Goodbye, Gig Economy. It’s a Multi-Earner Era

Stories about YouTubers and TikTok stars earning eight-figure incomes making videos may sound far-fetched, but they are indicative of an emerging investment theme—the multi-earner era.

This evolution of the gig economy centers on platforms—from social media and gaming, to shared mobility and vacation rentals—that offer avenues for freelancers and full-time employees alike to make money outside of traditional employment.

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

The trend also has broad implications for employers, the economy and investors. “As people challenge the status quo of corporate employment by leveraging new income streams that didn’t exist a generation ago, the rise of a multi-earner mentality may impact employers’ ability to hire and retain workers,” says Ellen Zentner, Chief U.S. Economist for Morgan Stanley.

As with many recent megatrends, Covid-19 played a key role in accelerating the multi-earner era.  “Boredom and necessity forced people to earn in novel ways during the pandemic,” says Edward Stanley, Head of Thematic Research in Europe. “Now, the rationale has shifted from necessity to opportunity.”

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

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

Multi-earnering can pay more than low-wage corporate jobs.

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

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

Monthly earnings for multi-earners, by generation.

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

“Looking at this from thematic investing perspective, consumer adoption curves are accelerating toward or past the critical 20% level,” says Stanley. “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 identified “X-to-Earn” verticals that have the reliability, stability and infrastructure in place to allow people to earn money:

• Create-to-earn platforms include everything from YouTube and TikTok posts, to original music, art and more.

• Sell-to-earn platforms represent two categories: merchants selling or re-selling products via large marketplaces and small-businesses using platforms to run or amplify their businesses.

• Deliver-to-earn platforms focus such things as delivery, takeout food and other staples.

• Rent-to-earn platforms make it easy for owners to rent their vacation rentals and personal car rentals.

• Invest-to-earn platforms represent two categories—traditional and crypto investing.

• Gig-to-earn platforms are among the more established in the segment and include such areas as ride sharing, task sharing and professional outsourcing.

• Play-to-earn platforms, also known as P2E, have been growing in popularity, in part out of enjoyment but particularly because players are rewarded in a variety of cryptocurrency tokens for their participation.

For employers, the multi-earner economy may make a tight labor 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-earner economy make it difficult to find workers, but it will make it difficult to retain them as workers have more options for income than before,” says U.S. Economist Julian Richers. “Lower barriers to entry to new forms of employment, such as through multi-earn platforms, only strengthens labor's bargaining power with employers.”

Employers are already moving to allow for 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 standard employment attractive relative to the alternatives.

It’s important to note that multi-earners may be overestimating their long-term earnings potential. But that may do little to dissuade workers from trying. An average of 40% of people earning across all X-to-Earn categories surveyed suggested that they aspire to leave their full-time jobs in the coming six months to focus on these income streams.

For more Morgan Stanley Research on the investment implications of the rise in multi-earners, ask your Morgan Stanley representative or Financial Advisor for the full report, “The Multi-Earner Era” (May 3, 2022). Plus more Ideas from Morgan Stanley’s thought leaders.