What is the Gig Economy?

The “Gig Economy” has been around for a long time. We can trace the term's origin back to the early 1900s jazz clubs where "gigs" or open spots, rather than full-time or contracted positions, were offered daily to musicians to perform at those clubs. In the late '90s and early 2000s, with the expansion of the internet, the Gig Economy took off with the irruptions of online platforms where "gigs" were offered.

Through these platforms, people are increasingly able to buy and sell goods, independent workers can offer their talent, or homeowners can rent their extra bedrooms to a worldwide online market. Also known as the “Collaborative Economy,” this new and growing marketplace is characterized by consumers relying on each other, rather than large companies, to meet their needs and wants.

Did Covid change this landscape at all?

While the Covid pandemic was initially very hard on the Gig Economy worker, the long-term effects of the pandemic have led to growing this part of the overall economy.

Some research shows that at least 52% of independent workers lost their jobs due to the pandemic, but the Gig Economy expansion is three-times faster than the whole U.S. workforce, even after the pandemic. Recent reports show that during the stay-at-home mandates, less traditional work arrangements became more common. A McKinsey survey on the Gig Economy connected this increase with the need for extra money, while a ManpowerGroup report associated it with increased interest in a more flexible lifestyle. Likely both factors are responsible for the continuing expansion of the Gig Economy.

What does the Gig Economy have to offer for nonprofits?

The Gig Economy is shaping a new employee base. A report from Korn Ferry titled “Future of Work Trends 2022: A New Era for Humanity” suggests that the Collaborative Economy is one of the main drivers of the future of work trends.

Nonprofits must take note of these changes and understand the opportunities they bring. As more and more people opt for the freedom and economic potential of gig-work rather than conventional employment, nonprofits need to consider this employer base to ensure they are working with the leaders in their respective fields.

But we can also think about the impact of the Gig Economy from a program (rather than staffing) perspective. This kind of flexibility will mean that more people will have more freedom in their schedules to accommodate volunteer activities. What does that mean?

By 2027, some estimates expect that the Gig Economy will employ more than 85 million people, and current data shows that 33% of those workers will be Millennials and 16% will be Gen Z. If these numbers increase as predicted, we might be looking at 50% or so of the workforce making a living out of the Collaborative Economy as independent workers, which means that half of the workforce will no longer be tied to strict 40-hour work weeks.

And looking at the salary trends, it is likely that independent workers will be able to meet their financial needs with fewer working hours and much more schedule flexibility. This opens a great window of opportunity for nonprofits to offer meaningful, in-person volunteer opportunities for people that want the personal connection that an online or virtual workplace does not provide.

We know that Millennials like to be involved in the charities they support, and we know that many remote workers can eventually find the situations isolating. How better to meet both needs than expanding volunteer opportunities?

In terms of staffing strategies, what should nonprofits take into account?

Adaptation is critical for any organization in the current job market. With a changing occupational mix of the economy and new skills being demanded along the way, a nonprofit must redesign its operations, processes, and organizational culture to become more flexible and adaptable to a more remote and changing job market.

The newer generation of workers has different priorities and expectations for the jobs they want. According to the McKinsey survey, they have experienced new ways of working and want to stick to those. So, to keep attracting talent, nonprofits must be able to meet those expectations. Talented employees want flexibility; retaining those employees will require providing some flexibility.

For one thing, nonprofits will want to carefully look into their job structure and identify which roles could be part-time or project-based roles sourced from the Gig Economy. Of course, spreading talent out like this—from remote employees to part-time or project-based employees—poses a challenge for organizational culture. Culture is a hallmark of nonprofit work and it’s one of the things that attracts employees to nonprofits. Leaders will have to be thoughtful about preserving culture while also changing employment structures.

Making the most of the Gig Economy

Like it or not, the Gig Economy is staying—and growing. If you want your organization to thrive, you need to embrace it. On the one hand, this may mean providing more flexibility to employees and hiring more part-time employees. On the other hand, it may also mean attracting more volunteers. There will certainly be some changes to nonprofit staffing—some good, some bad—but it’s important to stay ahead of the curve and to begin preparing now for a growing Gig Economy.