In the land of opportunity, the American dream has traditionally been defined by a single, full-time job that provides the income and benefits necessary to sustain a comfortable lifestyle. However, with shifts in economic realities and growing income inequality, many Americans find that this traditional employment model is no longer sufficient. The rise of the “gig economy” and the increasing popularity of side hustles serves as a testament to the changing landscape of work in the United States.
A side hustle is any employment undertaken in addition to one’s full-time job, intending to supplement income. It can take many forms, from freelance work in one’s area of expertise to selling handmade goods online, driving for a rideshare service, or renting out a room on Airbnb. These endeavors allow people to leverage their skills, pursue passions, and ultimately increase their earnings.
A complex interplay of factors drives the increasing prevalence of side hustles and multiple jobs in America. Stagnant wages, rising living costs, the burden of student loan debt, and lack of sufficient benefits from primary employment have all pushed many Americans to seek additional income streams. Furthermore, the uncertainty of the job market, often influenced by economic recessions or global events like the COVID-19 pandemic, contributes to the need for a diversified income as a form of financial security.
While side hustles can offer increased financial flexibility, they also underscore a deeper issue: the struggle for many to make ends meet with traditional employment. In a society marked by prosperity and abundance, the need to work additional jobs points to systemic issues that require attention from policymakers, employers, and society as a whole. The future of work in America may very well hinge on how these challenges are addressed.
Why Aren’t Americans Making Enough Money?
The issue of Americans not making enough money to keep up with inflation and the changing economy is multifaceted and influenced by several factors. Here are some key reasons:
- Wage Stagnation: Despite overall economic growth, wages have remained relatively high for many workers. Wage stagnation refers to the lack of significant wage growth over time, leading to a decline in real wages when adjusted for inflation. This phenomenon has been observed across various industries and job levels, and it can be attributed to factors such as increased automation, globalization, weakened labor unions, and shifts in the bargaining power between employers and employees.
- Growing Income Inequality: Over the past few decades, income inequality has risen in the United States. The top earners have experienced significant income growth, while wages for middle and lower-income workers have remained relatively stagnant. This inequality can be attributed to several factors, including changes in the labor market structure, the decline in union membership, technological advancements, and certain policies that have favored the wealthy.
- Changing Job Market Dynamics: The job market has experienced significant shifts due to technological advancements, globalization, and changing consumer demands. Automation and advancements in artificial intelligence have displaced certain jobs while creating demand for more specialized skills. This has left some workers facing unemployment or the need to transition into different industries, which can impact their earning potential.
- The decline in Worker Benefits: In addition to stagnant wages, there has been a decline in certain worker benefits over time. Employer-provided benefits, such as healthcare coverage, retirement plans, and paid time off, have become less comprehensive and accessible for many workers. The increasing burden of healthcare costs and reduced retirement security can contribute to financial strain and a sense of not keeping up with the changing economic landscape.
- Rising Costs of Essential Expenses: Essential expenses, such as housing, healthcare, education, and childcare, have outpaced wage growth for many Americans. These rising costs, coupled with stagnant wages, can lead to a situation where individuals struggle to keep up with inflation and maintain their standard of living.
- Globalization and Outsourcing: Globalization has led to increased competition in the labor market, as companies can outsource jobs to countries with lower labor costs. This has put downward pressure on wages for certain industries and occupations, particularly those that can be easily outsourced or automated.
- Policy and Regulatory Factors: Government policies and regulations can also affect income disparities and wage stagnation. Tax policies, labor laws, trade agreements, and minimum wage regulations, among others, can impact income distribution and influence workers’ earning potential.
It’s important to note that these factors interact and influence each other, creating a complex economic landscape. Addressing the issue requires a comprehensive approach that includes policies aimed at promoting equitable wage growth, strengthening worker protections, investing in education and skills training, and ensuring access to affordable essentials like healthcare and housing.
The Rise of the Side Hustle
The rise of the side hustle refers to the increasing trend of individuals pursuing additional sources of income or starting small businesses alongside their primary employment. During the pandemic, side hustles became increasingly prevalent as individuals sought additional sources of income and financial stability amidst widespread job losses and economic uncertainty.
With lockdowns and restrictions limiting traditional employment opportunities, people turned to their skills, creativity, and online platforms to start small businesses or offer freelance services. However, while side hustles provided a lifeline for many, the challenge of keeping up with inflation remained. As living costs and essential expenses continued to rise, stagnant wages and limited access to benefits made it difficult for people to maintain their standard of living.
Side hustles have gained popularity in recent years due to various factors such as economic uncertainty, technological advancements, and changing attitudes toward work. Some key aspects of the rise of the side hustle:
- Economic Factors: In many countries, the job market has become increasingly competitive, and traditional employment may only sometimes offer the financial security or fulfillment that individuals desire. Side hustles provide an opportunity to supplement income and create a financial safety net.
- Technological Advancements: The proliferation of the internet and digital platforms has significantly lowered the barriers to entry for starting a business or offering services. Online marketplaces, social media, and freelance platforms have made it easier for people to advertise their skills, products, or services and reach a global customer base.
- Flexibility and Autonomy: Side hustles allow individuals to take control of their work schedules and pursue their passions. People often engage in side hustles outside their regular working hours, which provides the flexibility to balance personal and professional commitments. This flexibility can also appeal to those who want to explore entrepreneurship but are not ready to leave their full-time jobs.
- Diverse Income Streams: Relying solely on a single job or income source can be risky in uncertain economic times. Side hustles offer an opportunity to diversify income streams, reducing dependence on a single source of earnings. This diversification can help individuals build financial resilience and pursue multiple interests simultaneously.
- Pursuit of Passion and Personal Development: Many side hustles stem from individuals pursuing their hobbies, talents, or interests. It allows people to turn their passions into income-generating activities and provides a creative outlet outside their main employment. Side hustles also offer opportunities to learn new skills, gain entrepreneurial experience, and explore different industries.
- Entrepreneurial Mindset: The rise of the side hustle reflects a shift in attitudes towards work. More people are embracing an entrepreneurial mindset and seeking ways to take ownership of their careers and financial futures. Side hustles provide a low-risk entry point into entrepreneurship, allowing individuals to gradually test their business ideas and build their entrepreneurial skills.
- Gig Economy and Freelancing: The growth of the gig economy and freelance work has contributed to the rise of side hustles. With the increasing demand for flexible, project-based work, many individuals are leveraging their skills and expertise to offer specialized services on a freelance basis, either as a complement to their regular job or as their primary income source.
The rise of the side hustle reflects a changing landscape of work, where individuals are looking for additional income, flexibility, and opportunities for personal and professional growth. While side hustles can offer numerous benefits, it’s important to consider factors such as time management, potential conflicts of interest with the primary employment, and legal and tax implications when embarking on such endeavors.
Why People Still Need Side Hustles
Side hustles might have served as a temporary solution, but now we are seeing more and more people needing to keep their side hustles or work multiple jobs JUST to make ends meet. The need to maintain multiple jobs and side hustles is due to several factors:
- Insufficient Income From Primary Employment: In many cases, the income from a primary job may not be enough to cover all living expenses. Low wages, limited job opportunities, or high living costs can contribute to financial strain. Side hustles offer an additional source of income to bridge the gap between earnings and expenses.
- Rising Costs of Living: The cost of housing, healthcare, education, and other essential expenses continues to increase in many parts of the world. Even with a regular job, individuals may struggle to keep up with these rising costs. Side hustles provide an opportunity to earn extra income and alleviate financial pressure.
- Debt and Financial Obligations: Many have financial obligations such as student loans, credit card debt, or mortgages requiring regular payments. Side hustles can help individuals generate extra income to pay off debts faster, avoid late payment penalties, or achieve financial goals.
- Unpredictable Work Situations: The nature of work has become increasingly uncertain in some industries. Companies may downsize, restructure, or implement cost-cutting measures, leading to layoffs or reduced hours. Having a side hustle provides a cushion of financial stability during job insecurity.
- Flexibility for Unpredictable Lifestyles: Some individuals have personal circumstances that require flexibility in their work schedules. This includes caregivers, parents, students, or individuals with health conditions. Side hustles allow them to work on their terms and accommodate their unique situations while still earning income.
- Pursuit of Financial Goals and Aspirations: Side hustles can be a means to achieve specific financial goals or aspirations. Whether saving for a down payment on a home, funding a dream vacation, starting an investment portfolio, or paying for further education, the extra income from a side hustle can accelerate progress toward these goals.
- Opportunity for Personal and Professional Growth: Side hustles often allow individuals to explore their passions, develop new skills, and gain entrepreneurial experience. People may engage in side hustles for financial reasons, personal fulfillment, and long-term career development.
It’s important to note that while side hustles can help individuals make ends meet, they also require time, effort, and careful management. Balancing multiple commitments can be challenging, and individuals should assess their capacity and prioritize self-care to avoid burnout.
Is Freelancing and Side Hustles Lucrative?
While side hustles are becoming necessary in America, they aren’t always the best solution. Whereas some can be extremely lucrative many people aren’t aware with hidden fees, taxes and other obstacles that occur with a side hustle. Being a freelancer, a small business owner is hugely expensive. You can expect to pay double taxes because a traditional employer isn’t helping you match your taxes like in a traditional W2 job.
There is so much work that goes into side hustles. It is great to have freedom of schedule, but that can also set you up to work every single day and at all hours, especially when your side hustle is a work-from-home job. And let us not forget if you want benefits that’s coming out of your own pocket and they are extremely expensive when not given through an employer. It’s definitely not all sunshine and rainbows and being able to pocket and save tons of cash. Here are just some of the many concerns that come along with side hustles:
- Increased Tax Rates: In some jurisdictions, the self-employment tax rate can be significantly higher than traditional employment rates. In the US, for example, in September 2021, self-employed individuals must pay both the employer and the employee portion of the Social Security and Medicare taxes. This means they might pay up to 15.3% (12.4% for Social Security and 2.9% for Medicare) on their net earnings from self-employment.
- The complexity of Tax Compliance: Unlike traditional employees, freelancers and those pursuing side hustles have to deal with a lot more complex when it comes to tax compliance. They are responsible for keeping track of all their business income and expenses, calculating and paying estimated taxes quarterly, and dealing with complex tax forms come tax time. Some people doing side hustles had no idea they had to report that to the IRS. The IRS lets no one slide. So many people have shared how they ended up owing substantial amounts of unexpected taxes on social media. Freelancing, small businesses, and side hustles don’t come with a clear-cut manual on how everything needs to be operated and what the standards are.
- Lack of Benefits: Traditional employees often enjoy health insurance, retirement contributions, and paid vacation time. On the other hand, freelancers and those pursuing side hustles typically have to provide these for themselves, which can be costly and time-consuming.
- Instability of Income: Income from side hustles and freelance work can be highly unpredictable. Unlike traditional employment, where you receive a regular salary, your earnings as a freelancer can fluctuate greatly from month to month, making budgeting and planning difficult.
- Cost of Doing Business: Freelancers often have to bear the full cost of doing business, including costs for equipment, software, marketing, and professional services like accounting or legal assistance. These costs can add up and significantly reduce net earnings.
- Lack of Legal Protection: In many countries, labor laws and protections that apply to traditional employees do not extend to freelancers or those with side hustles. This can leave these individuals vulnerable to exploitation or unfair business practices.
While there are certainly challenges and drawbacks to having a side hustle or freelancing, many people find that the benefits – such as autonomy, flexibility, and the potential for higher earnings – outweigh the negatives. It’s also worth noting that resources and strategies can help mitigate these disadvantages, such as tax planning, purchasing individual health insurance, and building an emergency fund to buffer against income fluctuations.
Consequences of Working Multiple Jobs
Burnout from working multiple jobs or maintaining a main job and a side hustle can be a significant issue for many individuals. It refers to a state of chronic physical and emotional exhaustion, often accompanied by feelings of cynicism and detachment from work. This condition can manifest due to various factors related to having multiple jobs or maintaining side hustles. Here are some aspects of how burnout can occur:
- Extended Hours: One of the most straightforward reasons for burnout is the number of hours worked. Working multiple jobs or maintaining a side hustle on top of a full-time job means longer work hours, often without adequate rest. This can quickly lead to physical and mental exhaustion.
- Lack of Downtime: Humans are not designed to be “on” all the time. We need downtime to relax, recharge, and pursue hobbies and interests outside of work. If all your time is spent working, recovering from the day’s stress can be hard.
- High-Stress Levels: Balancing the demands of multiple jobs can be extremely stressful. This is especially true if there is a high degree of job insecurity or if the work is particularly demanding or challenging. Chronic stress can have severe health impacts and significantly contribute to burnout.
- Mental Health Issues: Working too many hours and only making ends meet can leave people feeling highly defeated and triggered. We are seeing more and more people committing suicide over financial strain than we ever have. If you’re working just to live but not actually living, what is the point?
- Limited Social and Family Time: Working multiple jobs can limit your time socializing and spending with your family. Social connections are a crucial component of mental health, and not having time to maintain these connections can contribute to feelings of burnout.
- Lack of Control: If someone works multiple jobs out of financial necessity rather than choice, they may feel a lack of control over their time and life. This feeling can contribute to a sense of helplessness and burnout.
- Neglected Health: People working multiple jobs or long hours may find it hard to make time for regular exercise, healthy eating, and sleep — all of which are crucial for physical health and emotional resilience. Neglecting these areas can accelerate the path to burnout.
Given these potential risks, it’s crucial to pay attention to signs of burnout and take steps to address it. This may include reassessing workload and time commitments, setting boundaries, prioritizing self-care, seeking social support, and addressing the financial issues that may be driving the need to work multiple jobs. If burnout symptoms persist or lead to depression or other health issues, seeking professional help is recommended.
Remember, You Are Not Just a Work Machine
In the evolving landscape of American work, side hustles have emerged as both a symptom of systemic economic challenges and a potential solution for individual financial needs. As more and more people turn to additional jobs to supplement their income, it becomes clear that the traditional employment model may no longer be sufficient for a large portion of the population. This shift prompts a vital conversation about the future of work, economic security, and financial independence. Navigating this new terrain requires both individual adaptability and societal and policy changes that address wage stagnation, the rising cost of living, and the necessity of benefits. While an intriguing development, the rise of the side hustle ultimately highlights the urgent need for a broader re-evaluation of work and wealth in America.
Resources if Your Struggling With Burnout
- Call: 988 for mental health services.
- Call: 211 for other community services and resources.
- Text: 741-741 for text mental health support and guidance.
- Speaking of Suicide