It looks like the gig economy -- where workers are independent contractors rather than employees, is gaining traction and there’s no sign of it going away. According to research from Prudential, the gig model may provide more flexibility for employers and workers, but it isn’t good for workers’ financial wellness.
Prudential says the biggest challenge to financial wellness for gig model workers is they have to self-fund their benefits and retirement savings. In addition, they’re responsible for self-employment taxes. The survey found, on average, gig workers earn $36,500 per year, while full-time employees make $62,700. To make matters worse, only 16 percent of gig workers have assets in an employer-based retirement plan, as compared to 52 percent of full-time employees.
To tackle the gig economy issues, researchers suggest employers provide holistic financial wellness programs and gig workers should consider using exchanges for health care and other insurance, as well as setting up IRAs. Gig workers should also seek the help of professionals, who can help them figure it out.