American side hustles are here to stay, according to economists, who say it's now easier than ever to make money in your spare time.

Typically, during a financial crisis, individuals reduce their spending and there is a decrease in the number of new businesses established.

Despite the high costs of living and inflation, credit card debt in the U.S. increased, and Americans' savings dwindled during the Covid-19 pandemic. However, consumer spending jumped noticeably, and more businesses filed for creation than in pre-Covid 2019.

Americans are increasingly focused on earning extra money to spend, with over a third of U.S adults and nearly half of millennials and Gen Z having a second source of income, according to a survey published by financial services company Bankrate.

According to Kayla Bruun, a senior economist at Morning Consult, the decision to spend more money ultimately boils down to the need to earn more.

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Across all age groups, income levels, and industries in America, the trend of having a side hustle is on the rise, according to data. This trend is expected to continue as younger generations are more comfortable with the idea of having multiple income streams to support their living, regardless of the economic conditions, experts predict.

The prevalence of side hustles among individuals and the prediction by economists that they will persist in the future can be attributed to various reasons.

Financial need and insecurity

According to Ted Rossman, a Bankrate senior industry analyst, the median U.S. side hustle earns $250 per month. For nearly half of Americans with side hustles, the additional income is not for leisure; instead, it is a necessity, resulting from financial instability.

Last year, Bankrate discovered that 45% of Americans with side hustles use them to cover debt and living expenses. Rossman remarks, "While $250 per month may not be enough to live on, it's a significant amount of money that can be used effectively to get out of credit card debt or save for a down payment on a home or wedding."

Although wages and employment opportunities are increasing, some Americans still find it difficult to afford larger living expenses due to high student loan and credit card debt, as well as rising costs of housing and childcare, which have not decreased since the pandemic.

Bruun claims that millennials are particularly responsible for many financial obligations.

In 2018, Shonnita Leslie, a 40-year-old program manager at a university in Texas, began working for DoorDash to pay off her six-figure student loan debt. Over the next five years, she earned $72,000 and reduced her debt to $18,000. Now, she continues to work for DoorDash as a side hustle because she feels more secure with multiple sources of income, as she shared with Make It earlier this year.

A second income stream is becoming increasingly important for both older millennials and younger generations, including those currently experiencing high inflation for the first time as adults.

"Rossman stated that people are side hustling out of necessity rather than desire, resulting in a stagnant situation. He wishes more individuals were progressing, working on their passion projects, or saving and investing more."

Upgrades to leisure experiences

Even people with healthy incomes are seeking extra cash outside of work, with Americans with household incomes of more than $100,000 being the most likely to have side hustles, according to Bankrate's 2023 report.

Historically, Americans have used their full-time paychecks to fund simple leisure activities like vacations, concerts, or date nights, and for those people, $250 per month may not be a life-changing amount, but it's certainly enough to cover these expenses.

Last year, Bankrate discovered that 52% of Americans with side hustles use their extra income for discretionary spending or to increase their savings. Some of them may be victims of "lifestyle creep," where the more money they earn, the more they feel compelled to spend.

Rossman remarks that some of it might be a "keeping up with the Joneses" type of behavior.

It appears that some Americans have recognized the side hustle as a means to finance or enhance their leisure activities. For instance, five months of the median U.S. side hustle would be sufficient to cover the cost of a $1,088 ticket to Taylor Swift's Eras Tour.

"According to Gusto economist Nich Tremper, our research shows that the financial desire of the individuals is related to their paycheck not going as far as they expected."

Side hustles are here to stay

If you don't need a side hustle to make ends meet but still have one, it suggests that the trend is here to stay, according to economists. With the ease of setting up an account on platforms like Fiverr, TaskRabbit, or Etsy, many people are questioning why they shouldn't earn extra money on the side if they're willing to put in the time and effort.

"Rossman predicts that side hustles will become increasingly popular in the future, as it is now easier than ever to make money in your spare time through activities such as delivering packages, selling crafts, taking surveys, being an online personal assistant, graphic design, and more."

Tremper concurs, stating that the proliferation of hybrid and remote jobs allows individuals to devote more time to cultivating their side hustles. Each assignment presents a self-directed avenue for personal and professional growth, he emphasizes: "You're not under a supervisor's watchful eye."

No individual gig is guaranteed a long shelf-life, and a second job means more working hours and less time available for sleep, hobbies or maintaining relationships.

"Rossman commends the work ethic of full-time freelancers and gig workers but expresses concern about the burnout risk and the absence of a safety net. He believes that this is a warning sign that one job is no longer sufficient."

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