Tuesday, 9 October 2018
Americans have always been an industrious lot, and now, more than ever before, entrepreneurial-minded folks can earn extra cash by marketing their talents and resources without having to get hired by a company.
Got an extra room? Rent it out on a home-sharing site. Decent car? Offer rides via Lyft or Uber. Can you organize closets, paint, babysit, throw a dinner party, dog walk or write love letters? Whatever you can do, there's a platform to connect you with someone who needs your help.
Statistics vary widely, but up to 37% of Americans take on a side hustle—part-time self-employment—at least once a year. Of those, more than 50% are Millennials. Respondents to a Bankrate.com survey say they do it for more extra cash (59%) and to meet living expenses (38%), earning an average $686 per month. Those who work a side hustle at least once a month earn an average $836.
According to the survey, the top side hustles are home repair and landscaping (12%) followed by online sales, crafts and childcare. The U.S. Census Bureau shows that ridesharing is experiencing a quantum growth, however: the number of self-employed drivers showed a steady growth of 5.2% each year from 1997-2013, and then a boom as the number tripled from 224,000 in 2013 to more than 700,000 three years later.
Data from ride-share service Lyft backs this up and goes beyond. Lyft provided 2.7 million rides in 2015, then 160 million in 2016, and this year alone the platform booked 375.5 million rides.
As with every major movement, economic or otherwise, there's a confluence of factors at work. First, the technology to connect buyers and sellers has become simpler and less expensive to use than ever before. For example, if someone wants to sell a table, she can list it on a number of apps, including Facebook. When she connects with the buyer, that person can find someone with a truck who can help her move it that day. And it can all happen from a phone, which would have been much more difficult even 10 years ago.
Economic trends are in effect as well. Though the unemployment rate has held steadily low since the recession recovery, wages have stagnated and wage inequality means what growth there may be isn't necessarily going into the pockets of those who need it the most. “Year-over-year growth has mostly ranged between 2% and 3% since the beginning of 2013. But in the years just before the 2007-08 financial collapse, average hourly earnings often increased by around 4% year-over-year. And during the high inflation years of the 1970s and early 1980s, average wages commonly jumped 7%, 8% or even 9% year-over-year," reports the Pew Research Center. Meanwhile, healthcare and education costs continue to rise, leaving less money for other wants and needs. No wonder so many people are scratching for a little extra cash where they can find it.
For a lot of side hustles, the pitch seems too good to be true: Work whenever you want, wherever you want. But you'll need to factor in the cost of doing business before you start counting your cash—including any commissions you'll pay the platform you're using. For example:
But there are other benefits often overlooked in official analyses of the gig economy: A side hustle can be fun. It can introduce you to new people, make you feel useful, and fill a service niche in your community. And maybe, if you love it enough and make enough money, it can be the foundation of a whole new career.
The content provided is for informational purposes only. Neither BBVA Compass, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial advisor about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA Compass or any of its affiliates.
Links to third party sites are provided for your convenience and do not constitute an endorsement. BBVA Compass does not provide, is not responsible for, and does not guarantee the products, services or overall content available at third party sites. These sites may not have the same privacy, security or accessibility standards.
So you scored a windfall! But now what do you do with all that hot cash? Vacation? Pay debt? Maybe both.
Do you have an elderly family member and help manage his or her finances? Here are tips on how to help them keep their independence and stay safe.