You may have heard of the gig economy and thought, here’s just another buzzword with little immediate relevance to your work or retail business. You could be wrong.

What is the Gig Economy?
The gig economy is a labor market where short-term contracts and freelance work dominate as opposed to permanent and full-time jobs. The term is often lumped in with the sharing economy and the on-demand economy as things “only millennials do” or “only tech startups offer.” (I was, in fact, quoting myself just now, BTW, before writing this article.) In fact, a recent Intuit study estimates 40 percent of the U.S. workforce will participate in the gig economy in less than three years.

Let’s consider both the employer and employee point of view, and see who really makes out in the deal.

As an Employer
As an employer, the benefit (or lack thereof, pun intended) of employing contract or freelance workers vs. permanent employees is that it provides appealing financial savings. An employer of contract or freelance workers doesn’t have to offer these employees benefits (now the pun makes sense). For example, say an employer can shift 100 hires from permanent to contract, at what would be equal to an $80,000 annual salary:

I recognize that I’ve already lost a handful of you employers at this point in the article, who now have their takeaway from this article and an exciting cost conservation idea for their P&Ls!

But wait … there’s more! You’ll also get a savings from no holiday pay, no sick pay, and no FMLA! And if you order now, you’ll also get double the savings from HR — less time and faster hiring and firing!! But this great deal won’t last for long …

As an Employee
Next let’s consider what any smart, aware and brave individual might think about the deal that they have as a full-time employee. Once a permanent employee signs their offer letter, they’re getting benefits and a chance at a career, one that — historically — has come with the traditional perks that good performance and loyalty would engender:

  • pay raises;
  • job security;
  • potential for promotions and upward mobility;
  • recognition for a job well done; and
  • being part of a positive culture/team.

How has that worked out for full-time, permanent employees over the last five years to seven years? How about permanent employees in retail?

Soft retail sales mean that layoffs have been common, while pay raises and promotions have been scarce. Management layers haven’t been replaced, which creates pressure above and below. As we all know far too well, sales comp misses and pressure increases come hand in hand, and many employees are fighting for their livelihoods. There are changes in leadership, changes in direction, and unexpected late nights and weekend work for staff. The tangibles (i.e., the numbers) are the only thing that matter as the organization gets more and more laser-focused on delivering sales.

How does the deal look for the full-time employee?

  1. Pay raises: from zero percent to 3 percent annually
  2. Job security: a thing of the past
  3. Potential for promotions and upward mobility: gone
  4. Recognition for a job well done: most likely gone
  5. Being part of a positive culture/team: most likely gone

The gig economy provides employees with new options. Employees could create flexibility and variety in their work life and can now rent their apartment on Airbnb two weekends of the month while traveling; drive for Uber; work for TaskRabbit, Hello Alfred, Upwork, Dogvacay, Thumbtack, Postmates, Handy, Fetch, Proprly, etc.

Now, let’s not get crazy — the example I provided won’t be equal to a corporate salary overnight (I did prove earlier that I can do math, right?).

However, the point is employees see the potential to make good on some of the missing items from the list above, albeit in nontraditional ways. They could quit corporate life, decrease their spending habits and work gigs, or work gigs on the side to make up for decreases in income. They could work gigs for income while they focus on turning their passion project into a business or their unique idea into the next great startup.

Look at this ad campaign from Fiverr, a freelance services marketplace geared towards entrepreneurs, which highlights the benefits the gig economy offers — the emerging potential for a more idealistic, personalized and satisfying deal for (would-be corporate) employees:

Permanent employees are smart, aware and informed. They have these attributes because the employer screened for them and worked hard to hire them. These same employees, who are smart, aware and informed individuals, know what makes for a fair exchange, a good deal. They believe not what employers say but what employers do. In more ways than one, they’re looking.

The employer is looking to find and keep the best talent, at or below market prices, while providing ways to easily contract and expand the workforce.

I spoke to the top recruiter in retail one month ago and he said that this contract — the contract between employer and employee — is eroding. To me, that’s code for things are changing. There are those who say the gig economy is broken. I say not yet. It could be good for employer and employee, but one thing remains the same — both sides are watching and looking, thinking about a better deal.

Amy Madonia has led e-commerce and digital marketing efforts for many brands over the course of her 17-year career. With a record that includes leading and growing e-commerce businesses for brands including Temptu, Nautica, New York & Company, Michael C. Fina, Wrangler and Hanes, Amy’s responsibilities have typically included site merchandising, content and promotion development, analytics, social media, mobile, and remarketing.