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October 01 2015

The unstoppable rise in the gig economy

53 million Americans, or 34% of the workforce, are now 1099 workers. The category covers the full spectrum of freelancing, from independent contractors, to temps, as well as on to occasional moonlighters. The volume of 1099 contractors is anticipated to grow by over 4% annually through 2020 to 66 million people. The trend is driven by a mixture of new technology and age-old incentives. Freelancers be cheaper for businesses who cut down on payroll costs and benefit outlays, while staff is granted greater flexibility. A Roosevelt Institute/Kauffmann Foundation joint report argues that, by 2040, the usa economy will probably be "scarcely recognisable".


�The gig economy now accounts for another from the American workforce.

�By 2020 66m Americans are hoped for to become freelance or 1099 workers.

Does everyone really would like the gig?

Is 1099 the real code for your age?

Energy, Financial Services, Government, Healthcare/Pharma/Biotech, Industrials/Manufacturing, Innovation & New Ventures, Media & Entertainment, Nonprofit, Private equity finance, Property, Retail & Consumer, Technology & Telecoms, Capital raising

The attractions for being a 1099 are by no means universal,
due to not enough the rate of employment and employment rights. 53% of individuals freelance by choice, 47% out of economic necessity. Even though many contractors enjoy the flexibility and control freelancing offers, other people increasingly keen to win employee status. Specifically in blue-collar segments a little, but growing variety of Uber drivers as well as other 1099s doing work for Postmates, Lyft and Washio are fighting legal battles to get classified as employees and not contractors. Home cleaning start-up, Homejoy, closed partly as a result of the load of these lawsuits. The growth from the �gig economy� presents governments with serious problems. While entitlement systems are created round the conception of the fixed job, revenues from payroll taxes are going to fall sharply.

Current legislation not suitable for today�s economy

Several analysts feel that an urgent change in legislation is required together with the introduction associated with an intermediate classification between �worker� and contractor�. Germany's "dependent contractor" status supplies a model which combines protection with flexibility. Simon Rothman, a trader in delivery service platform Sprig, argues for the adoption for these one. Noting that 38% of on-demand staff is signed up to multiple companies, he really wants to see personalized healthcare travel together with the employee. According to tech evangelist Tim O'Reilly, however, legal changes add up to nothing more than a sop. Reilly highlights that companies who are nervous of legal actionare already switching workers from 1099 to W2 tax codes and so are capping employees' hours so that they become part-time and do not receive benefits. "We've basically gutted wages for professional, and we're wondering what's happening", he says.

What the brains think�

In June, a McKinsey Global Institute Report suggested that online talent platforms - starting from job sites like Monster.com, to digital marketplaces like TaskRabbit and talent management agencies like PayScale and ReviewSnap - could boost global GDP by 2% or $2.7 trillion by 2025. Platforms could have the positive impact of accelerating employment by 72 million full-time equivalents. The authors believe that a successful transition on the �gig economy� requires not only new labor market regulations, but additionally affordable broadband access for those and clearer rules from the thorny regions of data ownership and privacy. .freelance

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