Supposedly there’s a recession coming. Economic forecasters seem to think so, at least. Generally, I take these things with more than a few grains of salt. After all, a lot of people are also talking about the world ending, the collapse of Western society, the Illuminati, and a global cabal of…something. That doesn’t mean that they’re actually going to happen or happening.

That said, I do see a lot of areas where our economy is held together with duct tape and paperclips, so I’m inclined to give these predictions some credit. There’s also the age-old upside of “predicting” recessions: stand your ground long enough, and you’ll be right eventually. So let’s go ahead and say one is coming.

When it does hit, it’s going to be rough going for a lot of people. This is not unusual. The wealthy should be more or less okay (though they too generally take a hit of some kind), the middle class will be hit or miss, and the working class/poor will get clobbered. What’s new is this: the creator economy, the gig economy, and other “Great Resignation”-inspiring careers haven’t been through a down market yet. What happens next could be telling for the future of these career alternatives.

The biggest problem with new workforce trends is always the same: they’re untested, unstressed. If economic prognosticators are to be trusted, we’re about to see how our “new” economy fares in tougher times. We can do our best to take a guess and prepare beforehand, however. It would be foolish not to.

Uncharted territory

Yes, uncharted territory is a terrible cliche, but it’s also an apt one. While the pandemic met the traditional definition of a recession in terms of negative GDP growth, it certainly didn’t act like one. What it really created was a two-track economy: the bottom 40% or so of the country got absolutely destroyed, while most middle-class and upper-class citizens either remained unchanged or, in many cases, saw improvement in their day-to-day lives.

While the wealthy prospering in bad economic times is certainly not unheard of, the middle class coming through mostly unscathed is. Instead of middle-class suffering, the main story coming out of the pandemic-recession shuffle was the change in our workforce dynamics. People in volatile fields that were impacted disproportionately by the pandemic left in record numbers to pursue careers in the ever-growing “creator” and “gig” economies.

So too did many lower-end employees of major chains, tired of working front-line jobs for no pay. Being asked to continuously expose themselves to a potentially fatal disease while working 50+ hour weeks for $13 an hour turned out to be the final straw, and the continued absence of these workers has been the defining trait of our supposedly Great Resignation.

As a result, the pandemic-related economic woes were nothing like the recessions we’re used to. To find the last “traditional” recession, we have to go all the way back to 2007 when the Great Recession began. Needless to say, it was a different economy back then compared to today. It’s important to note just how different.

The creator and gig economies were a long way off, yet. The top social media site was Myspace, with more than double the monthly visitors of 2nd place Blogger and the upstart Facebook. Yahoo Geocities and Classmates.com rounded out the top 5. Uber had not yet been created, let alone put “Eats” after its name. Someone who dashed at your door was a threat, not food delivery.

And content creation? It existed, but minimally. YouTube was ad-free. Many news websites were just digital versions of the newspaper — the top stories were posted up there at the start of the day and wouldn’t update. If you went to CNN.com once at 9:00 AM, you were good on the news for the whole day. Twitch and other streaming services were about half a decade away, and Netflix’s primary function was still mailing DVDs. Blockbuster Online was launched to compete with this revolutionary service.

The developments since then have been significant, to say the least. Alternatives to lower-end jobs flourished in the ensuing years. These would go on to become the backbone of the so-called “gig economy,” which has shown consistent growth, now representing 5.7% of our total GDP. With no real data on how these jobs perform in a down market, it’s tough to gauge how they’ll fare. That said, we do have some information that can assist us. What it reveals isn’t good.

A fragile field

If you strip the gig and creator economies down to their bare bones, it’s easy to see what keeps them going. Subscriptions/fees, advertising dollars, and discretionary/luxury spending. These are decidedly not areas that perform well in recessions. Actually, they’re among the hardest hit.

Advertising spending usually drops across the board. Maybe someone in the field can help me fill in some blanks here, but I’d assume it’s done at the request of companies looking to curtail spending in the face of declining revenues. Some, I’m sure, cease it altogether, while others probably just reduce the line-item by a number that keeps their stock price in check.

Any decline in this spending would be a new development for our freelance economy. There hasn’t been a statistically significant decline in total advertising spending for over 13 years. It’s only natural that the freelance economy would perform well given an unlimited flow of corporate money into digital marketing.

It’s no big secret that influencers and many other content creators depend on advertising dollars. Between affiliate links, payments per view, and product endorsements, this group pretty much has no revenue other than companies, brands, and services.

There’s nothing ostensibly wrong with that, though I think we’d do well as a society to keep that in mind when deciding who we “follow.” Regardless, that does make this group vulnerable to any reduction in spending on a corporate level. Depending on where influencers rank in the priority list of their “partner” companies, these wells could easily go dry.

Digital media is a huge portion of advertising dollars, adding up to almost two-thirds of total spending in 2021. That’s a lot of money, and it’s been spread around to plenty of corners. This consistent, steadily rising spending has been painting a rosy picture of the creator economy through self-reported earnings and anecdotal success stories. That image might change if spending slows.

The very top tier, those with hundreds of thousands or even millions of followers, will probably still thrive. A few less endorsements won’t kill this group, though they will need to be more PR-conscious about their lavish lifestyles during a poor economy. As usual, it’ll be those in the middle that get hurt. I anticipate the less-popular creators will not be in a position to defend their worth to corporate partners when spending cuts come.

Similarly, content creators, writers, bloggers, and the like are dependent on a hybrid of subscription fees and advertising revenue. Unfortunately, in recessionary times consumers get a little pickier with their spending. If what we’re about to see affects the middle class like so many recessions before it, subscription-based services may need to prepare for a decline in viewership/readership.

It’s easier to cut monthly subscriptions to save money than it is to restructure auto or housing payments. Rising interest rates could squeeze consumers with credit card debt (and its variable rates), and an easy way to offset the extra dollars in monthly payments is by cutting your less-necessary monthly expenses. I know when I’m looking to save money, subscriptions are one of the first places I look.

Content creators, whether they be writers, streamers, or anything else, should plan accordingly. Subscriptions have proven particularly difficult to predict in a poor economy, alternating between resilient and suffering. There’s no telling in advance which way they’ll fall this time around. The best we can do is prepare and remind ourselves that these trends haven’t seen bad times just yet.

The worst of it will, unfortunately, be for the employees who made the Great Resignation the headline in the first place: lower-paid, front-line workers. Most of these hopped out of their poorly paying, volatile jobs for marginally better opportunities in the gig economy. The very same gig economy that relies on people paying $20 for a $7 hamburger for “convenience.” I can’t see this performing well in a recession.

Employees who had already been the target of the pandemic-related layoffs will be equally hard hit on the other side when the gig economy begins to suffer. Consumer discretionary spending is one area that consistently does poorly in a recession, and this time it’ll bring down some new fields along with it. The shame of it is the very freedom that drove wage growth in the bottom rungs of corporate ladders could be setting freelancers up for a catastrophic fall, swinging the pendulum all the way back in corporate America’s favor.

Parting thoughts

In a sense, this is nothing new. Anyone who’s been freelancing or a small business owner before the trends of the last couple of years could tell you security and stability are traded away the second you leave your corporate career. Still, people historically made that trade hoping for greener pastures. Recently, they’ve been doing it for relatively little in return. Their primary jobs were just that bad.

Unfortunately, these freelancers are unlikely to have the savings behind them to weather a bad run. They may end up forced back into the very jobs they left not so long ago, gaining nothing and losing a few years of their careers in the process. The Great Resignation might look terribly shortsighted in retrospect, but it’s not like these workers had any good options to begin with.

The restaurant industry, travel, hospitality, and others that were quick with layoffs when the pandemic started typically don’t fare well in recessions either. There’s no saying if those employees or Uber Eats workers will have it worse if things really do go downhill. Ultimately employees given these choices really have no way to win. Perhaps that’s where our focus should be — improving that choice. As it stands, it looks the working class is about to get more bad news one way or the other.

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