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Baby Boomers Most to Benefit from Gig Economy

Many contend the emerging “Gig Economy” is thriving even more now that our U.S. economy has experienced a record pace of growth since President Trump took office in January 2017. Record low unemployment and high Labor participation rates are now being matched by a growing trend in GDP exceeding 4 percent. So why would there be a thriving Gig Economy? One that demands more use of temps, contingent or contract workers.

According to Amy Anger, Vice President & Global Lead at Kelly Services,

"Simply put, it means there’s an opportunity for organizations to thrive as well. The global workforce is undergoing dramatic transformations influenced by globalization, technology, and skill shifts, as well as societal and demographic changes. As workers, and work itself, demand more flexibility to drive innovation and work-life design, the entire concept of work is becoming more fluid. Organizations can keep up with this quickly shifting landscape by embracing a “workfit” [contracting non-employed experts when needed] approach to workforce management—one that adapts to the rising gig economy.”

Prior to Trump’s election, employers were primarily using gig workers to reduce operating cost and risk of hiring underperforming talent in the market. If work or work processes could be automated or accomplished by a qualified contract worker, that was more palatable than adding the fully loaded cost of a full-time employee plus benefits. Sure, there were positive side benefits from this approach, but the primary strategy was to reduce risk and cost in an economy that was unstable and politically sensitive.

Now, twenty plus months into a new Trump administration with a complete reversal in economic policies, there is still a shortage of needed skills and about the same number of open positions to fill as there was before Trump taking office. Persons with critical skill sets desired in the market are still in high-demand and command high value for the use of those skills. That makes independents with skills which are in demand a high-value, add-in for any employer worldwide with reduced risk.

To be sure, “giggers” who do not have these in-demand skills are also benefiting. As more jobs are filled and the economy races forward, more disposable income is available and many will use more of Lyft, Uber, Angie’s List, Home Advisor, Maven, Workmarket, and similar electronic platforms to engage temp and contract workers for projects previously stalled or were done by other means. 

Approaches to gig work, and attitudes toward it, vary. As the labor market tightens, employers who understand how the different generations use and view gig work may find themselves better equipped to meet workers’ expectations and needs—and so improve their ability to attract the talent they need.

Gig work appears to function the best today for the Baby Boom generation, whose members in some cases are already established financially and are looking to gig work as a bridge to retirement.

At the opposite end of the spectrum, many Millennials appear to be making a short-term decision to embrace gig work as a means of balancing work/life demands. While that has left many of them with financial wellness challenges, it is worth noting that Millennials still have three or more decades to work and improve their financial situation.

Gen X gig workers also face financial wellness challenges, but do not have as much time to shift their career path and improve their financial life. The growth of the gig economy, and the changes it has produced in the employer/employee relationship, has implications for workers and employers alike, and for financial advisors and policymakers.

• Gig workers. Gig work clearly presents financial challenges for many people, especially Gen Xers. Given their lower average income levels and their widespread lack of access to employer-sponsored benefits, Gen Xers would appear to be in need of financial guidance. Yet most gig workers do not regularly seek advice on financial matters. When they do, Millennials and Gen Xers often turn to family and friends. Baby Boomers are the most likely to seek the services of a professional advisor. Other generations may wish to consider joining the Boomers in doing so, and/or in taking greater advantage of the many financial planning tools now available to them.

• Advisors. Gig workers may need a broader level of advice than traditional employees who have access to employer-sponsored benefits and retirement plans. Advisors can help gig workers not only with setting up retirement savings plans but also with acquiring adequate insurance coverage and developing budgets.

• Employers. Employers who use the gig model may want to consider offering gig workers the same holistic financial wellness programs they provide to traditional employees as well as voluntary benefits (not covered by ERISA). To attract the full-time talent they need, employers also may want to make it easier for workers to balance work and life responsibilities by offering flexible work schedules, student loan repayment programs, and training programs—along with transitional work for those looking to segue into retirement.

• Policymakers. Today’s financial wellness challenges may lead to tomorrow’s retirement shortfalls, which could strain government programs and resources—especially once ill-prepared Gen X gig workers begin exiting the workforce. Policymakers may want to encourage both public and private-sector solutions to delivering health, retirement and other benefits to gig workers. But, as with all things run by government bureaucrats, federal regulatory intervention is not a viable solution.