MONEY SMART By GRACE S. YUNG, CFP
Working On Your Own Be aware of the financial challenges facing LGBTQ gig workers. While the COVID-19 pandemic brought about some significant changes in the workplace—most notably the shift to working from home or a remote location—there are many in the LGBTQ community who have been “solo-preneurs” or part of the “gig” economy since long before the health crisis hit. According to Upwork’s Freelance Forward: 2020 study of the nation’s independent workforce, roughly 59 million Americans performed freelance work between September 2019 and 2020, representing 36 percent of U.S. workers. Because many LGBTQ workers report high rates of discrimination, either when looking for work or while on the job (including lower pay, which leads to a diminished sense of well-being), many enter the gig economy to supplement their income or even generate a full-time living. Even though freelancing offers the opportunity to increase earning potential—especially in a tough job market—there are some distinct trade-offs that must be accounted for when it comes to current and future financial security. The New Gig Economy The gig economy is defined as “a labor market characterized by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs.” Some examples of gig workers can include:
• Hair stylists • Graphic designers and web designers • Massage therapists • Drivers for companies like Uber or Lyft While some individuals choose this independent career path, others may have been forced into it following the loss of a more “traditional” job. In either case, it is important to make sure that you have all of your financial ducks in a row so you’re in a better position to 26 JANUARY 2022 | OutSmartMagazine.com
deal with short- and long-term financial emergencies and objectives. Challenges for Gig Workers Although having your own business can provide you with a number of nice perks, such as more control over your work schedule and the ability to set your own pay rate, there are also some areas where gig workers can face financial hurdles such as the lack of health insurance, disability coverage, and an employersponsored retirement plan. In general, LGBTQ individuals are less likely to have health insurance. This same group more frequently rates their health as poor, and also reports more chronic conditions. This is particularly the case for the transgender community, where surgeries and/or hormone therapy can increase expenses. Those without health insurance coverage are also less likely to fill prescription medications, and are more likely to delay getting the care they need. Unfortunately, this problem
is compounded by healthcare providers who discriminate against LGBTQ patients or even refuse to provide services. A large percentage of freelance and independent workers also lack disability insurance. This type of coverage will pay out a preset income if an insured is deemed unable to work due to a covered illness or injury. Without disability insurance, you run the risk of depleting savings and/or paying for basic living expenses with a high-interest credit card, which can have a negative impact on your savings and retirement funds. In addition to the lack of insurance coverage, gig-economy workers are less likely to have access to an employer-sponsored retirement plan such as a 401(k). Because of that, they can miss out on key benefits such as tax-deferred savings (pre-tax contributions that can lower income tax in the years when deposits are made) and employer matching contributions (which are oftentimes thought of as “free money.”)
