Pros & Cons of Working in the Sharing Economy
If you’ve ever used an Uber, stayed in an Airbnb rental or had Task Rabbit pick up your dry cleaning, you’ve participated in the sharing economy. Also referred to as the peer economy, or gig economy, it’s a rapidly evolving business model that connects consumers with service providers, usually through the use of a cellphone app. There is vigorous debate among economists and scholars about the impacts of this new employment model, but as consumers continue to embrace it, it looks like it’s here to stay in some form or another. If you are considering working one (or more) of these gigs, take a look at the pros and cons of a job in the sharing economy.
Flexibility — One of the things those who work in the sharing economy love is the flexibility. You can generally work as much (within reason) or as little as you want, and pretty much get to set your own schedule. These side gigs are a great choice for people like actors and artists who need to supplement their incomes as they pursue other passions.
Seamless Payments — In a traditional freelance arrangement, you bill your clients for the work you do, but that doesn’t guarantee you’ll be paid in a timely fashion — or even at all. With the app-based business model of the sharing economy, all the financials are taken care of via the app, so you’re guaranteed to be compensated for the work you do.
Independence — If you’re someone who doesn’t care for a traditional office or collaborative workplace, many jobs in the gig economy don’t require you to be in those environments. You’ll still have to interact with customers, of course, but you’ll have plenty of solo down time, too.
No Benefits — The flexibility and independence of working in the sharing economy comes with a price – namely, none of the traditional benefits such as health care and retirement. If you already have a full-time job with benefits and want to work a side gig just for extra money, it’s not an issue. But if you’re planning to make the majority of your income in this way, you have to factor in the cost of paying for benefits on your own.
You Don’t Set the Rates — As a freelancer, you determine how much you charge. That’s not the case in the gig economy. The platform determines what you charge, which may limit your earning power.
The Future is Uncertain — The sharing economy is having some growing pains. For example, there is currently a class action lawsuit against Uber in which drivers are fighting to be classified as employees, rather than independent contractors, and they recently settled a similar lawsuit claiming the same. Other platforms have also faced criticism for how they treat and compensate their workers.
As businesses and consumers continue to evolve, the sharing economy will evolve along with them. If you are simply looking to earn extra money to pay down debt or save for a large purchase, it can be a great way to make some quick cash. If you’re looking at it as your sole source of income, however, you may run into challenges you hadn’t considered. Either way, it’s worth exploring if a place in the sharing economy is right for you.
If you’re currently working this way and need help adjusting financially, we can help you learn how to budget with inconsistent income.