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'Reorganizing priorities:' Gig economy transforming business, changing the way work gets done

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ANDERSON — An epiphany happened for Jason and Jerrad Oakley as darkness fell on the side of a mountain in Tennessee.

The brothers were vacationing in the foothills of the Smoky Mountains in 2013 and were on their way to Jerrad’s home in South Carolina when their motorcycle blew a tire. During a three-hour wait for roadside assistance, the Oakleys hashed out a decision that would lead them to a dilapidated building at the corner of Eighth and Jackson streets in downtown Anderson.

Creating and distilling alcohol had long been a hobby for both brothers. Jerrad was growing increasingly disillusioned in his job as an executive at AT&T, and Jason’s employment offered him scheduling flexibility. So the Oakleys decided to open their own distillery.

“I realized that I personally was not going to be able to answer to the man for what was going to be going on,” Jerrad said. “Not to mention, I was not happy with the way the corporations were treating their employees. So I decided to go off and go into my own enterprise, my own business. I realized that that was the only way that I was going to be able to manage it.”

The Oakleys are far from alone in choosing to leave the structure of a 9-to-5 job with benefits for more uncertain pursuits as entrepreneurs. A Pew Research Center study in 2016 found that 24% of American adults earned money during the previous year in what’s known as the “gig economy.” In 2017, the Bureau of Labor Statistics reported that approximately 55 million people in the U.S. were “gig workers,” a figure accounting for nearly 34% of the U.S. workforce. That number is projected to increase to 43% next year.

As the Oakleys moved forward with their business plan, they determined that Indiana would be more suitable for a distillery. Jason, who lived in Noblesville, spent months scouring the area in search of an affordable location before getting a call in 2016 from Levi Rinker in Anderson’s downtown development office. The Oakleys bought the structure in late 2016 and set about “deconstructing” the interior, turning 20,000 square feet of space into a brew house and restaurant that Jerrad says is “still a hobby.”

But the brothers maintain that their years-long investment in their business — and in Anderson — is a product of both their passion and a desire to live life on their own terms.

“I went from working a corporate job to starting my own service business in order to be able to do our dream, which is this,” Jerrad said. “For me personally, leaving the corporate world was the only way that I was, along with my family, able to even do this.”

REORGANIZING PRIORITIES

Defined loosely as a system in which independent workers are paid by completing a specific task or project, the gig economy has been around for decades. But many experts cite the Great Recession and its aftermath as the catalyst for bringing it into greater prominence.

As layoffs mounted across a variety of industries many workers — by choice or out of necessity — began to pick up temporary or seasonal jobs whenever they could. Those jobs had to offer scheduling flexibility in order to allow people to continue seeking more permanent employment while supplementing their income.

“It’s a reorganization of priorities and preferences for the American worker,” says Terry Truitt, CEO of the Flagship Enterprise Center and a former dean of the Falls School of Business at Anderson University. “At one point, it had been the highest wage amount, (work with) the highest income, the most benefits, was the most solid job, the most important. But it seems like there’s been a change in priorities to where flexibility — my personal time, the ability to change what I need to, family life — all those things are gaining in importance.”

Side gigs offer flexibility, fulfillment

Increasingly, those issues matter more to younger workers, many of whom have recently graduated from college with aspirations that are drastically different from those held by their parents 30 years ago. Instead of settling into careers and opening company-backed 401(k)s or other retirement plans, many millennials are opting to piece together incomes based on contract work.

“As people get younger and younger, they are less nervous about this,” says Matt Will, an associate professor of finance at the University of Indianapolis. “They believe strongly that, yeah, they’re going to be able to get that consistent income. It’s a psychological shift, a cultural shift. It’s fascinating to watch.”

WORKER-CENTERED BUSINESS PLANS

With more potential employees demanding greater flexibility and prioritizing quality of life away from the workplace, many companies are rethinking aspects of their recruiting efforts. And startups often launch with business plans devoid of such customary features as health benefit plans, 401(k)s and other retirement planning services.

“With contract labor, in the gig economy there are no benefits associated with that,” Truitt said. “So those are savings the company can count on as well. So if they have a full-time position at 40 hours a week, and they can have four people fulfill that at 10 hours apiece, pay them a little more per hour, perhaps, without paying them benefits, the company can then come out ahead.

“Then if they lose one of the four, they don’t lose the entire 40-hour-a-week person,” he added. “They lose a fourth of that instead. They can fill that much easier than they can replacing the full person.”

For companies, hiring workers on contract carries with it the benefit of reducing — or eliminating altogether — fixed costs that were once considered nonnegotiable.

“A company may not want to employ (salaried workers) because then they’d have to pay benefits,” Will said. “Instead they’re going to outsource. Even not-for-profits are outsourcing the chief financial officer function. They want to make their costs variable. It’s a way for companies to exert more control over their expenses.”

For the Oakleys, who employ 10 part-time workers at their distillery, adapting to the gig economy carries intangible benefits as well. Their employees, Jason says, feel a sense of empowerment as they’re treated almost as full partners in the enterprise.

“I feel like our employees treat this facility and this business as their business, and they move into ownership in regards to that way,” Jason said. “Because of that, it makes it very easy for them to come to work and know that there will be a job here for them. It’s comforting to them.”

WHAT’S NEXT?

Although the U.S. economy has been robust by many accounts over the last few years, experts say there are warning signs on the horizon. Economic growth, which had been around 3% last year, is expected to slow, and unemployment is expected to tick up slightly in 2020. As businesses prepare for what many believe will be an inevitable downturn, gig workers will be front and center in many operating plans.

“The workforce and the structure of companies 10 years from now will look nothing like they do today,” Will said. “They will be lean as far as payroll and their employees. People right now perceive that as a negative. It’s antithetical to their thinking. But you talk to a 25-year-old these days, they’re saying, ‘Why would I want to commit 30 years of my life to this one place?’”

Truitt added: “The primary driver is the workforce itself. So while it may be less expensive for employers at some level, and where it may be attractive for those reasons to give them flexibility, the driver in this is the worker.”

Follow Andy Knight on Twitter @Andrew_J_Knight, or call 765-640-4809.

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