As inflation remains high and economic concerns persist, financial struggles are hitting workers across industries and job levels—but one talent pool may be facing particularly challenging times, necessitating strategic involvement from HR, experts say. Gig workers and other nontraditional talent make up an increasing share of the American workforce, but they are often left without the traditional financial supports full-time employees can access.
A new report from career website Zety found that 88% of gig workers have had to take on more jobs to make ends meet, while almost half say their biggest worry is lacking access to such traditional benefits as healthcare and retirement saving. Nearly a quarter are concerned about not making enough money to meet their basic needs.
More gig workers—with more stress
The rise of gig work isn’t new—but it’s also become so pervasive that HR can no longer approach the model as a temporary trend.
American workers’ interest in nontraditional work is “multi-faceted,” says Matt Bahl, vice president, market lead, workplace financial health at nonprofit financial services consultancy Financial Health Network.
Some appreciate the inherent flexibility of such work, a factor that has likely driven significant growth in this market since the start of the pandemic; meanwhile, Bahl says, others are turning to gig work as a source of supplemental income in a challenging economy.
Yet, increasingly, gig work isn’t just a “side hustle,” says Dana Gagnon, chief marketing officer at Everee, a payroll provider for staffing and gig work. In a recent survey of 400 U.S. rideshare and delivery drivers, the organization found that nearly 60% of respondents said their gig work makes up at least half of their income. For more than a quarter of survey participants, gig work comprises their entire income.
Those surveyed by Everee may be “piecing together” work from different apps, like Uber and DoorDash, but are also turning to nontraditional income streams like selling goods online and taking online surveys, Gagnon says.
“That creates volatility and unpredictability,” she says, “in how they’re getting their income week to week, and even day to day.”
Drivers, in particular, Gagnon says, are challenged by the fact that their work requires them to have access to gas money and a functioning vehicle—when they don’t, their income stops.
A benefits system that’s ‘not keeping pace’
Complicating financial matters for gig workers is that they lack access to the traditional benefits available to most full-time employees—like health insurance, retirement-building tools and financial wellbeing resources—that can drive better holistic health and, ultimately, contribute to financial security, says Bahl.
Gig workers and independent contractors have to procure such benefits on their own, “and that can be both time-consuming and confusing,” he says. “Our benefits systems are simply designed for W-2 employees—and as that model has evolved, our infrastructure and approach to benefits haven’t kept pace.”
While regulatory issues largely restrain HR from extending traditional benefits to gig and other workers, some organizations are reexamining their policies for part-time employees.
“We are seeing some interesting examples of employers granting access to part-time benefits, removing waiting periods, extending access to part-timers for retirement and health insurance,” he says. “But doing so for gig workers would blur that line for 1099 and W-2 employees.”
Given that this space is “fraught with compliance challenges,” Bahl says, the most feasible way to tackle the financial stress of nontraditional workers is by reexamining pay models.
“At the end of the day, the best lever HR leaders have is to look at the rate of pay for independent contractors and take into account what it takes to procure [benefits] outside of the traditional employer model,” he says. “But, we’ve not seen many employers going down that road yet.”
Evolving expectations on pay
In the area of pay, workers can also benefit from—and increasingly expect—access to their earnings quickly, says Gagnon.
In Everee’s recent study, 70% of drivers surveyed said they want their pay daily—or even instantly—while 85% cite quick access to pay as a “very” or “extremely important” factor in deciding which platform they’ll drive for. Providing that access can also ensure that gig workers stick around, Gagnon adds.
When drivers get paid instantly, the research found, their satisfaction with their work is 13 percentage points higher than those on a weekly pay cycle.
Some organizations are responding to this emerging reality with payroll solutions that can both pay contingent workers quickly and full-timers on a more traditional cycle, while others are leveraging different software for these two populations, Gagnon says.
Given that access to earned wages has become “table stakes” for nontraditional workers, Everee ultimately envisions an employment landscape where biweekly or even weekly pay becomes a thing of the past.
“These pay cycles are outdated concepts created 50 years ago because of tax law,” she says. “Everything has become automated and digitized, and people want to get paid earlier.”
While quick access to earnings is an obvious shot in the arm for gig workers struggling with finances, even higher earners, she notes, can benefit by, for example, having more cash on hand for investing.
“Same-day pay has become the norm in gig work, and all signs are pointing to gig work continuing to expand. There’s so much going on that [same-day pay] is not just a flash-in-the-pan trend, but speaks to a long-term need. And the momentum’s there.”
Meeting gig workers where they are
Bahl notes that W-2 employment will “never go away” but agrees a “migration toward 1099 employment” necessitates HR to reexamine long-held pay and benefits policies.
Deep listening strategies can help inform this work. “You have to be talking to these folks,” he says.
Understand the financial and other challenges of nontraditional workers, Bahl says, and consider how the organization can remain compliant while addressing these needs. Explore where innovation is in the market—for instance, Bahl says, some organizations are providing nontraditional workers low-cost access to insurance products.
“HR can be looking at models in the market that are replicating—not workplace benefits—but these marketplaces for affordable access to products,” Bahl says, “and make these more widely known to your people. That can drive better awareness and understanding.”