How to attract talent in the gig economy

In recent years, the gig economy—a labor market in which independent workers have short-term contracts or gig work as opposed to permanent jobs—has shown incredible growth in the United States. A 2023 FlexJobs report¹ found that 40% of the U.S. workforce has freelanced in the past year. That’s around 60 million gig economy workers who have opted out of standard corporate jobs.

Numbers have been on the rise in the wake of the COVID-19 pandemic and the Great Resignation, a trend where traditional workers left their jobs in massive numbers in search of better pay and benefits.

These part-time, freelance, and contract gigs have allowed millions to work independently with more flexibility than ever before. It’s a newfound freedom many employees aren’t willing to give up.

But the gig economy benefits more than just workers. By hiring an independent worker, businesses can benefit by meeting their immediate employment needs while reducing employment costs.

However, talent acquisition in the gig economy can be difficult. And, with the growing prevalence of the gig economy, you’ll want to ensure your current workforce doesn’t leave for gig work. To effectively attract and keep your talent, you’ll need to provide personalized benefits that your employees want.

In this article, we’ll explain how to attract and hire talent in the gig economy.

Learn which benefits each generation cares about the most. Download our generational employee benefits comparison chart

Why is the gig economy growing?

The gig economy and gig companies have been around for decades. However, recent events have shifted the perception of gig work from a last resort for the working class to a desirable employment model for standard workers.

On March 11, 2020, the World Health Organization (WHO) declared COVID-19 a global pandemic. Businesses shuttered, and many part-time workers and full-time employees were laid off or forced to work from home in makeshift offices. As a result, according to Statista², more than 2 million traditional employees joined the gig workforce in 2020 alone.

These Americans turned to gig work as a way to pay their bills until they could find a new job. It was seen as a temporary fix, but now that the economy’s rebounded and businesses are hiring, these same workers are hesitant to leave their gig work behind. That’s because working from home comes with several benefits to gig workers. It allows people to live a flexible lifestyle that wasn’t possible before in a full-time, in-office job. Freelancers and independent contractors are free to set their hours and choose to take on the clients they want to work with. They can often work when they want, where they want, wearing what they want for any period of time they want.

Finally, advances in digital technologies and system improvements are partially responsible for the gig economy's growth. Thanks to digital platforms such as video conferencing and instant messaging that make remote work possible, people are more equipped to be successful gig economy workers.

Endless opportunities for gig workers

From delivery jobs to high-ranking executive positions, there’s a wide range of options for gig workers to choose from in today’s economy. Ride-sharing services like Uber and Lyft have expanded how self-employed people can earn money. Companies that provide personal services, such as TaskRabbit and DoorDash, also add another dimension to the labor force.

A 2021 Pew Research Center study³ found that 16% of Americans have earned money through an online gig platform.

Some of the ways gig workers have earned money include:

Driving for a ride-hailing app
Shopping for and delivering someone’s groceries or household items
Performing household tasks like cleaning someone’s home or running errands like picking up dry cleaning
Acting as a delivery driver by using their personal vehicle to drop off packages via a mobile app or website such as Amazon Flex

There are also several technology companies, staffing agencies, and consulting firms that have made it a priority to hire gig workers.

A FlexJobs report⁴ found these companies had the most remote freelance jobs in 2022:

Kforce
LHH – Lee Hecht Harrison
BELAY
Kelly
TELUS International
Aston Carter
Beacon Hill Staffing Group
Akraya
Solomon Page
Amplify Education

The latest legislation on gig work

Keep in mind the latest legislation on gig work has caused some concerns for companies such as Uber and Lyft. In October of 2022, the Biden administration proposed a rule that could result in more gig workers being considered full-time employees rather than independent contractors.

The U.S. Department of Labor believes the proposed rule can reduce the risk of organizations misclassifying employees as independent contractors. Ultimately, this law could affect future pay and benefits for gig workers. Many labor advocates are in favor of this, but it may raise costs for companies offering gig work.

Hiring gig talent

Why might your organization want to hire gig talent? Why not stick to the tried and true method of in-house permanent talent?

If you have an immediate skills gap in your organization, hiring independent contractors is often quicker than searching for an equally qualified full-time job seeker.

Hiring an independent worker can also help with your budget. Because gig workers aren’t a permanent workforce, they can be engaged as needed on a project-by-project or temporary basis. This is especially helpful for small businesses that can’t afford to bring on more full-time help.

However, hiring gig talent isn’t the same as hiring for permanent positions. Since gig workers move around and balance multiple gigs simultaneously, the hiring and onboarding process must be fast. While your average worker might wait around through a month-long hiring process, don’t count on a gig worker to do the same.

You also need to establish goals, deliverables, and timeframes for gig talent. After all, with gig workers, you may want to offboard them once their job is complete. Alternatively, you can hire gig workers later as full-time employees by offering them the benefits they want.

No matter how you want to use gig workers in your organization, you’ll need to provide desirable benefits and perks to attract the right talent.

Why offer benefits to gig and full-time workers

There’s stiff competition in the gig economy sector right now. A lack of benefits could send potential hires looking for work in another direction. To ensure that your organization stands out to job seekers, you need to offer an appealing benefits package as a bonus to their source of income.

Because many gig workers are millennials or Gen-Z job seekers, providing benefits that young people want is more important than ever before. Additionally, according to Gallup⁵, 46% of the full-time workforce comprises millennials and Gen-Z.

You’ll want to bolster your benefits and perks for your permanent full-time employees to ensure they don’t leave for flexible gig economy opportunities.

In our 2022 Employee Benefits Survey Report, we found that factors like gender, age, and where an employee works all influence what kind of benefits an employee wants most. While young people increasingly want their leaders and organizations to be ethical and transparent, as it turns out, most young employees want similar personal benefits to everyone else.

Some of the most desirable benefits for young workers include:

Job growth opportunities
Tuition support
Health benefits
Wellness benefits
Retirement benefits
Remote work options

So, what benefits should you offer to attract and retain workers in the gig economy? We’ll explain the most appealing benefits to job seekers and how to make the most of them.

Health benefits for gig workers

Health benefits are a major factor in which positions a job seeker applies for. But why would you offer a health benefit to a part-time employee? If you want to attract the best gig talent, you need to be able to compete with other organizations.

While there are no legal requirements for offering a health benefit to all of your part-time employees or independent contractors, a health benefit can help you attract and keep the right employees.

According to The Philadelphia Inquirer⁶, 30% of adults aged 19 to 25 had no health benefits in 2011. That number dropped to 16% in 2018. Offering a health benefit can help you attract these part-time and full-time workers.

These benefits are critical for keeping full-time employees. Plus, if your organization is an applicable large employer (ALE) with 50 or more full-time equivalent employees (FTEs), you’re required to offer a health benefit to at least 95% of those full-time employees.

Health benefits can be in the form of traditional group health insurance or health benefit allowances. We’ll cover a few of the most popular health benefit options below.

Group health insurance

Traditionally, a group health insurance policy plays a significant role in recruiting and retaining employees. However, it can also be highly time-consuming and expensive for organizations and employees.

If you want to offer group health insurance to both full-time and part-time gig workers (not to mention different income levels, ages, and health statuses), you’ll have a hard time finding a policy that fits all of your employees’ needs.

Thankfully, there are other options for providing health benefits to your full- and part-time employees.

Health reimbursement arrangements (HRAs)

One option that’s growing in popularity is a health reimbursement arrangement (HRA). HRAs have the same tax advantages as group health insurance while giving employers more control over their budget.

Employers offer a monthly tax-free benefit allowance that employees can use for eligible medical expenses. This can include health insurance premiums and prescriptions. Employers can decide if they want to reimburse premiums only or include out-of-pocket expenses as well.

Because HRAs reimburse employees for their health expenses, employees can choose the individual health insurance plan that’s best for them as long as it meets minimum essential coverage (MEC).

With an HRA, you can even include your part-time employees in the benefit.

The are two types HRAs that could be leveraged to support part-time and full-time employees:

Qualified small employer HRA (QSEHRA)
Individual coverage HRA (ICHRA)

An ICHRA is the only option for employers who want to offer a health benefit to their gig workers. It's an IRS-approved benefit that allows businesses to give their employees an allowance toward the health plans of their choice.

Health stipends

Instead of offering an HRA or group health insurance, some organizations pay their employees a stipend allowance to help cover their health costs. Health stipends, or perks, come with fewer regulations and are more flexible for businesses.

You can reimburse employees for their healthcare expenses, much like an HRA, but without submitting receipts for approval. This makes a health stipend easy to manage.

Health stipends are best for organizations with employees who receive federal premium tax credits. Employees can keep their tax credits while also taking advantage of the health stipend.

However, health stipends count as taxable income on an employee’s W-2. And you’ll have to pay payroll taxes on these stipend payments.

Wellness benefits

An often-overlooked perk for attracting and retaining employees is a wellness benefit. Wellness benefits are essential in the modern gig economy. People often pick up gig work for flexibility and to focus on their well-being and work-life balance. Offering a wellness benefit, such as a wellness stipend, is a great way to attract these workers and improve your organization’s overall productivity.

With a wellness stipend, you can offer your full and part-time employees different monthly allowances for their wellness expenses. This can include reimbursement for gym memberships, yoga classes, exercise equipment, and more.

Remote work benefits

An alternative work arrangement could also pique the interest of your current talent and potential hires. Giving your regular workers the freedom to work remotely or on a hybrid schedule is a great incentive that boosts productivity.

While remote work is a perk, offering additional benefits is extremely important to independent gig workers. Employers can reimburse employees for their home office costs with a remote work stipend, such as internet access and cell phone bills. This helps ensure that your remote employees have a stable internet connection to complete their tasks.

A remote work stipend can also reimburse part-time and full-time employees for their home office setup costs.

Conclusion

To attract and retain talent in the gig economy, you’ll need to provide benefits to part-time and full-time employees to remain competitive. Knowing the different types of benefits you can offer to gig workers will help you ensure that your employees are set up for success.

Want to offer your employees stipends for things like health, wellness, remote work, and education without taking on the stress of figuring it all out yourself? Our WorkPerks personalized benefits solutions can help you set up and manage a custom employee perk stipend in only a few minutes every month.

Schedule a call with one of our personalized benefits advisors to learn more about the employee benefits that fit your organization’s needs.

This blog article was originally published on March 9, 2022. It was last updated on March 2, 2023.

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Holly Bengfort

Holly is a content marketing specialist for PeopleKeep. Before joining the team in 2023, Holly worked in television news as a broadcast journalist. As an anchor and reporter, she communicated complex stories to the vast communities she served on a daily basis. Her background has given her a greater understanding of people and the issues that affect our lives. When Holly isn’t writing, she enjoys reading, exercising, and spending time at the beach.