Gig work is getting less profitable (2024)

The gig economy is a roughly $1 trillion industry in the US, according to research published earlier this year by Robert Peterson, the John T. Stuart III Centennial Chair in Business Administration at The University of Texas at Austin, and John Fleming, who wrote the book "Ultimate Gig: Flexibility, Freedom & Rewards." It's expected to grow between 16% and 17% each year, four times faster than the traditional economy, their research shows. By 2027, the research projects nearly 100 million Americans — roughly 40% of the adult population — will participate full-time or part-time in the gig economy.

"The economy has changed so much in that people used to drive for Uber for nine hours so they could have $100 so they can go to the bar this weekend with their friend," Charles Rosenblatt, president of fintech company PayQuicker, which helps facilitate payments to gig workers, told Business Insider. "Now, I'm going to drive because my electricity bill went up and I don't have the money to pay my bills anymore and need to supplement my income in a separate way."

Business Insider spoke with experts about the state of the US gig economy, where it's heading, and what people should know before diving in.

Benefits of gig work

Across all demographics, gig workers are looking to have greater flexibility, diversify their income stream, meet new people, and explore interests in their free time. But many who have replaced their office jobs with various gig jobs haven't quite figured out how to make it work for them. Many have gone into gig work thinking they can make ends meet by working one or two gigs, but have struggled to make enough to pay bills or plan for the future.

Among gig workers, 60% work multiple gigs — 23% work three or more — spending around four to eight hours per week on a job, according to the research. Additionally, less than 10% of gig workers make over $2,000 a month.

"The great majority of people are looking at how better to leverage their time," Fleming told BI, referring to gig workers.

'The house always wins'

Some gig workers don't realize how little they're earning, Alexandrea Ravenelle, assistant professor of sociology at the University of North Carolina, told Business Insider. That's because it can be difficult for gig workers, particularly ride-hailing and delivery drivers, to calculate their true profits.

When Ravenelle speaks with students who work as gig drivers, she said they typically don't realize how little they take home once expenses like gas, depreciation, maintenance, and insurance are tallied up. Vehicle expenses can amount to between $4 to $8 per hour, gig drivers previously told Business Insider, compared to hourly pay from as low as $9 to $12 an hour to as high as $23 to $28 an hour.

"I end up pointing out that they would quite frankly be better off getting a job at McDonald's," Ravenelle said.

In addition to uncertain pay, gig workers can face fluctuating customer demand and competition, along with tweaks to platform algorithms that can change the rules of the game. It's why gig workers should be careful of growing too reliant on any single platform, experts told Business Insider.

"When it comes to the gig economy, the house always wins," Ravenelle said. "You might think that you're making plenty of money, but at some point, you'll have something that goes wrong. You will get deactivated from that platform, you'll move down in the queue, or you'll get impacted by a change to the algorithm."

About 43% of gig workers surveyed by Peterson and Fleming said that less than 10% of their annual household income came from gig work.

Workers also need to be more strategic about seeking out opportunities, particularly those that offer upward mobility or better pay and bonuses, as opposed to just settling on one or two gig jobs, Rosenblatt said. This could entail taking up gig work at a traditional company — Fleming estimates over 50% of traditional companies are engaging gig workers.

Peterson told BI as the gig economy grows, it becomes increasingly unclear who will train these workers. For example, many companies won't invest the time and resources into training a worker who will only work for eight hours a week and colleges don't frequently inform students on how to best navigate gig work, Fleming said.

Peterson said he anticipates more companies adopting internal talent platforms to get employees to bid on jobs to make extra money, instead of having to train and keep track of outside employees. This potentially could lower the number of gig employees working in more traditional sectors.

Still, such shifts in the gig economy could push workers more into building their own brands or products, Rosenblatt said.

Where gig work is heading

The experts Business Insider spoke to said that they expect increasingly more people to work three to five gigs that touch on their passions. For example, people don't need to work 40 hours a week for a ride-hailing company when they can devote 10 hours to that and reserve the other 30 for writing, photography, or real estate.

"Part of that is the income piece, but part of that is people basically curating their life," Rosenblatt said. "It's a lot easier for someone to go and do 10 extra work hours driving for Uber or DoorDash or selling Tupperware than going to your boss and asking them for a 20% raise so you can feed your family."

What's more, people are increasingly looking to gig work for instant pay gratification, Rosenblatt said. About 83% of gig workers surveyed stated that when looking for new gigs, it's important to be paid immediately for performance, the report found.

Rosenblatt anticipates affiliate sales and other influencer-type work that can be done from home will grow over the next few years, coupled with a pivot away from gig jobs like delivery driving that require extra expenses like vehicle upkeep. He also expects an increase in direct selling, whether it's for coffee or CBD.

"I don't see gig work disappearing," Ravanelle said. "I see it continuing to grow, and I think that we are going to need to really rethink our strategy as a society in terms of ensuring that workers have economic stability and then have access to benefits if their only income is coming from 1099 work."

Are you struggling to navigate — or have had success navigating — the gig economy? Reach out to these reporters at nsheidlower@businessinsider.com and jzinkula@businessinsider.com.