The gig economy might be a newer phrase, but it is hardly a new concept. Workers have been independently picking up extra shifts as freelancers or contractors since the turn of the century. By the 1990s, 10% of US workers earned income as contractors, temps, or on-call employees. In the last decade, technology accelerated the growth of the temporary labor movement, helping to pair workers with jobs and facilitate rapid payments. From 2017 to 2021, the number of US gig workers more than tripled, and in the last 12 months, 23 million Americans have earned income through a digital platform.
CNN reported that the uptick in gig workers is “a clear indication of just how many more people use tech platforms to help earn a living”. This can be interpreted two ways. People are leveraging more tech platforms and apps to accept and complete gigs, and companies are leveraging real-time payments technology to issue faster payments directly to workers. Payment tech is transforming gig work by creating an experience that meets workers’ needs and expedites the work cycle. It has become invaluable in facilitating gig jobs and supporting the scale of the industry.
There are three key ways that real-time payments are transforming the gig economy for the better.
Building Gig Worker Loyalty
The gig economy is a highly transactional system. Workers accept a job, complete the job and are paid for the job, and employers have an obligation to make the work cycle fast and seamless to complete the transaction. According to a recent survey from PayQuicker and the Ultimate Gig Research Project, 60% of the gig workforce take jobs from multiple platforms, so completing a gig shift and receiving earnings is critical to attracting workers back. Real-time payments improve the experience and ultimately create gig-worker loyalty.
Gig worker loyalty has a monetary value. Worker turnover among gig employees is as high as 500%, and The Wall Street Journal reports that turnover is directly related to employee pay and experience. The cost of turnover is estimated to be 0.5 to 2 times the employee’s earnings, even for a gig worker. By improving both the employment experience and the speed of payment with real-time payments, gig employers reduce turnover and protect profits. Gig workers are more likely to return again and again, developing a long-term, stable relationship with the employer.
Creating Management Efficiencies
The increase in demand for gig work is matched by the availability of gig jobs. Short-term contracting opportunities now exist across industries, from ride-sharing and food delivery to professional services. As employers increase their utilization of gig talent, they also need to streamline the management and payment of their influx of gig workers. This may seem like a daunting task, but real-time payments technology can actually enable employers to optimize efficiencies while decreasing management and cost burdens.
According to Mastercard, delayed payments (due to manual errors and processing delays) may total as much as $3 trillion globally, disproportionately affecting small businesses. With modern payments technology, it is tremendously easier for an employer to keep track of workers and spending, to ultimately reduce cash flow bottlenecks and maintain better liquidity.
Empowering Flexible Earning Possibilities
PayQuicker’s research finds that 50% of gig workers use the money earned from their gigs to pay household bills, underscoring the critical nature of this compensation. More individuals might consider gig work to earn additional income, if it was feasible to receive their earnings in the frequency, method and currency they prefer.
This on-demand workforce seeks not only on-demand pay, but also a suite of payment options that make it easy to receive, spend and transfer their funds. That ranges from pre-loaded cards to direct bank deposit, mobile wallets or even alternative currency, like crypto – all delivered at the completion of a job.
Real-time payment technology empowers gig workers with access to their earnings on their own terms. This opens the possibilities for even more individuals to take on gig work, and benefit from the earning potential.
The expansion of the gig economy isn’t slowing down. It is expected to grow 16% to 17% annually with an estimated 100 million people joining the gig workforce by 2027. As the gig economy overtakes the traditional workforce, the expectation for real-time pay will have far wider impacts, and all business leaders should pay attention.
A seasoned innovator in the payments industry, Charles Rosenblatt has held executive leadership positions at major global banks including Capital One and Chase, as well as prominent fintech organizations. After having been on the management teams that led to the sale of Hyperwallet to PayPal and Payoneer going public, Rosenblatt is now President at PayQuicker.