The Rise of the Gig Economy:
Pop quiz: what do Uber drivers, babysitters, and freelance artists all have in common?
Answer: they all have side jobs… or, if you prefer it, side hustles.
I can guarantee that you’ve at least heard of Uber. For those who haven’t, Uber is basically a public taxicab service through which average people can have a side job driving people places. Babysitters watch babies for parents while they are away from home, and freelance artists spread their art wherever they can to make money. You may or may not relate to or be interested in any of those jobs, but think about this for a second: have you ever wanted to make free cash? (The key word is “cash.”)
Well, it’s not exactly free money— just untaxed cash that you can keep to yourself. But that’s what Uber drivers, babysitters, and freelance artists all pursue every day.
It expands far beyond them too: people can use the Internet to work for anybody and make money from anywhere. People are hired for their specific skills and talents. 2 This is what’s called the gig (sharing) economy, and like Pitbull, it’s worldwide. There’s one small problem, however: it’s not all that legal to work under the table.
Especially considering how Uber has blown up in the past few years and strongly motivated the gig economy, Americans seem to like the idea of working under the table, or “off the books.” Essentially, that means working outside of the radar of the IRS…
…Which means that your side employer pays you in their own cash and doesn’t report it to the IRS. Worse, if your side employer doesn’t classify you as an “independent contractor,” that’s illegal. Kelly Phillips Erb from Forbes believes that despite the wide appeal of this trend, the only real reason that an employer would ever hire you off the books is that they have bad credit or can’t legally work in America. 7
If you’re not sure what I mean by “bad credit,” Map the Money Maze is a fun, helpful way to navigate through courses in finance so that you can school all of your friends the next time they want to borrow money from you.
The question is: why does it have such a wide appeal? As with many popular trends, it all starts with money.
Think back to 2008, when the American economy sank into a recession. Seven years later in 2015, it was still difficult for Americans to find and retain standard jobs in that kind of market. Many of them— in fact, 15.8% of them— resorted to “alternative working arrangements” according to economists Lawrence Katz and Alan Krueger. 3
According to “a survey of 2,245 Americans” conducted in July 2017 by finder.com, Millennial participants made an average of $3,677 (unreported) just from working under the table. For all of the generations surveyed, the top three most frequently unreported side hustles were jobs in freelance creative work, babysitting, and cleaning. 1
Katz and Krueger would add that “all net employment growth in the U.S. economy since 2005 appears to have occurred in alternative work arrangements.” 3 Millennials have bolstered its rise too. Due to sluggish wages over the past few years and a generation of independent, “educated, equipped, and motivated” Millennial employees in a technological world, they are “defining” the gig economy says Jeff Tennery, who has worked for Verizon and Millennial Media. 2
Tread Carefully:
As with any popular trend, however, there are consequences, and you have to be careful if you would ever consider working under the table. Just because 33.3% of Millennials are slaying by working under the table and not reporting their side cash to the IRS doesn’t mean that you should ride the bandwagon. 1
First off, you’re risking having less money saved up for your Social Security check in the future. 7 It’s always good to have money in your account whenever you can, but remember that through working under the table, you’re not stimulating the economy by keeping the money flowing through the system properly. 3 You should be wary that with 69.8 million Americans overall working under the table as of 2017, $214.6 billion of cash (yes, that’s ten digits!) is not reported to the IRS. 1
Working under the table rather than as an employee at McDonald’s or Michaels leaves you with little to none of the benefits or rights earned by a standard employee. 6 Even if you still like the idea of having a side job, you probably won’t have it for long because it’s a fickle opportunity. 5 Your employer may not even have the proper documentation for your employment, like the W-9 or W-4. Yet this makes sense because they’re not reporting any taxes of your income to the IRS anyway. 7
Finally, I should address the big elephant in the room: the worst consequences. Time to face the facts: working under the table is straight up glorified tax evasion: if you don’t pay the IRS, you may be sent to prison. It can be as simple as that. As an “independent contractor,” you are still held responsible for paying your own income taxes and self-employment taxes. 8 9
According to LuSundra Everett, an IRS enrolled agent, “If you file, but fail to report all of your income, the penalties can range from a 20% IRS penalty to imprisonment for willful tax evasion.” The IRS can catch you with their handy Whistleblower program, which hires confidential informants who can detect whether you’ve been shady with your taxes. 1
Is It Right For You?:
Please, please keep in mind that I in no way, shape, or form intend to scare you off from working under the table, but if you have skills and you feel that it’s the right option for you in your current situation, then you need to consider every side. There is a right way to go about this kind of opportunity, which I will discuss below.
If you have an app such as Map the Money Maze, it makes this process of evaluation much easier.
If you’re still interested in using your skill or talent to make money on the side, then here are some more benefits and tips.
Even though America has recovered from the recession of 2008, job security is still shaky because employers can take your job away for a multitude of reasons, including outsourcing and downsizing. 4 Jobs that pay under the table are generally more flexible and allow you to more easily live your life as you wish to live it. 3 You have more control over when you work and how. 5
With your extra time, and cash, you can even travel the country or the world if you want to! You can gain so much varied life experience from working under the table, which makes McDonald's, Michaels, and other standard employers potentially want to hire you! 4
I strongly advise you to look for an employer that can convert you and thereby give you the opportunity to further progress your skills or talents full-time. If you find a company like this, chances are that they’ll treat you well because they want to see you do your best. Go local too; see what’s in your hometown or city. 5
1: Jennifer McDermott, Side hustlin’ and tax evasion: The telling statistics. Finder.com. September 3rd, 2017.
2: Devishobha Chandramouli, Why Moonlighting Is On Its Way To Causing The Next Workplace Revolution. Huffington Post. May 18th, 2017.
3: Rob Wile, Harvard economist: All net U.S. job growth since 2005 has been in contracting gigs. Splinter. March 29th, 2016.
4: John Scorza, Stop Looking for a Job (and Join the Gig Economy). SHRM. March 29th, 2017.
5: Adam C. Uzialko, A Mixed Bag: Navigating the Ups and Downs of the Gig Economy. Business News Daily. July 13th. 2017.
6: Yuki Noguchi, Efforts Increase To Bring Health And Other Benefits To Independent Workers. NPR. June 23rd, 2017.
7: Kelly Phillips Erb, Ask the taxgirl: Getting Paid Under the Table. Forbes. December 12th, 2011.
8: IRS, 1099-MISC, Independent Contractors, and Self-Employed.
9: IRS, Publication 1779 (Rev. 3-2012). March 1st, 2012
Opmerkingen