Is it time to play your own 'gig'?
By Lee Travers
Growing up, I always knew that I wanted to be my own boss. I always felt that I had a different way of doing things and I was constantly coming up with products and ideas that I wanted to bring to market. The idea of building and creating is what gets me out of bed in the morning.
The idea of building and creating is what gets me out of bed in the morning.
It appears that there are an increasing number of people that agree with me. In spite of income instability and economic volatility, the 'gig' economy continues to break boundaries and thrives in both America and the UK. Today, more than 55 million Americans and 1.9 million Brits are self-employed, freelance, or working on a job-by-job basis.
More than 55 million Americans and 1.9 million Brits are now self-employed, freelance, or working on a job-by-job basis.
Nevertheless, we all need that push to leave a safe and comfortable job and try to make it on our own. I believe that the global financial crisis was the catalyst for the rise in self-employment, as those faced with redundancy and unemployment had to think of new ways to make money.
Additionally, it has become increasingly difficult to find job security; a steady 40-hour-a-week job is not something that readily exists anymore. Plus, who wants to be working 40 hours a week anyway? Today’s millennials want to make money quickly and without too much effort. Job culture is changing.
Today’s millennials want to make money quickly, and without too much effort. Job culture is changing.
In America, individuals who have undertaken temporary, project or contract-based work increased to 35% of the total labor force in 2015, meaning that the gig economy is now worth more than $1trn. The UK is not too dissimilar, with 46% of businesses hiring freelance workers, meaning that more than £21bn is spent on the gig economy.
It’s no surprise then, that since 2014, more than two million Americans turned to self-employment and the number of UK freelancers has grown by 36% since the recession.
Working in the digital/tech space, has always meant that I’ve had the opportunity to spot trends years before they’ve become mainstream. Technology is changing the way that we interact with one another, meaning that we no longer need to be in an office with someone, in order to be able to work effectively with them. In some sectors, technology is actually taking over the role of humans, meaning that we have to be more creative in the way that we add value if we want to compete with artificial intelligence.
Thanks to websites such a PeoplePerHour, freelancers have a more direct route to finding work and pitching to clients that they may never have come across ordinarily. Having launched many businesses myself, I feel that the younger generation is far more entrepreneurial, more likely to want to work for a smaller company, or start their own business.
A UK survey by Evolve found that 21% of graduates with first class honours say they have already chosen to work as a freelancer and 29 per cent of all graduates said that freelancing is part of their career strategy for the next five years. Around 69% said that the biggest career draw was the better work-life balance that freelancing offers.
What are we afraid of?
In spite of millennials leading the charge for this change in our working culture, surprisingly, the largest group of self-employed workers in the US is the 40-49 year old category, which is interesting.
My own father decided to open his own business later in life, as he had the experience under his belt and, at that stage in his career, the confidence and support to do things the way he wanted. So, I guess experience does have a big impact.
I know that, throughout my career, it’s the contacts that I’ve made that have helped me to build the support network that I have. I have learned so much from people like my father; things that are always sitting in the back of my mind every time I have to make a decision about something.
Also, it’s about identifying our own skills and what we can do better, or differently, to someone else - that will give us a competitive advantage. I would love to be good at absolutely everything, but I have to know my limitations and therefore employ people who complement my skill-set to support me in my business endeavours.
So why aren’t we all doing it?
So, why aren’t we all doing it, I hear you ask? Well, it’s about two things; skill-set and responsibilities.
Firstly, not everyone has a skill that they can draw upon in order to work independently. We are all different and some people are better-suited to a structured environment where they’re the ones being delegated to. Also, for those who have a family to support, or debts to pay off, having a wage that can fluctuate from month-to-month could prove too stressful.
Income instability is a serious problem for many American households who rely on a freelance wage, with the typical worker’s wage fluctuating by $300 a month. This could be the difference between being able to put food on the table; or not.
According to a report by the Century Foundation, in collaboration with The National Employment Law Project (NELP), self-employment does not come without its problems. The report found that income instability is a serious problem for many American households who rely on a freelance wage, with the typical freelance worker’s wage fluctuating by $300 a month. This could be the difference between being able to put food on the table; or not.
So, the life of a freelancer isn’t always smooth sailing. Self-employed people in the US experience nearly twice as much income volatility as standard workers, according to the research.
It adds that, with an ever-increasing gig workforce in the US, some kind of insurance and assistance needs to be put in place to support these workers. Freelance workers also need insurance and need further support to be empowered.
UK vs US?
In the UK, the government has recently thrown a spanner into the works for freelancers, by cutting the National Insurance (NI) tax benefits that they receive. Chancellor, Philip Hammond said that he will increase NI contributions for self-employed people earning more than £16,250 a year.
Mr Hammond said class NI contributions for the self-employed would rise by 1% in April 2018, to 10%, and a further 1% in April 2019, on income up to the higher rate threshold of £45,000. The new rates are still lower than for employees who pay NI at 12% on the same income levels, while both groups will continue to pay at 2% on income above the higher rate threshold.
President Donald Trump has taken the opposite approach in the US. If Mr Trump achieves his campaign proposal, more American citizens may consider the prospect of a freelance position. While promising to cut taxes, President Trump’s plan would result in a tax increase for many middle-class employed workers. If this policy were to be actioned, tax increases - less head of household deductions - may inspire many more Americans to consider the benefits of self-employment.
Tax increases - less head of household deductions - may inspire many more Americans to consider the benefits of self-employment.
Will we all be self-employed…eventually?
More than 60% of those surveyed by UpWork said that freelancing, and people’s perceptions of it, is changing. I do believe that the gig economy will continue to grow. However, being self-employed doesn’t appeal to everyone; therefore, there will always be a need for structured, traditional employment.
However, as UpWork’s research shows, being your own boss does have its advantages. Those surveyed felt empowered, respected and happier just by working for themselves. And that, to me, is all that matters.
Mental wellness is important. I think it’s also vital to balance that with financial wellness. So, for me, as the CEO of iam bank, I want to help and support that change, so that more people can have the freedom of being self-employed - if they chose to - without the stress and financial volatility that can come with it.
For more information on how iam’s offering is supporting the gig economy, go to www.iammoney.co.uk