Wall Street is beginning to worry about a new recession in the next couple of years. People are already aware of spiking fuel and energy costs. Now, they are starting to become familiar with the hit to their wallets in the grocery stores as prices rise there rapidly. Overall, prices for everything seem to have steadily gone up, not down.
People living below the poverty line know that every penny counts. Inflation is like having a hole in your pocket. On a fixed income, you seem to have less and less. If you’re bringing in any kind of income, you have to work more and more just to maintain where you’re at.
Our central bank, the Federal Reserve, manages our currency in the United States. When recession looms, the Federal Reserve can trigger a recession to bring inflation down. It does this to keep the economy from falling apart due to cash losing its value. The risk, however, is bringing on stagflation: persistent high inflation combined with high unemployment and stagnant demand.
In the face of that uncertainty, Americans are taking their economic futures into their own hands. With the shutdown of the traditional job market during the height of lockdowns, many people got creative and turned to other means for income. Gig work became popular. Then, as the economy opened back up, the traditional system was baffled that people weren’t taking the plentiful jobs that were advertised. Many blamed COVID-19, or concluded people didn’t need to work with government stimulus. The truth is, the masses have embraced alternative ways to make a living as they were increasingly shut out of conventional employment during the pandemic. The traditional economy, and the traditional system that supports it, now has to question its role.
Gig work isn’t just limited to Uber, Doordash or those other big names. Any internet search will show the incredible number and variety of opportunities to choose from. The alternative economy is fast on its way to becoming the economy, with 52% of Americans having done some freelance work by 2023. There are already 59 million gig workers, according to Fortunly.
The alternative economy isn’t all good news. Most contracted workers work more than 40 hours per week, but make less than full-time employees. More than half don’t have access to employer-provided benefits, or other protections that came with traditional employment. Most also lost their jobs during the COVID-19 pandemic.
What it does allow, however, is options within the traditional economy. With 90% of US workers saying they would consider freelancing or independent contracting work, the word is out. People in the alternative economy are still making do with less and working more hours than ever, but at least they’re able to be self-reliant.
Being self-reliant doesn’t mean that people are disconnecting from community. In fact, many people are expressing that they’ve found it again, since joining. The gig economy is still just one facet of the alternative economy, which arose out of a survival economy, in which people barter for what they need and look out for each other. Rather than abandon it and return to a traditional system, more and more are adopting it, with downturns in the formal economy propelling it further.
Analysts, economists and policymakers in the traditional economy really are scratching their heads. What should they say to people who no longer seem to need them, for a system that is fast becoming irrelevant? Like the Reformation, when Martin Luther stamped his theses to the door of the Catholic Church and declared that the priestly class of intermediaries was no longer needed, America finds itself with similar questions and challenges. For those experiencing poverty and struggling, given what may lay ahead, taking action on our own behalf is critical and not even a question.
