USC graduates will need grit, adaptability, to survive in gig economy, experts say

This year's graduates of the University of South Carolina may not have the word "business" written on their degrees, but experts say they'll need an entrepreneur's mind if they want to succeed in the modern economy.

That's because employers are increasingly relying on contractors, freelancers or consultants for work that was once done by full-time employees. And workers who once would have been employees working a nine-to-five shift are now entrepreneurs working for multiple "clients." It's a model referred to as "the gig economy" or "independent work," and between 20-30 percent of the working age population in America and Europe partake in it, according to a study from The McKenzie Global Institute.

"In politics I see it a lot because nothing is guaranteed," said Sophie Davish, a USC sophomore and intern for Gov. Henry McMaster, who is majoring in finance. "That's not necessarily something I'd want to do, but I figure it's something I would have to do."

In addition to a skill, workers need grit, a willingness to adapt and basic business skills if they want to succeed in the modern workforce, said Marion McGovern, founder of M Squared Consulting, a Pennsylvania company that has been pioneering the gig economy since the late 1980s.

"In the gig world and in the business world in general, the real key is going to be re-skilling yourself," McGovern said.

Tom Halasz, director of USC's Career Center, agrees, but adds one skill set to that list — networking.

He said USC has taken steps to prepare students for the changing work force, which is already requiring many workers to function as entrepreneurs. The Darla Moore School of Business has a center devoted to entrepreneurship, and the School of Music has an entrepreneurship minor tailored specifically for music students.

Two years ago, USC alumnus and Houston Texans owner Bob McNair funded an $8 million McNair Institute for Entrepreneurism and Free Enterprise.

Working in the gig economy is a "trade-off" between higher risk and higher reward, Halasz said. The trick is having what Halasz calls a "T-shaped model," which means having a broad set of skills but specializing, in-depth, on one skill set.

"There are people who make hundreds of thousands of dollars a year because they have a very specific skill set they consult on," McGovern said. She cautioned, however, that "Quite frankly, it's not for everyone."

When done properly, that reward isn't always just financial. People who work in the gig economy by choice and use it as a primary source of income reported higher levels of overall job satisfaction and appreciated the increased freedom, according to the McKinsey survey, which talked to 8,000 people in America and Europe.

However, those who worked the gig economy out of necessity said they made less money and were less certain about where they would get their next paycheck, according to the study.

The study also busts several myths about the gig economy, including that they are primarily young and poor. Though half of the surveyed workers under 25 years old participated in independent work, they made up less than a quarter of overall independent workers. Similarly, 40-55 percent of low-income households participated in independent work, but they make up less than a quarter of the independent work force.

Many of the older independent workers are Baby Boomers working as consultants, and they tend to make more money because they have more experience and connections, McGovern said.

Industries most affected by changes in technology and those that are growing. The five industries most affected by the gig economy right now are: healthcare, real estate, construction finance and IT services, Halasz said.

It's unclear how the gig economy affects South Carolina. The state's Commerce Department, Department of Employment and Workforce, and the Labor, Licensing and Regulation Department do not keep statistics on workers in the gig economy, spokespeople for those agencies said.

The gig economy suffered a setback when a California court cracked down on companies classifying workers as "contractors" instead of employees. Companies do this because it costs 20-30 percent less to hire contractors, according to experts cited by the New York Times.

But Halasz said that's not going to stop the gig economy from emerging. "regardless, it's a continuing trend," he said.

This story was originally published May 11, 2018 at 9:25 AM with the headline "USC graduates will need grit, adaptability, to survive in gig economy, experts say."