The 'Great Resignation' Will Transform the Gig Economy. Are You Ready to Take Advantage?
There are enormous opportunities for freelance workers in the wake of pandemic-related "quits," but also real hazards unless they keep an eye on the horizon.
Opinions expressed by Entrepreneur contributors are their own.
This past December, 4.3 million Americans quit their jobs while 10.9 million jobs remained open, according to the U.S. Bureau of Labor Statistics. Dubbed the "Great Resignation," this market dynamic shows few signs of abating, at least in the short term.
In navigating the pandemic, workers were often tasked with re-thinking the way they organize their lives and are now seeking more meaningful careers and asking for healthier work environments, but the Great Resignation is not as simple as workers simply leaving one full-time job to start another. Many are giving up the traditional 9-to-5 structure entirely; 20% of Americans say they are considering a switch to full-time freelance work, according to recent Upwork research.
What does this mean for the future of the gig economy?
As more and more Americans leave jobs, there is a perception that the result will be a boost to the gig economy. Companies are desperate to replace fleeing workers, and the fastest way to do so is by slotting gig-workers into what were once full-time jobs. As a result, demand for freelancers is growing and that worker sector is, for once, in the driver's seat. There is a sense of euphoria for those in the gig economy. Profits are high and people are optimistic that they can make a better life for themselves by striking out on their own. And in some respects, they can, but how long will this fairytale last?
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The catch of the Great Resignation
Right now, freelancers may feel empowered, but this optimism ignores fundamental trends of the gig economy. The digital tools that freelancers are using to gain freedom through remote work and flexible hours may also be the very ones that lead to a lower quality of life in the future.
The continued march of progress in digital technology has brought us to a point where it's easier than ever for entrepreneurs to condense complex workflows into a simple set of tasks that can be put on a platform and outsourced. And while these advances are exciting, they also commoditize work, as well as the workforce.
As this commodification continues and competition increases, the prices that workers can charge will lower. Every job, and thus every worker, can be replaced if a company finds someone (or something) who can do it cheaper and faster. We will become engaged in a race to the bottom, and that's a future in which everyone will lose.
Greater freedom, autonomy and mobility for freelancers is not a bad thing. However, we cannot become so enamored by the promised freedom of the gig economy that we lose sight of the bigger picture and put our future livelihoods at risk.
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What we're missing
I do not mean to say we should never take a risk on a new venture or that the Great Resignation is a net negative. The conversations we're having around the value of work are important, and I'm glad to see the stigma on independent remote work lessened. The pandemic freed us from outdated notions that the only respectable job is one that requires a suit and tie and a proper office, and the workforce as a whole is better for it.
But in order for some of the avenues in which people are now trying to express themselves to work sustainably, we need to look at the whole picture and ask, "What are we missing? What more can be done to ensure that this doesn't turn into that race to the bottom? What can we do to empower freelancers and solopreneurs to monetize the intellectual property they create?"
For one, we need new forms of finance and access to capital for creators and freelancers to be able to create partnerships and grow their equity. Right now, those solutions do not exist in any meaningful or substantive way. The system itself does not yet have the financial capability to invest in all of the creators who are trying to make a new life for themselves.
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Advice for aspiring gig workers
Becoming a freelancer, creator or entrepreneur is seductive: you work when, where and for whom you want. Over the coming years, we will see millions more Americans attempt to strike out on their own, but the reality is that some of those attempts will fail. The distribution of success is more likely to mimic the bell curve we see in almost every business and skillset: some will be widely successful, another faction will do pretty well and some won't succeed.
It's vital, then, to understand one very important fact as a gig worker: you are your business. You are the sales, operations, admin, finance and work teams rolled into one person. A successful freelancer will be one who recognizes this truth.
Keep in mind, too, that what we are seeing today is a demand imbalance: freelance opportunities that appear plentiful now may not be as numerous in the future. In order to take full advantage of this temporary distortion in the market, such workers need to organize themselves as a business and utilize all of the tools and partnerships available. This will not only result in increased efficiency and higher profit margins, but the ability to take more risks in the future — to take the opportunities present in the market today and turn them into a stable and high-earning business with long-term success.
I'd also advise that freelance workers seek new avenues to find capital better aligned to help grow — a key way of ensuring that you don't have to run a race to the bottom. Freelancing comes with the same responsibilities that any business does, and it's up to each individual to set themselves up for success.
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