The SMB Salary Reset – 10 Reasons Why Personal Branding Skyrockets in the 2021 Gig Economy
The Department of Labor estimates that more than 26 million Americans have filed for unemployment since March 14, 2020 due in large part to COVID19. As small businesses begin to recover from this, there will be a significant salary reset for employees of small businesses. So why will personal branding play such as large role in the gig economy of 2021? Tune in to learn how and why it matters.
Why is personal branding important in a post COVID-19 economy?
Cautious employer optimism. As the US begins to open back up, small businesses (less than 500 employers) will begin to hire, but will be forced to do so at a lower pay scale due to low or non-existent cash reserves and new projected revenue models compared to the pre-COVID-19 economy. Small business owners will be cautiously optimistic as it will take consumer confidence to rebound. Remember that small businesses represent more than 47% of the US employment workforce.
The salary reset. Over 26 million Americans have filed for unemployment between March 14 and April 24, 2020. Whether it is a small business that scaled back to essential workers only or whether it is new companies that start up to replace those businesses that closed, there will be a huge small business salary reset. These small businesses will not be able to offer the same salaries paid to workers pre-COVID-19.
The salary expectation levels will flip. Former senior (10 years of experience) level staff who were higher wage earners will find that their old job pays 30% less (if not 40-50% less) as businesses slowly try to reestablish cash flow models and operational forecasting. Lower level staff (2 years of experience) will jump at the opportunity to take these new positions based on the incentive of title and/or the 5% increase in what they were earning pre COVID-19.
Rookie mistakes prove costly for employers. Some employers will hire less experienced employees to fill the roles of their senior level predecessors. In some cases, these new employees will make mistakes and some mistakes will prove to be costly creating a pain point for employers to find alternate solutions to finding workers to fill task-based positions.
Remote working fuels gig economy. During the stay-at-home, work-from-home period of COVID-19, employers who would have resisted work-from-home in their business model will be more likely to outsource task-based deliverables of their business in order to keep salary overhead costs low and to assign tasks to experienced individuals. This will cause a massive shift from employment opportunities for full-time employees to freelance or 1099 subcontractors, which is the foundation of the gig economy workforce.
Existing freelance marketplace explosion. In 2019, the gig economy workforce comprised 32% over the workforce in the US. It was expected that in 2020 that would expand to 40%, but that did not happen due to COVID-19. It is very likely that in 2021 that number could very easily reach 50% due to the impact of remote workers during COVID-19. Sites like freelancer.com, upwork.com, fiverr.com and many others already have the platforms to source freelance or out-sourced job opportunities.
Personal brand will be the differentiator in the gig economy. In the current gig economy, ratings play a major role. Ratings for Uber drivers or AirBnB owners have played a significant role influencing consumer confidence. But, in 2021, “the consumer” is going to be “companies” looking for task-based deliverables from experienced individuals. Ratings will still be important (like testimonials); but proven work samples or demonstration of applied skills will be a critical factor companies consider when making a decision to contract with a gig worker. Many individuals who were formerly in-house or full-time employees will be forced to adapt to the dynamics of the gig marketplace. Companies seeking gig workers will review ratings, reviews, online resumes and portfolios, but gig workers who include links to their highly active social media profiles will have a distinct advantage.
Gig economy workers leverage personal branding. The competitive advantage for gig workers building a personal brand on social media will create gig opportunities through their organic one-to-one relationship network. For gig workers who publish content on their social media profiles, demonstrating their skills and experience will facilitate word-of-mouth recommendations through their existing social networks. These organic connections will facilitate new gig opportunities and could potentially save gig workers fees that will likely be part of the gig marketplace platforms. This fee structure would be no different than hair stylists paying a fee to the salon owner or commission percentages assessed by agents.
Impact of CARES Act in the gig economy. The massive federal stimulus of the CARES Act of 2020 created a model for regional financial banks to realize new revenue streams through operational loans for small to medium-sized businesses. The terms and conditions of the PPP and EIDL programs create new paths of eligibility for businesses to obtain funding. While some business owners may not like the idea of taking out a loan to operate, it does create a scenario where cash flow projections become clearer as expenses are more predictable. Businesses that map gig worker tasks to direct revenue will be able to minimize large swings in overhead costs thus incentivizing business models adapting the gig economy trends.
The gig economy expands into the C-suite. The massive small business economic reset will extend into the C-suite as businesses will need the expertise of a CEO or CFO as they begin to take advantage of new funding opportunities offered by regional banks. The challenge for many small business owners is two-fold; their lack of optimizing cash flow and operational expenses which will be essential in accessing new funding opportunities; and not having the capital to hire a full-time CEO or CFO to manage these responsibilities. This pain point will fuel the demand for gig C-suite workers. The emergence of platforms like Zoom will provide comfort, allowing small businesses to contract with gig CEOs or CFOs. The disruption of the business models as a result of COVID-19 will fundamentally change the small business landscape forever. CEOs and CFOs of companies which closed as a result of the economic impact should already be working on their personal branding content on LinkedIn. LinkedIn was already moving into the job market platform and it will continue to evolve with the demands of employers seeking gig workers.