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What is the gig economy?
The IRS defines the gig economy as “activity where people earn income providing on-demand work, services or goods,” often through an app or website .
In short, gig work typically consists of doing temporary, contract and freelance jobs. If you are looking for flexibility, gig work may be good, particularly if you already have profitable skills or hobbies.
Examples of gig work
The term “gig economy” gets thrown around most often in reference to jobs where an app connects independent workers to paying customers, such as with:
- Delivery services like DoorDash, Instacart and Amazon Flex.
- Pet sitting apps like Rover or Wag.
- Freelance marketplaces like Upwork, Fiverr and other freelance websites.
It also includes jobs like tutoring, design, caregiving and many more. The gig economy represents a large part of the workforce and spans virtually every industry. In fact, over half of U.S. adults (62%) now earn money working for one or more gig platforms, according to research from credit reporting agency TransUnion published in 2024 .
Why it’s called a gig
A “gig” (sometimes called a “side hustle”) is generally a short-term task, project or job that a person takes up to make extra cash. But many do gig work long term or as a main source of income.
Some gig workers get paid per task or assignment. Others earn an hourly rate. It’s a “gig” because you do the thing — give a ride, deliver a package, teach a lesson, walk a dog — then move on to the next one.
» MORE: How to make money as a kid
Benefits and drawbacks of gig work
Gig workers are typically classified as self-employed independent contractors, rather than employees, for tax purposes. This can be both a blessing and curse.
Benefits
Gig work can mean freedom from a monotonous day job. Working in the gig economy can come with flexible hours, quick cash or the ability to set your own pay, depending on the job.
Drawbacks of gig work
Gig work can also lead to instability if it’s your primary source of income. Being self-employed can bring irregular pay, a lack of benefits and a complicated tax process.
What to do before ditching your day job
If you’re considering gig work, keep a few things in mind.
1. Research the pay
Rates can vary by location, experience and demand. Plus, the platform you get gig work through may take a cut of your earnings. It’s also a good idea to find out how often you get paid, so you’ll know when to expect each paycheck. Check the company’s website, reviews and Better Business Bureau page for details.
2. Be aware of potential costs
Some gigs require you to pay for certain expenses related to the job. For example, you may be on the hook for insurance, gas and car maintenance if you transport goods or people. (Learn how gas expenses affected the earnings of a NerdWallet writer who tested how much DoorDash pays.)
3. Budget for taxes
Traditionally, employees automatically get payroll taxes withheld by their employers. Most gig workers, on the other hand, are responsible for doing the math themselves. Build self-employment tax into your budget so you don’t face a surprise bill when it’s time to file.
4. Watch for scams
Gig work is high in demand — and scammers know this. Be on the lookout for red flags. If you’re asked to pay money upfront, or a position promises to pay more than your skills and experience warrant, it’s probably a scam. Learn more about how to spot a bogus job.
5. Manage your time
Adding a gig economy side hustle on top of a 9-5 career can be a recipe for mental and physical burnout. Make sure the money and the satisfaction is worth the extra time and effort. Have a goal in mind — whether it is to make a certain amount of extra income and/or upskill for a future career — and know your end game.
Like your free time? Maybe you can save money instead.
Consider looking at your living expenses and seeing whether you can lower or eliminate something. That might allow you to work fewer or better hours. And there’s also no shame in looking for resources to help with paying your bills if you are struggling to make ends meet.
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- 1. Internal Revenue Service. Gig Economy Tax Center. Accessed Sep 18, 2025.
- 2. TransUnion. More Than One-Third of Gig Workers Rely on Gig Work as Primary Source of Income. Accessed Sep 18, 2025.
