on specialization skills.

Freelancers can work with a variety of clients in different industries, which provides greater flexibility than traditional employment. Individuals may find themselves working with clients from multiple sectors to meet their specific needs. This could allow them to specialize in one industry area and work for clients who will be more likely to have a need for their particular skills.

6. Privacy and security of accounts.

Freelancers have control of their own privacy by not disclosing their clients' information, especially if they are paid on a project basis or the client's payment is made directly to them. They can also opt out of some online work with contractual restrictions and opt-out forms.

7. The ability to define one's own hours and location.

Part-time employees and others with flexible schedules who choose not to work full-time can find freelance work they enjoy. By establishing their own location, some gig economy employees are able to take advantage of the benefits of space and beaches without having to commute long distances for work. In addition, they have the flexibility to set their own hours, which can be beneficial economically when times are tough for start-ups or businesses.

8. Freedom to pursue unique and independent work opportunities.

Working as a freelancer allows workers to choose their own schedule and pursue work that may be unavailable as a result of full-time employment. Taking on contract work also allows workers the opportunity to gain experience and increase their expertise in specific industries or topics. While some freelance positions offer flexible scheduling options, moving from job to job can provide the freedom for individuals to explore new opportunities and broaden their skillset.

9. Flexibility

Flexibility is the main advantage out of all. Freelancing gives you more flexibility if you want to pick up or drop off work. You can take on short-term jobs that give you flexibility with your schedule.  They have the flexibility to establish their timetables and operate from any location. This flexibility can lead to a better work-life balance and allow individuals to pursue other interests or side projects.

10. Good for Trying New Things 

Our workers are known for trying new skills and picking up new projects outside of their major field, as they can work from anywhere at any time. If someone does not have a lot of experience in one thing, but wants to try out something new, freelance work might be a good option for them.

11. Higher Earning Potential

Freelancers that have specialized in a skill or business area may earn more than those that are just generalists. This is because it is easier to make money off of their specialty.

Cons:

1. The lack of full benefits or job security.

Some companies don’t give benefits, like paid vacation and health insurance. This can leave freelancers with high stress levels and financial concerns. In many locations, they are not guaranteed any paid time off or holidays. Additionally, some employers expect that you will work all the time, which can lead to burnout if you end up working too many hours. These issues can be resolved by consulting with contract law pros.

They may not earn as much money as full-time workers because they are limited by what freelance jobs are available and what is needed. If they don’t have as much experience or education, then it can be difficult for them to find work. Furthermore, there are no guarantees that freelance jobs will last long or even come back at all.

Freelance work can lead to a lack of benefits for those that take on the job, like health insurance and paid vacation days. Those that freelance may be required to have a second part-time job in order to compensate for this financial loss.

2. High cost to maintain status

Although costs associated with maintaining freelance status are often less than for standard employee status, there are hidden costs associated with both employment and self-employment that can be difficult to navigate. The cost of healthcare for freelancers has been cited as a major obstacle, because many employers reimburse their employees for a certain percentage of the cost of healthcare premiums. They must purchase health insurance on their own without this additional source of income. In addition, workers must pay self-employment taxes and take on the burden of filing quarterly tax payments.

3. Limited time flexibility exists due to obligations to clients or employers

Many freelancers work scheduled hours with the expectation that they will be compensated accordingly, which may not always be possible if there is an unexpected delay or meeting that is requested at an inconvenient time.

4. The lack of benefits may affect overall job satisfaction

While independent contractors have the opportunity to pursue various work opportunities, they are often required to work longer hours than their counterparts who are full-time employees. This can impact overall job satisfaction and decrease the amount of time available for friends or family.

5. Lower wages 

Lower wages in some cases, because those paid by client projects may not be compensated for experience or set salaries at the level of a full-time employee working 40 hours a week. These workers can be paid an hourly rate, a flat fee, or less frequently, a percentage of the money earned from a client project. Some are able to take on additional projects to make up for lower earnings per hour.

Conclusion: 

As a result of the many benefits and challenges associated with freelance work, the topic has received increasing attention. Because of this, some organizations provide resources to help their workers complete necessary tax forms and training courses on companies' policies and procedures of how to maintain their status as independent contractors.