Improving Payments & Disbursements in the Gig Economy
The “Gig Economy” is an environment/economy where temporary, flexible jobs are common and where companies and organizations hire independent contractors and freelance workers for short-term engagement instead of full-time employment. There are many benefits to the freelance/gig lifestyle, such as flexible hours, working remotely, autonomy, the ability to take on multiple projects, or earn extra money. Unfortunately, many gig workers are not being paid on time, forcing millions to live paycheque-to-paycheque, work multiple jobs, and deal with crippling debt and predatory lenders.
According to PYMNTS’ recent Gig Economy Index, only 51 percent of gig workers surveyed in the fourth quarter of 2017 reported being paid within one week of providing their services. This is a shockingly large 12 percent drop from Q3 2017, when 63 percent of gig workers reported receiving payments within a week of rendering services. What’s worse, a third of all freelancers surveyed by Freelancers Union had experienced situations in which they weren’t even paid at all!
There are currently 68 million workers in the gig economy in the United States, and 80 percent of American businesses employ independent contractors. 43 percent of the U.S. workforce will be freelance by 2020, up from 34 percent in 2016. Upwork and the Freelancers Union estimate that freelancers will make up more than 50 percent of the U.S. workforce within 10 years.
So how can we improve the way we pay workers in the gig economy?
Businesses and corporations need to take a look at ways to pay gig workers in a timely and cost-effective manner. A 2016 study by Experian revealed that 46 percent of freelancers were stressing about having enough money to live on, and nearly 50 percent considered leaving their line of work because of late payments and subsequent money problems. Real-time payments, such as prepaid payroll cards, can help improve retention and acquisition for employers, are less costly than paper-based payments, and help freelancers make ends meet and avoid late payments, overdraft fees, and high-interest loans. In today’s digital world, the idea that many employers are continuing to offer payment 30, 60, or even 90 days after a freelancer has already finished their work is ridiculous. Make your company stand out by offering on-time payments in order to attract and keep these talented gig workers!
84 percent of independent contractors and freelancers said they would do more work if they were paid faster.
Switching to digital disbursements like payroll cards will also help increase efficiency for companies employing gig workers, and for gig workers themselves. 70 percent of companies are still managing freelancers manually or with spreadsheets. Prepaid payroll cards give you full visibility of your payroll activities. You can pay employees all over the world at the click of a button, and can automate what were once time-consuming and expensive administrative duties. It also makes things much easier for freelancers. It’s estimated that, as a result of financial services having problems keeping up with gig workers’ lifestyles, 90 percent of gig workers use personal payments and banking for business purposes, which can create all kinds of problems when it comes to separating finances, budgeting, and taxes.
The gig economy represents $2.7 trillion in annual disbursements. If your company or organization wants to be a leader, it needs to be able to adapt and meet the needs of your employees, whether they’re full-time, temporary, freelance, or independent. How and when you pay people is important. No one wants to have to wait for a distant payday. Real-time, immediate payment services such as prepaid payroll cards can help eliminate gig workers’ insecurities, protect them from acquiring debts, and make your business stronger than ever.
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