Thinking Like a Business: Mindsets in the Gig Economy

October 8, 2020 | Blog

This is the third part of a six-part series sharing the outcomes of a six-month study on cash flow and financial precarity with a dozen individuals living and working in the Greater Toronto Area in what is described as the ‘gig economy’.

The cash flow study was delivered by DUCA Impact Lab and UKAI Projects.

See part one of the series to learn more about the methodology and intentions of the study. Each post will explore findings in the data set that suggest further exploration and/or relevance to the development of innovative financial instruments that support the experiences of those feeling precarity or volatility in their work.

“I mean, everything just kind of mixes together. Sometimes I’m paying people and sometimes they’re paying me. It’s not a straightforward thing to figure out if a trip or an expense or whatever is for my art, or for my business, or for my relaxation. It’s all just life, I guess.”

-        Study Participant

The study involved comprehensive tracking of cash flow on a transaction by transaction basis from October 1, 2019 to March 31, 2020. Late in the study period, Canada saw isolation orders as the COVID-19 pandemic moved across North America and the world. Qualitative interviews conducted prior, during and after the study period provide elaboration on the emerging statistical themes arising from the study.

This series of blog posts will elaborate on the results of this research and begin pointing to trends and opportunities for both those offering services in the arts and culture community and those seeking to understand the kinds of financial services required in a rapidly evolving labour market. The research study consisted of 12 creators aged 24 to 46. Seven of the participants identified as male with five identifying as female. Eight of the twelve identified as non-white with three of the eight identifying as part of the African diaspora. Participation was drawn from across the Greater Toronto and Hamilton Area (GTHA) and represented a range of employment situations, creative disciplines, and educational levels. Two of the twelve participants failed to complete the full study period. Three of the twelve are parents of school age children.

Distinguishing Business from personal finances can be murky, complicated by multiple, unrelated income sources

Many of the participants in this study made few conceptual or practical separations among the financial implications of creative work and the participant’s overall personal financial situation. In fact, 93% of business expenses recorded in the study were from two individuals. The cause of this merging of activities in tracking varied. Four of the participants stated that they kept their creative and other financial activity separated. However, the data used in this research only saw two of the participants provide clear divisions within the data collected. Perhaps relatedly, only two of the study participants maintain a separate registered or incorporated body to house their creative work.

The confusing and entangled nature of finances for creatives in the gig economy is evident in one exchange with a participant. They explain that “I want to buy a house, you know? And I want to build my equity. Right now, I'm also back in school again. And I'm trying to get my real estate license right now. And I also just started a new job a couple days ago. I'm actually working at a law firm right now. It's in cash too.” Expenses and revenues are tangled and hard to clearly distinguish. A participant shared vehicle expenses with family members and a cohabitating partner. They also worked as a contractor with Uber and Lyft while also using the vehicle in their creative practice to move equipment and in shoots. The vehicle was also used to get to and from three other jobs, but only when it was available for use. In fact, this participant had expenses with Uber as well as income.

In interviews, three offered that the separation of creative and other finances could happen should the need for it arise. Another participant offered that finances, “are merged together but I organize invoice files separately so to keep track of all of my investments and earnings in my creative pursuit”. Others didn’t feel that they had achieved a level of success that justified the work that this separation involved. They framed creative work as something to be invested in through equipment, professional training, or travel tours rather than something that should be a source of consistent income.  When they “made it” as the argument goes, they would revisit their processes for recording finances.

In the uncommon instances of clear separation of creative work in finances, the motivation is principally fear. In fact, those making no distinctions and those making clear distinctions shared a mistrust or antagonism to legal and other systems that could potentially impact their activities.

One participant with clear lines drawn justified it by offering that “it creates a very clear path for government … it doesn't become too muddled. And just to keep things kind of like straight and narrow, like there's only so much leeway you get and sure, we're all in the gray area once in a while, but I don't ever want the government to be like, well, clearly you're making a lot more money than you're letting on. I'm like, no, no, no, that's the company. This is how much I get paid.”

Debt is often a resource to draw on, but the terms of common debt-based solutions are not designed for this path, causing resentment, and impacting financial health.

As we saw in the second post, some do “make it” and manage to sustain themselves consistently through their artistic practice. In this study, a photographer and a creative producer earned most or all their income through their creative work. However, reaching this level professionally required a full-time commitment to the creative practice and the accumulation of significant debt. Those working in the gig economy while investing ad hoc in their creative practice see slow advancement, debt accumulation, and are outcompeted by creatives with a safety net of resources to draw on during down times.

Educational debt is significant for many in the study. Asked why they continued to return to school, one participant offered that “I write my own scripts. I edited the film. I feel like that's what artists have to do these days. It's the internet and this fast-changing economy. You always have to have these skills ready to create something.”

Another participant, when discussing the use of debt, offered that, “I do not carry much of a moral obligation to pay back banks and government or corporate loans on time”. This was a recurring theme across interviews with participants expressing mistrust or hostility toward institutions, both public and private, that ostensibly exist to support their entrepreneurial and professional development. One participant offered that they took a loan to avoid volatility in accounts receivable. They explained that, “I took a loan out with a large bank- s#$% loan - the terms of the loan were crap, but I took it out anyways because I knew I could pay it off within the timeframe.”

All of this suggests a situation where the benefits of planning and budgeting for creative practice is not visible to participants. When the tracking does occur, it comes out of fear and is backed by a sense that the systems that would use this data do not have the participants’ best interests at heart.

Decisions related to the value of the work are difficult when the cost structure of the work is unclear.

Unsurprisingly, this also leads to failures to charge appropriately for work or having little sense of what rate would be necessary to sustain the work. This creates pressures on both those under-charging and those competing for work.

As one participant lamented, “I come in and I give you a contract and you're like, why the f$#! does this cost this much? And I'm like because that's how much it costs. And they're like, when X and Y does it, it’s this or that much. And then it opens up where there's no structure for what becomes an industry standard. There is no industry standard for what I do. I've had to set that industry standard along with other photographers.”

A resistance to carefully distinguishing revenues and expenses for creative work contributes to volatility and precarity for those caught between gig work and a more sustainable creative practice. Firstly, it creates a pattern of ‘investing’ in the creative practice without being able to see if those investments are moving the individual forward. Debt is accumulated without evidence that the ability to address that debt is any closer. Secondly, it reflects a deep mistrust of systems that wish to see this tracking, particularly among artists that experience racism and marginalization. Thirdly, it puts those with access to safety nets at a considerable advantage, as they can weather lengthier periods of low or volatile income while establishing the revenue potential of their work. Finally, it pushes rates down, as creators have no sense of what price points are required to sustain themselves and they become willing to take below-market rates for the opportunity to earn something from their art.


State of Fair Banking 2020

February 4, 2021 | Article


Where to Go from Here? Precarity in the Gig Economy

February 3, 2021 | Blog


Partner with Us

Interested in making a difference by creating a more equitable financial system?

Join the Conversation

Send us your suggestions, questions and feedback. We value collaboration and want to hear your thoughts about our initiatives!