March 20, 2019

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Opinion

Workers coping in the 'gig economy'

Book suggests contract, part-time jobs 'new normal'

Hey there, time traveller!
This article was published 7/1/2017 (802 days ago), so information in it may no longer be current.

The “American dream” is on life support. For that matter so, too, is the “Canadian dream.”

The goal of having a home in the suburbs, two cars in the attached garage and a couple of kids has slowly been dissolving in the acid test of reality over the last five decades.

The linchpin has always been full-time employment. Without it, the dream is unworkable.

While full-time jobs are still the gold standard and make up the majority of employment in North America, work is trending toward more part-time, contract and on-demand jobs.

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Hey there, time traveller!
This article was published 7/1/2017 (802 days ago), so information in it may no longer be current.

The "American dream" is on life support. For that matter so, too, is the "Canadian dream."

The goal of having a home in the suburbs, two cars in the attached garage and a couple of kids has slowly been dissolving in the acid test of reality over the last five decades.

The linchpin has always been full-time employment. Without it, the dream is unworkable.

While full-time jobs are still the gold standard and make up the majority of employment in North America, work is trending toward more part-time, contract and on-demand jobs.

Statistics Canada data from November show part-time jobs grew by 213,000 over the last 12 months, while full-time work decreased by about 30,000.

Moreover, part-time jobs are increasingly the norm for older and younger workers, accounting for one in five and one in two jobs, respectively, according to a recent CD Howe Institute report.

According to the author of a new book we’re moving toward a "gig economy," where more people are working multiple part-time jobs, on contract or are self-employed. And it’s not only changing how we work, but also how we live, play and save for the future.

"If you’re not working as a full-time employee, you’re part of the gig economy," says Diane Mulcahy, author of The Gig Economy: The Complete Guide to Getting Better Work, Taking More Time Off, and Financing the Life You Want.

"It’s absolutely a trend and it shows no signs of reversing, and there are three main drivers of it."

For one, companies are not creating a lot of new full-time jobs. Consider media as an example of this trend.

"There is a lot of freelance work available, but not very many full-time reporter jobs available," says Mulcahy, a Boston-based venture capitalist, who lectures at Babson College and is a senior fellow at Ewing Marion Kauffman Foundation, managing its private equity and venture capital investment portfolio.

"Companies have figured out they can get the work done without organizing it into full-time jobs."

And that brings her to driver No. 2: Full-time workers are the option of last resort for many employers.

"They’re the most expensive and least flexible," she says.

"Companies are looking at automating, off-shoring, outsourcing, contracting and freelancing as alternatives to hiring full-time employees."

The third driver: workers are getting used to non-full-time work and even choosing it over full-time because of the freedom it can afford.

"People have busy lives with a lot of things they want to do so they appreciate the ability to balance their personal and professional lives and to control how, where and when they work," Mulcahy says.

The trend has big implications for society as a whole, but perhaps most profoundly the gig economy will alter how we manage our money.

"If you’re entering the gig economy, you absolutely have to rethink personal finance," she contends.

And this directly ties into the idea that the American Dream, in its original form, is dying:

"That traditional narrative about what success looks like really relies on a stable job and a steady paycheque, and a lot of those components of the American Dream have become very expensive."

Having a mortgage, car payments and other large fixed costs make less sense when you’re income is variable.

"You need to be very deliberate about the lifestyle you want because you have to go out and generate the income to support it," she says.

Moreover, gig workers need to save more for the future because they don’t have workplace pensions, or benefits. They need a larger financial cushion, and making large, fixed payments inhibits the ability to set aside extra money for retirement and rainy days.

"Another thing I talk about is access versus ownership — and to me, that’s the biggest personal financial revolution of our time," she says.

As a gig worker, do you really need to own a car or a home, or can you get the same conveniences they offer without ownership?

Mulcahy suggests this is already happening with millennials who are renting instead of mortgaging, and biking, busing and car-sharing rather than making monthly car payments.

"It’s very freeing to not have a fixed cost for a car every month because you don’t have to generate a set amount of income to cover those costs every month," she says, adding even full-time workers should heed this advice.

"The risk is you take a full-time job and say, ‘Thank goodness, I don’t have to do any of that stuff anymore.’"

Full-time employment is anything but permanent these days, however, so full-time workers seek to squeeze as much as they can from their workplace experience.

"Learn all you can, max out the benefits, network as much as you can, keep doing side gigs when possible, and always think about what you’re going to be doing next," she says.

Yes full-time is the ideal, but unfortunately it is increasingly hard to get.

And governments are slow to react to the changing labour climate. Consider that part-time and contract workers often receive fewer benefits. Even government programs such as employment insurance and the Canada Pension Plan are less lucrative for non-full-time workers.

"What we have now is governments desperately trying to hang onto outdated systems geared toward full-time workers," Mulcahy says.

"But the model has to change and it is likely to be very disruptive."

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History

Updated on Saturday, January 7, 2017 at 8:22 AM CST: Photo added

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