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That side gigs - part-time or occasional work to supplement income - have become more common is hardly new news. Nor are the reasons behind the growing number of Americans with side gigs.

Simply put, workers up and down the income ladder are finding that their compensation simply doesn’t keep up with rising costs, especially of education, health care, and housing. 

Because of this, more Americans are turning to side gigs to help them make ends meet.

As the chart below from the 2019 MBO Partners State of Independence study shows, the number of "occasional independent" workers has increased by roughly 50% over the past 4 years.

Occasional independents are are workers who report working independently occasionally or sporadically, but at least once a month on average. 

Most occasionals have other jobs, but many have activities such as care giving, homemaking, school, etc that keep them from having a traditional full or part-time job. 

And, of course, most occasional independents are working side gigs to supplement their income. Other reasons for side gigs are to pursue a passion, build skills and to start or test out a new business opportunity.

Another reason side gigs are growing is that online platforms and marketplaces are making them easier to do. These platforms provide a low friction (meaning it's easy and quick to get started), highly flexible (work when you want or can) work options.

With wage stagnation, the hollowing out of middle skill jobs and the rising costs of housing, healthcare and education showing no signs of abating, we believe the number of Americans with side gigs will continue to grow.

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Predicting the Next Tech Disruption from Big 3 Strategy Consulting firm Bain and Company discusses 4 forecasting tools (shown below) Bain uses to predict when disruptive technologies will be widely adopted.

Two of the tools - experience curves and adoption curves - have been around a long time and widely used.

For example, we use both - and especially adoption curves - in our forecasts. And much like McKinsey also suggests, Bain suggests using similar technologies to help you develop your adoption curves. 

This is something we've done for many years and have found very useful. 

Bain's Elements of Value tool is focused on consumer technologies. But we think it could be modified to also work with B2B tech. You'd just need to create the equivalent of Maslow's hierarchy for business users.

The tool we found most interesting is what they call barriers and accelerators. 

We spend a lot of time examining potential barriers and countervailing trends that could impact our forecasts. This is because we've observed that most technology forecasts are overly optimistic because they don't include these.

A good example is drone forecasts back in 2014. The vast majority of these forecasts at that time simply ignored the wide range of barriers to broad adoption drones faced

Other examples include autonomous car forecasts, Internet of Things forecasts back in the early 2000's and again in 2010 through 2015 and pretty much all the forecasts that A.I. and automation would eliminate huge numbers of jobs by 2020 that were put out 6-8 years ago. 

In all these cases barriers and countervailing forces were either missed or ignored. So we certainly agree with Bain's inclusion of this tool.

Forecasting is obviously not easy and no one can actually predict the future. But using tools like the ones Bain suggests will help your forecasts miss by less.

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Regular readers know we like Pet Trends here at Small Business Labs.

So we had to cover the U.S. Chamber of Commerce's article The Pet Economy Kicks Into Overdrive.

The article covers the growth of the pet economy. Key quote:

The surge in spending on pets – and explosion of new products, services and unique “experiences” to help quadrupeds and their owners bond more closely – is at an apex, tracking to break U.S. records this year.

According to the article, "the U.S. pet economy is projected to exceed $75 billion this year, up from $72.5 billion in 2018 and a doubling of 2005’s $36 billion ...".

The key reason the article gives for this growth is pretty much the same as we covered in our article in our article Pets Used to be for Kids. Now they are Kids: pet humanization.

Key quote from the article:

“What we see happening is a transition from pets being ‘man’s best friend’ to ‘family’s favorite child,’” Petco chief merchandising officer Nick Konat, told CO—. “ People want to take the best care of their pets, like they are a member of the family.” He does not view this mindset as a trend so much as a movement that’s been building over time as people integrate pets more fully into daily life — the workplace, dining, shopping and celebratory occasions."

The pet industry's growth is attracting a wide range of products and services. Our favorite from the article is Nashville's BarkPark (pictured below).

BarkPark describes itself as "an ultra-fun dog park that doubles as a hip human hangout for playing, working, and chilling."

They also claim BarkPark "is a much needed ‘third place’ for dogs".  

While we're not sure how needed a new 3rd place for dogs is, it's likely pet parents will embrace the concept.

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One of the clear findings from the MBO Partners State of Independence study series is that, on average, independent workers (freelancers, independent contractors, the self-employed, etc.) and those with traditional jobs have different risk profiles. 

Simply put, independent workers are more comfortable with the risks associated with being independent than traditional job holder are. They're also are more willing to accept these risks in return for greater work autonomy, control and flexibility.

As the chart below shows (click to enlarge), 65% of those with traditional jobs think it's risky being an independent worker or running your own business versus only 18% of independent workers.

This different view on risk is reflected by what people value in terms of their work. 

Independent workers tend to value the flexibility, autonomy and control independent work provides. Traditional job holders tend to value stability and a predictable income. 

Interestingly enough, as the chart above shows both groups tend to be satisfied with their income.

That independent workers are more comfortable with risk than traditional job holders may seem obvious. 

But it's rarely discussed in the debates around independent work and the gig economy.  

Nor is the willingness of most independent workers to trade security and a predictable income for greater levels of work autonomy, control and flexibility. 

Instead the assumption by many is that most independent workers - like most traditional job holders - would prefer having a traditional job.

This assumption is simply wrong. 

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The Washington Post's ‘This doesn’t look like the best economy ever’: 40% of Americans say they still struggle to pay bills covers the fact that despite a strong job market and a 10 year long economic recovery, a lot of Americans still struggle financially.

The reason, according to the article, is this expansion has been weaker and its benefits distributed far more unevenly than in previous growth cycles, Key article quote:

This is a “two-tier recovery,” said Matthew Mish, head of credit strategy at the investment bank UBS. About 60 percent of Americans have benefited financially, he said, while 40 percent have not.

The 40 percent — which Mish calls the “lower tier” — have seen paltry or volatile wage growth, rising expenses for housing, health care and education, and increased levels of personal debt. 

The struggles of the lower tier is nicely illustrated by Intuit's recent Pursuit of Prosperity study. 

As the study chart below shows, almost half of Americans live paycheck to paycheck and have little to no savings.

Regular readers know we consider the growth of the lower tier is a key reason why more Americans are turning to highly flexible, low friction gig work to supplement their income.

This is especially true when someone is hit with a financial shock such as a job loss, health issue or unexpected major expense. 

As the Post article points out, "Half of U.S. jobs pay less than $18.58 an hour and more than a third pay less than $15, which makes it difficult to save or invest for a better future."

And without savings, people are vulnerable to financial shocks such as a job loss, healthcare issue or unexpected major expense.

In response to financial shocks like these, a growing number of people turn to gig work to generate extra income. 

We cover this topic in more detail in our Economic Uncertainty section

The Washington Post also has an excellent podcast interview with the article's author

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Despite trade wars, tariffs, and the erection of other barriers to cross-border commerce, independent workers, freelancers and solopreneurs are increasingly finding customers outside U.S. borders.

As the MBO Partners State of Independence study chart below shows (click to enlarge), in 2019 22% of Independent workers who work full-time as independent workers said they provided goods or services to customers outside the U.S.

This us up from 19% in 2018 and just 12% in 2012.

The increase in exports is being driven by several factors:

  • Online marketplaces have made it much easier to find and service customers outside of the U.S. They also simplify and facilitate transactions and payments.
  • Collaboration software has reached the level where communicating with remote customers is easy and efficient. This has greatly increased the ability of service providers to serve customers outside of the U.S. 
  • Improvements in outsourced logistics services have reduced the costs and greatly simplified the process of delivering physical products to pretty much any global destination.

We expect the trends driving the growth of exports by full-tine independent workers to continue to strengthen. Because of this, we expect the export activity by independent workers to continue to grow.

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According to the  U.S. Census, the number of nonemployer businesses in 2017 increased to 25,701,671, up 3.6% from 2016

Nonemployers are businesses that have an owner, but don't have paid traditional full or part-time employees (W2 employees). The data comes from tax records.

As the chart below shows (click to enlarge), the number of nonemployers has been growing around 2.45% per year since 2010.

That may not sound like a lot of growth, but it's about 3 times the growth rate for overall employment.

We've long tracked the nonemployer business statistics

Nonemployer data gets less attention than other government data on self-employment.

This is because the dataset is messy and includes a hodge podge of business entities - passive businesses, firms no longer in business, LLCs owned by major corporations, etc. - that aren't active solopreneur businesses. 

But we find this data a useful general indicator of U.S. self-employment.

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It's been a busy couple of weeks for gig economy studies. Below is a list of 4 of the recently released studies.

1. Want Your Business to Thrive - Cultivate Your External Talent: The Society for Human Resource Management (SHRM) and Success Factors teamed up for study, which surveyed independent workers, managers who hire independent works and HR employees. 

The goal of the study was to get a 360 view of external labor use by businesses. And, overall, they've accomplished that goal. 

But we admit we laughed out loud when we read their press release.

Their big finding is it's a myth that most independent workers aren't doing independent work because they can't find a job. They also found - and it apparently shocked them - that independent workers like the flexibility and autonomy they have. 

These findings have, of course, been known for many years. But it's nice to see the HR world catching up.  

2. Platform Work in the UK 2016-2019: This study is a collaboration between the University of Hertfordshire and the U.K.'s Trades Union Congress (TUC). It found the number of people in the U.K. doing gig economy work has doubled over the last three years. 

And as the study chart below shows (click to enlarge), about 10% of UK residents report using a gig platform for work on a weekly basis and almost 30% are seeking work using these platforms.

The study also found the majority of people using online platforms to find work are working part-time to supplement their income. The study report has lots of interesting data on UK gig workers.

3. Freelance Economic Impact Report: Fiverr and Rockbridge Associates teamed on this study.

Using data from the U.S. Census non-employer dataset, the study explores the size, growth and skills of the specialized knowledge worker population across the 25 largest U.S. metropolitan areas. 

This is one of the few studies that provides a city level look at independent work. It's also one of the few focused only on knowledge workers. 

4. How Well Are Independent Workers Prepared for Retirement?: From the Pew Charitable Trust, this is really an essay instead of a study. 

We're including it because it contains data on gig workers in general as well as data related to gig worker retirement savings. 

The key point of the essay is we need more data on the gig economy, something we definitely agree with.

The gig economy is clearly a hot topic, but it's also a complex topic. So it's good to see the growth in studies in this area.

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One of the biggest shifts uncovered by the MBO Partners State of Independence study series is the increased use of online marketplaces to find work by freelancers and other independent workers.

As the study chart below shows (click to enlarge), in 2012 only 3 percent of full-time independent workers reported having used an online marketplace to find work in the prior 12 months.

In 2019, 24% said they had.

Relatively few (8%) report using online talent marketplaces as their primary source of work. 

But online talent marketplaces have become important secondary and tertiary sources of work. Independent workers use them to fill in gaps in their work schedules, explore new markets, find new clients and learn new skills. 

Going forward, the use of online marketplaces by independent workers will no doubt increase.

The 2019 data show 29 percent of full-time independent workers reported they intended to use an online marketplace over the next 12 months.

And as the chart above also shows, there's a strong correlation between between one year’s reported intentions and the next year’s reported usage. 

So we're very confident forecasting that next year we'll see close to 30% of full-time independent workers using online platforms to find work.

We'll continuing reporting on the findings of MBO Partners State of Independence study (we worked with MBO on this study) over the next few weeks. 

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Last week Facebook announced Libra, a new cryptocurrency. It's designed for use in transactions and as an easy and cheap way to transfer money. 

Expected to launch next year, Libra is what's known as a stablecoin - a digital currency built to avoid the large fluctuations in value that Bitcoin and other cryptocurrencies experience.  

And unlike Bitcoin, because the value will remain relatively stable Libra will usable as way to buy things. 

While Facebook is the driving force behind Libra, it’s created a foundation that other organizations can join. The foundation will be responsible for managing Libra and Facebook will have no more control than any of the other full members.

So far 27 organizations including Mastercard, Visa and Stripe and Paypal, Uber, Lyft, Spotify, several venture capital firms and 4 nonprofits have joined as founding members of the Libra Foundation. 

It is expected there will be more than 100 members by the time Libra launches.

Facebook also announced a new digital wallet called Calibra, which will provide users a way to store and spend Libra. Expect to see many others offering Libra digital wallets.

According to Facebook the main near term market for Libra is the 1.7 billion people around the world who lack access to the banking system.

Other early likely users include people who live in countries with unstable currencies, people who want to move money across borders and people who want to buy digital goods and services (in-game purchases, for example). 

But the longer term goal is for Libra to be used for everyday purchases by everyone. This is a goal Bitcoin and other cryptocurrencies have failed at, primarily because their value fluctuates so much.

It will be years before we know if Libra will succeed as common medium of exchange, but the broad organizational support Libra has attracted certainly makes success possible.

In the past we’ve suggested small businesses stay away from cryptocurrencies. We think Libra easily could be different.

Although unlikely to be an important payments option for most small businesses in the developed world anytime soon, it should be easy to add it as a payments option post launch.

So Libra will be worth looking at when it launches. 

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