While Americans continue to battle high inflation, many are turning to side hustles to supplement their income. According to a recent Bankrate study, over a third of adults are now earning money through side gigs. Bankrate's senior industry analyst, Ted Rossman, joined TheStreet to discuss what this trend says about the economy.
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Full Video Transcript Below:
CONWAY GITTENS: Well, I know you guys just put out a study at Bankrate that says more than one in 3 Americans are earning money through a side hustle. Break that down for us.
TED ROSSMAN: That's right. 36% nowadays have a side hustle. Back in 2017, when we started doing this research, that was only 19% So that's a big deal that this has basically doubled in the past seven years. It says a lot about the state of the economy because while we commend the extra work ethic, I do worry that this has been a good job market. And even in a good job market this many people feel like they need extra work to make ends meet. It's very much a story about high inflation, high interest rates. We're seeing a lot of people needing to cobble together these extra income streams. They're using the money primarily for expenses. This year, discretionary expenses overtook necessary expenses. So that was a bit of progress from last year.
But there aren't that many people using this money for savings or debt payoff or investments. It tends to be more of a spending story, although like I said, at least this year it's more of a, hey, let's go on vacation and have some fun kind of thing. Last year, it was more of a put food on the table and a roof over your head kind of thing. It's cooled a little bit. Last year, 39% had a side hustle. This year it's 36. The other big change was even a bigger change than those three percentage points. The bigger change was the percentage of people paying for discretionary versus necessary expenses. The discretionary crowd jumped by 10 percentage points over the past year.
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I take that as a good sign that it's less of a daily bill story and more of a let's drum up some extra funds to go on vacation or buy some electronics or something like that. It's not a total cushion in the sense of this is money we're putting aside for investments or retirement or a rainy day. It tends to be money that people are spending, at least this year. They're spending it on more discretionary kind of items. It does stand to reason that if inflation continues to cool, side hustling may continue to go down a little bit. But then again, we've seen some weakening in the job market. The unemployment rate has jumped from 3.4 to 4.3% That's still pretty low, historically speaking. But even in a good job market, a lot of people are side hustling. So you could see if layoffs were to rise, maybe more people are full time freelancing or full time gig working.
