Is the ‘gig economy’ all it’s cracked up to be?

I’m not cool with the idea that my generation must cobble together multiple jobs at odd hours without enjoying a 401(k) match or paid sick time, writes Brianna McGurran.

“Ask Brianna” is a Q&A column for 20-somethings, or anyone else starting out. I’m here to help you manage your money, find a job and pay off student loans — all the real-world stuff no one taught us how to do in college. Send your questions about postgrad life to askbrianna@nerdwallet.com.

This week’s question:

“I need money and I’m thinking about driving for Lyft or Uber, or working for another app that lets me set my own hours. Is that a good idea?”

With the release of every cheekily named on-demand app comes a new way for 20- and 30-somethings to make money on the side. Got a car? Drive for Lyft or Uber. Got a couple of hours to kill? Deliver cookies or cold medicine for Postmates. Got a knack for assembling furniture? Make money doing it with TaskRabbit. (Also, there’s an Ikea wardrobe in my apartment with your name on it.)

The explosion of the “gig economy” — the collection of online platforms that let workers sell their services directly to consumers on their own schedules — has lowered the barrier to entry for workers who need money quickly. The flexibility a gig affords can help you make extra money to pay off your student loans early, for instance, or to pay bills during gaps between jobs.

That’s how most workers use online platforms now. But the larger story of the move toward temporary work worries me. I’m not cool with the idea that my generation must cobble together multiple jobs at odd hours without enjoying a 401(k) match or paid sick time. Gigs aren’t replacements for full-time jobs with benefits, and it’s worth considering what we give up if, increasingly, they’re our only options.

Gigs small but growing

Today, the gig economy isn’t all that big. Between 2012 and 2015, just 0.4% of adults earned income consistently each month using online labor platforms like Uber, the JPMorgan Chase Institute found. Most gig workers supplemented lost income during periods of low earnings or when they were between jobs. As of September 2015, more than 80 percent of workers who used online labor platforms made less than 25% of their total income from that work.

But over the three years JPMorgan Chase performed its study, the percentage of adults who earned money regularly from online gigs grew tenfold. And the growth of gigs extends beyond online platforms.

In March, researchers at Harvard and Princeton found that from 2005 to 2015, the percentage of workers in “alternative work arrangements,” defined as online and offline temporary, on-call, freelance and contract work, went up 50%, to 15.8% of all workers. That accounts for all the net employment growth in the U.S. economy in that time.

More flexibility, less money

The problem is that temporary, contract and other “contingent workers” earn less overall than employees in standard work arrangements, the Government Accountability Office reported last year. They’re more likely to live in poverty and receive public assistance. They’re two-thirds less likely to have a retirement plan at work.

Olivia West, a singer-songwriter and mother of two based in Nashville, Tennessee, drives for Lyft to help pay the bills. She says she makes $250 to $450, before taxes, driving 25 to 50 hours a week between shows.

“Per hour I make a lot more singing than I do driving, but those gigs are harder to find,” she says. “The driving app is always there, filling the need.”

She used to clean houses to make extra money, but that paid less and was more physically demanding than driving for Lyft. She only just started a savings account for emergencies, and car maintenance and gas eat into her earnings. She’s not saving for retirement.

Do-it-yourself benefits

When you work for yourself, it’s up to you to find health care (made easier by the Affordable Care Act) and save for retirement beyond what Social Security will provide. In addition, you don’t have access to unemployment insurance if you’re laid off.

“These are things you’re going to have to kind of hack yourself when you’re working as your own boss,” says Katie Bryan, communications director for America Saves, a campaign run by the Consumer Federation of America.

That means setting up automatic transfers each month to a savings account for emergencies — aim to save $500 to start — and for the taxes you might be on the hook for. Save for retirement now in an individual account like a Roth IRA to take advantage of compound earnings over time, or set up a free myRA starter account, newly available through the U.S. Department of the Treasury. You can transfer your money to a higher-earning account later.

In the meantime, lawsuits continue over whether gig economy participants should be classified as employees or as independent contractors. Some proposals, like this one from the Brookings Institution’s Hamilton Project, argue they should be considered an entirely separate class of worker so they get certain traditional benefits.

“I would like to see workers who are involved in the gig economy receive some of the same protections that traditional employees receive and coverage under some of the same laws,” says Alan Krueger, a professor of economics and public affairs at Princeton University and co-author of the Hamilton Project proposal. Until that happens, set up an online savings account; there’s no paid sick time if you need some of that Postmates cold medicine for yourself.

Brianna McGurran is a staff writer at NerdWallet. Email:bmcgurran@nerdwallet.com. Twitter: @briannamcscribe.

This article was written by NerdWallet and was originally published by The Associated Press.