Gig workers, contractors, and consultants. They all sound the same, but there are some key differences between each one.
One thing they share is a need for a rainy-day policy should the unthinkable or unimaginable happen.
What’s in this article:
- What are gig workers, contractors, and consultants?
- How are gig workers, contractors, and consultants similar?
- How are gig workers, contractors, and consultants different?
- Why do gig workers, contractors, and consultants need a rainy-day policy?
What are gig workers, contractors, and consultants?
Gig worker
A gig worker is someone who takes on short-term, on-demand projects from multiple employers. Oftentimes the work supplements their full-time jobs. What they do doesn’t require them to be an expert or be knowledgeable about their industry.
The number of Americans who are gig workers, either part time or full time, is anywhere from 25% to 35% (or about 33 to 46 million) of US workers, according to the Gig Economy Data Hub, a collaborative effort between the Aspen Institute’s Future of Work Initiative and Cornell University’s ILR School.1The Gig Economy Data Hub also estimates that one in 10 of these workers rely on gig work for their primary income.2
Examples of gig workers are ride-share drivers who might use a platform like Uber or Lyft, babysitters, or virtual assistants.
Contractor
Contractors are another kind of self-employed worker. Like gig workers, they are task or project-oriented. But unlike gig workers, they usually only work for a single employer, sometimes for a year or more.
Contractors are brought on as a temporary set of additional hands. They focus on executing well-defined tasks, and like other employees, work regular hours (i.e. from 9 to 5) and report to a manager.
They are expected to have some baseline knowledge about their industry and to be able to complete the work asked of them.
Examples of contractors are construction workers, project managers, personal assistants, graphic designers, handymen/women, or house cleaners.
Consultant
Consultants are experts in their field and what they do. They are also self-employed workers. They’re brought in to solve problems and produce results. The problems they deal with are ones a company can’t solve at that moment (hence the need for help). Their work is also project-based but self-directed.
An example of a consultant would be a healthcare management expert or former corporate executive serving as a professional adviser who helps doctor practices transition from a fee-based service model to a value-based care one.
How are gig workers, contractors, and consultants similar?
Gig workers, contractors, and consultants share a lot of similarities.To start, they’re all self-employed. They work for themselves and are their own boss.
Like any freelancer or independent contractor, they’re also responsible for calculating their own taxes and paying them.
They’re also largely responsible for taking care of themselves whether they’re working or not. Unlike the half of the country that gets benefits from employers (54.5% to be exact), gig workers, contractors, and consultants have to buy their own health insurance.3 That also means they don’t have access to other perks like disability and life insurance typically provided to employees.
Because they’re self-employed, gig workers, contractors, and consultants also don’t qualify for unemployment insurance.
How are gig workers, contractors, and consultants different?
Gig workers, contractors, and consultants share many differences rather than similarities.The differences come up in several areas.
| Gig worker | Contractor | Consultant | |
|---|---|---|---|
| Skill | Little to none | Moderate | Expert |
| Experience | Little to none | Some (3-5 years) | Extensive (5-10+ years) |
| Job Length | Hours to days | Days to months | Months to years |
| Pay | Relatively low | Moderate | High |
| Scope of work | Narrow | Moderate | Broad |
| Portfolio | Reviews | Completed projects | Metrics |
Skill level to complete a task
Gig workers need relatively little to no industry knowledge to complete an assigned task or project. Contractors are expected to know how to do their specific work. Consultants are experts and are brought on board for that very knowledge they possess.
Experience
Gig workers require little to no experience to complete their work. Contractors require a moderate amount. Consultants are expected to have extensive years of experience in their field.
Length of job
Gig workers have the shortest gigs. Their work is temporary and generally won’t last more than a few hours or days. Contractors may have longer contracts that can last months to a year. Consultants would be expected to be on board for months to a year.
Pay
The pay is commensurate with experience. Gig workers are on the low end, contractors are in the middle, and consultants command top dollar due to their expertise.
Scope of Work
The scope of work differs greatly for gig workers, contractors, and consultants. Gig workers are expected to finish very narrowly-defined tasks. Contractors also are expected to do the same although their scope is generally broader. Consultants, on the other hand, will deal with the widest expectations and take on challenges and problems at the highest levels.
Portfolio
Lastly, gig workers, contractors, and consultants differ based on the body of work they share to demonstrate their competency. A gig worker may rely upon reviews from happy clients (actually, all do). Contractors will reference successful projects or completed designs or articles. Consultants will share how they improved metrics and produced tangible results of success.
Why do gig workers, contractors, and consultants need a rainy-day policy?
Gig workers, contractors, and consultants face the same question any self-employed person faces: what do they do when they get sick or hurt and can’t work?It’s a two-fold solution.
First, they protect themselves financially.
Buying health insurance is one step. Health insurance protects you from big, unexpected medical bills. For context, a 2019 study by the American Journal of Public Health found 66.5 percent of personal bankruptcies were tied to medical debt.4
You have many choices to cover you and your family. Here are just a few:
- ACA plans through the federal Health Insurance Marketplace or your state’s own exchange
- Medicaid if you quality financially
- Buying directly from health insurance companies
- Short-term medical plans that can bridge gaps in coverage
- Health sharing ministries, an alternative to insurance
But health insurance doesn’t pay the bills or put food on the table. It doesn’t cover rent or care payments either. That’s why gig workers, contractors, and consultants should consider the second half of the solution: an additional rainy-day policy just in case the unthinkable or unexpected happens.
One option is disability insurance. Disability insurance pays you a set amount if you’re unable to work. It has to be due to injury or illness not related to your job.
For self-employed workers, the most likely version available is disability accident insurance. Often paired with accident insurance, which pays a lump sum, disability accident insurance provides ongoing payments for a set time. Accident insurance can The length of time you can receive payments, or the benefit period, typically lasts several months. The amount you receive, or benefit, varies too but can be several hundred dollars a month. There are other details to know like how long you have to wait before receiving benefits (aka the elimination period).
Next Steps
If you’re a gig worker, contractor, or consultant interested in enrolling in your own rainy-day policy, Flex Benefits can help. We have numerous supplemental policies that can safeguard you and your family. Our disability accidental insurance offers up to three months of coverage, providing anywhere from $250 to $750 a month in additional income. Learn more by clicking here.
