Gig Economy is now a multi-income era

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Stories about YouTubers and TikTok stars earning eight-figure incomes making videos may sound far-fetched, but they point to an emerging investing theme – the era of multiple incomes.

This evolution of the gig economy is centered on platforms – from social media and games, to shared mobility and vacation rentals – that offer freelancers and full-time employees the opportunity to earn money by outside of traditional employment.

The concept of having multiple jobs is not new. But what has changed is the desire to avoid or supplement traditional employment, as well as the ability to do so cheaply and at scale using platforms that reach large and growing audiences.

This trend also has broad implications for employers, the economy and investors. “As people challenge the status quo of corporate employment by taking advantage of new sources of income that didn’t exist a generation ago, the rise of a multi-income mentality can impact on employers’ ability to hire and retain workers,” says Ellen Zentner, chief U.S. economist for Morgan Stanley.

As with many recent megatrends, Covid-19 has played a key role in accelerating the era of multiple incomes. “Boredom and necessity have forced people to make money in original ways during the pandemic,” says Edward Stanley, European thematic research manager. “Now the logic has shifted from necessity to opportunity.”

Unlike starting a business, there are often few start-up costs for many popular side businesses, and there is rarely a risk to a worker’s main source of income if they have another source of income. to the side.

In fact, workers of all stripes and income levels are now participating in the multi-income economy. For example, finance and IT employees make up the highest percentage of all occupations in the content creation platforms vertical. Likewise, multi-earners are well represented among those who already earn between $50,000 and $80,000 as full-time employees.

Multiple incomes can pay more than low-wage corporate jobs.

The platform economy is particularly popular among young workers. According to a recent multi-employee survey conducted by AlphaWise, the proprietary survey and data arm of Morgan Stanley Research, Gen Z (representing those born between 1997 and 2012) earn more per month from side hustles than any other. cohort – around $300 to $700 per month, depending on what platform they use to earn.

“We expect the lion’s share of multi-earning revenue to concentrate in the hands of Gen Z and its successor, Gen Alpha, over the next decade,” Stanley says.

Monthly earnings for multi-salaries, by generation.

It’s not just workers who can benefit from the multi-earning economy. It is also an emerging investment theme that has the potential to disrupt established industries and opportunities to invest in platforms and related technologies.

“Looking at this from a thematic investing perspective, consumer adoption curves are accelerating towards or beyond the critical 20% level,” Stanley says. “At this threshold, history tells us that investors tend to benefit from both growth and profitability rather than one or the other.”

Within these groups, Morgan Stanley Research has identified “X-to-Earn” verticals that have the reliability, stability, and infrastructure in place to allow people to earn money:

  • Create to win the platforms include everything from YouTube and TikTok posts to original music, art and more.
  • Sell ​​to earn platforms represent two categories: merchants selling or reselling products through large marketplaces and small businesses using platforms to manage or scale their business.
  • Delivery platforms to win focus on things like delivery, takeout, and other basics.
  • Rent to earn the platforms make it easy for owners to rent out their vacation rentals and personal car rentals.
  • Invest to earn platforms represent two categories: traditional and crypto investing.
  • gig-to-win the platforms are among the most established in the segment and include areas such as carpooling, job sharing and business outsourcing.
  • Gaming platforms to win, also known as P2E, have grown in popularity partly for fun, but mostly because players are rewarded with a variety of cryptocurrency tokens for participating.

For employers, the multiple income economy can make a tight job market all the tighter as people choose to focus on generating income from multiple income streams instead of taking a single income job. .

“Not only will the multi-income economy make it difficult to find workers, but it will also be difficult to retain them, as workers have more income options than before,” says US economist Julian Richers. “Reducing barriers to accessing new forms of employment, such as multi-earning platforms, only strengthens workers’ bargaining power with employers.”

Employers are already taking action to enable greater flexibility and innovative forms of work to compete in the post-pandemic world. That said, higher wages may need to be an additional tool to make the standard job attractive over alternatives.

It is important to note that multi-salaries may overestimate their long-term earning potential. But that may not deter workers from trying. On average, 40% of earners across all X-to-Earn categories surveyed suggested that they aspired to quit their full-time job in the next six months to focus on these income streams.

For more information from Morgan Stanley Research on the investment implications of increasing multiple incomes, ask your Morgan Stanley representative or Financial Advisor for the full report, “The Multi-Earner Era” (May 3, 2022). And more Ideas opinion leaders from Morgan Stanley.

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