Last week, NEACH staff attended a Payments Innovation Alliance meeting, featuring a wealth of informative sessions. One in particular, presented by Walt Cox, Director of Business Development at Rapyd, and Bill Dunn, Director, Government Relations at American Payroll Association, was entitled Faster Payments and the Gig Economy. The Gig Economy session peaked my interest, because I had never heard of the term. I am aware of the word “gig,” as being slang for a live musical performance. Wikipedia says it was coined in the 1920s by jazz musicians as a term short for the word engagement.
So what is a gig economy? It is short-term work, primarily performed by independent contractors. You will see it in specific industries like the arts, which has free-lance writers, photographers, construction workers, Uber or Lyft drivers, etc. While most of us are used to a two-week payment cycle, gig workers are interested in receiving their pay faster, and companies are responding to this demand. Many are living paycheck to paycheck. According to the speakers, in some Wendy’s franchises, for example, workers are enticed by “start today, get paid tomorrow.” Paypal recently introduced “funds now,” real-time payoffs to sellers. Workers increasingly have the option to be paid once the job or service is completed.
The gig economy is growing. What attracts these workers? For some, it is a means to supplement their income; it’s a way to earn income and have a flexible schedule – workers set their own hours. For workers who have lost their jobs, it is a means to keep food on the table until a full-time job becomes available. For others who can’t yet make a living doing what they love, they can dabble in the gig economy to gain experience, while working a full-time day job. One of the speakers indicated that he is not a traditional employee, as much to his wife’s chagrin, he purposely changes jobs every few years.
Payroll companies are not as familiar with paying the non-traditional gig employee. There are important considerations, including compliance and risk, authentication and verification, while giving these workers more control – they want more options, and the gig economy provides that.
#FasterPayments