Economic Evolution: Can You Gig It?

The gig economy isn’t coming—it’s here.

And it’s growing.

Recent statistics show that more than one-third of all U.S. workers are involved in the gig economy. Of that number, 24% are full-time and nearly half are part-time. If the gig economy continues to grow at its current pace, in less than a decade more than 50% of U.S. workers will be involved in either a primary or secondary employment capacity. (This may actually be a very conservative estimate, as the number of gig economy workers is currently growing three times faster than the growth rate of the overall U.S. working population.)

For those unfamiliar with the concept, the gig economy at its most basic level refers to an economic system in which workers operate as independent contractors or freelancers rather than in traditional employment relationships. It’s called the “gig” economy because these workers frequently get paid by the project or activity completed.

The economic impact of this system is enormous. In 2018, independent workers in the U.S. spent over 1 billion hours per week freelancing and contributed $1.28 trillion to the American economy.

The impact of the gig economy on our traditional economic and community development processes is just as significant. As more and more workers choose to leave traditional employment for the independent sector, we will have to rethink the ways in which we approach a number of issues.

Consider these facts:

• More than half of full-time freelancers feel more financially secure than those in traditional employment.
• 51% of all freelancers report that they would not return to traditional employment for any amount of money.
• 78% of freelancers say they’re happier than those working traditional jobs.
• 84% of freelancers are living their preferred lifestyle, while only 54% of those in traditional jobs report the same.

The growing embrace of independent work will require us to use different tools than we traditionally have. For example, there are implications for workspace utilization. Co-working and shared work spaces have become increasingly popular and will be in even greater demand as the number of freelancers continues to grow. Additionally, interest in telecommuting options may reduce the need for traditional office space by allowing companies to share workstations more broadly. The ability to design new commercial space and retrofit existing spaces to accommodate this paradigm shift will be essential.

Workspace utilization will impact commercial real estate in ways we have not yet fully considered. Co-working and telecommuting will combine to reduce both the footprint of new construction and the interest in larger, more traditional spaces for single-business occupants. Having product ready for commercial non-industrial operations will remain important, but is likely to look somewhat different a decade from now. The more that we can come up with creative ways to reuse existing spaces, the better. After all, the greenest building is the one that’s already built.

As a side note: Residential real estate will also be impacted, as millennials and younger generations look for opportunities to live near work, trading the expansive suburban experience for a sleeker urban approach. Given the preponderance of these generations in the gig economy, mixed-use development that combines upper-floor residential opportunities with lower-floor commercial or shared working space will continue to be a critical element of community appeal.

The changing real estate market will force municipalities to think differently from a planning and zoning perspective as well. Maintaining history and charm are important, but must be balanced with the ever-increasing need to design and build (or renovate and create) spaces where people want to gather and/or live. Development and design ordinances that balance history and urbanism will be essential tools in each city’s toolbox. Careful land use planning that takes advantage of existing construction and natural features can position cities and towns to win the day as our economies evolve.

Finally, the gig economy will force economic developers to re-examine how we approach commercial recruitment. While not every industry will be deeply impacted by this new economic system, many will. As increasing numbers of individuals opt out of the traditional employment relationship—with many saying they will never return—the ability to offer industries access to a large talent pool decreases and staffing becomes an even greater challenge. At the same time, advances in technology will require a workforce that is more skilled than ever before. Working closely with post-secondary institutions to provide training and retraining will remain a mission-critical task.

The ability to remain competitive in our economic and community development efforts with a package of skilled workforce, quality mixed-use and multi-purpose spaces, and thoughtful incentives will be critical to our long-term success in this brave new world.

Let’s get to work!