EU News Digest Latest News & Updates
Side hustles have long been on the rise. More than half of Gen Zers, 53% have a side hustle, as well as half of millennials and 40% of Gen Xers, according to an April 2023 Bankrate survey of 2,505 U.S. adults.
With such a wide swath of Americans adding part-time gigs to their regular income, “I think it does go to show that people need the extra money,” says Ted Rossman, senior industry analyst at Bankrate. Many of them are not just taking on passion projects for fun.
And when it comes to the future, 44% of side hustlers also believe they’ll always need one. Why are American adults feeling out of luck about their financial futures? Here’s what Rossman believes is driving their pessimism.
‘A lot of workers are underpaid’
In part, many people who tack on a side hustle do so because their full-time job is not covering their expenses.
“We see it in the service industry, for example,” says Rossman. “A lot of workers are underpaid.”
Service industry jobs include those in food and hospitality, for example. The median hourly rate for a person working in the food industry is $12.49, according to the Bureau of Labor Statistics. On average, a single person with no dependents needs to make at least $15 per hour to cover their basic needs in every state, according to MIT’s Living Wage Calculator.
And it’s not just the service industry. Half of workers in North America believe they are underpaid for their job, according to a 2022 ADP survey of 3,850 North American workers.
Only four states have minimum wages at or above $15 per hour.
‘Inflation is really this big elephant in the room’
Inflation has been another part of the story, says Rossman.
In May, inflation was up 4% year-over-year, according to the BLS. That’s down from a high of 9.1% in June 2022, but still means consumers have to shell out more for their day-to-day expenses.
The price of food prepared at home, for example, is up 6.7% year-over-year, the cost of shelter, including rent, is up 8% year-over-year and the cost of transportation services is up 10.2%.
“We see young adults the most likely to be side hustling and I think a lot of that reflects just rising household formation costs, whether that’s buying your first home or renting an apartment or having kids,” says Rossman.
“I think inflation is really this big elephant in the room.”
‘A weakening job market’ could mean more people get a side gig
Rossman does not believe the proliferation of side hustles will slow down in the near future, with more people possibly having to pick one up. That’s because though unemployment has been historically low, it likely won’t remain that way.
“There’s only one way for the unemployment rate to go which would be up,” he says. As of May, the unemployment rate is 3.7%, according to BLS data. Many economists predict the rate will hit “maybe the mid fours by the end of the year,” he says, adding that, “a weakening job market could push more people to do a side hustle.”
Low paying jobs, a higher cost of living and a hike in unemployment and job insecurity could all make it harder for people to save in the long run, as well as making people more dependent on their side gigs.
Want to be smarter and more successful with your money, work & life? Sign up for our new newsletter!
Check out:
Minimum wages are going up, but typical workers still don’t make enough to get by in any U.S. state
The state with the highest minimum wage isn’t California or New York—and it pays more than $15/hour
‘I got a check the other day for $8’: TV and film writers share why they’re on strike
