Gig Economy Leaves Some Workers Financially Vulnerable

The lack of benefits is the most commonly reported disadvantage of ‘gig’ work, according to a survey from Prudential Financial.

The survey included Gig Only workers—people who do contract work exclusively; Gig Plus workers—individuals who do contract work and hold a traditional full- or part-time job; and Full-Time workers—those with traditional full-time jobs. The gig work model is one in which workers act as independent contractors rather than employees.

More than half (54%) of Gig Only workers do not have access to employer-based benefits. Gig Only workers have less than half the access to employer-based health insurance as Full-Time workers (40% vs. 82%), and 51% of Gig Plus workers have access to medical benefits.

Significantly fewer Gig Only workers have assets in an employer-sponsored retirement plan (16%) than their Full-Time counterparts (52%). Twenty-five percent of Gig Plus workers have assets in an employer-sponsored retirement plan, possibly from their traditional, non-gig work.

The survey report says retirement assets for all segments may also be attributable to a spouse, a plan sponsored by a previous employer, an affiliation with a professional association or by another entity.

Younger Gig Only workers (ages 18 to 35) are less likely to have access to benefits (70% have no access) than Gig Only workers older than 55 (44%).

The study suggests that managing day-to-day finances is also difficult for gig workers. The nature of gig work is such that its workers often live with less stability of income and “job security,” have to self-fund their benefits and retirement savings, and pay self-employment taxes. According to the survey, on average, Gig Only workers earn $36,500 per year versus $62,700 for Full-Time employees. Gig Plus workers earn on average $55,800.

The Gig Worker On-Demand Economy survey was conducted online by Harris Poll on behalf of Prudential from January 5 to February 18, 2017, among a nationally representative sample of 1,491 workers, including 514 full-time and 256 part-time traditional employees and 721 gig workers. The survey report is here.