Paul Donovan, chief economist at UBS Global Wealth Management, said fiscal authorities and statisticians have long underestimated different types of economic activity, and side hustles are no exception.
in a financial times Column Late last month, he pointed to a major milestone for the creator economy: from WPP Media said that by 2025, creator-generated content will account for the same share of global advertising revenue as the broadcast and newspaper industries.
“Advertising revenue will not flow to traditional platforms,” Donovan wrote. “To convey a message in the modern world, you need to find a 15-year-old with a smartphone and a set of beautiful dance moves.”
While some influencers can make a living from online content alone, most creators are more likely to earn additional income, he said.
But more people can get involved in the business. For example, more musicians can now make money by releasing their music on streaming services, bypassing record labels that have historically served as gatekeepers.
“Online marketplaces abound, and anyone who thinks they have something to sell can find customers without paying any of the costs of renting a physical store,” Donovan explains.
But he added that the economic impact is difficult to measure because “social media influencer” is not an occupation tracked in the labor force survey.
Indeed, there is a tendency to underestimate growth, in part due to a failure to measure certain economic outputs.
In terms of the creator economy, the dominance of e-commerce means side businesses enjoy a huge potential market and minimal fixed costs. But data collectors who focus more on large stores underestimated total consumer spending compared with smaller online sellers.
“Side hustles have financial value, but the work is rarely recognized,” Donovan said.
On the other hand, he noted that measuring the time creators spend laboring can be trickier than tracking their sales. This could distort productivity data.
Another issue is how to tax side income, which is a growing problem for many fiscal authorities. Because the costs of taxing each small business may exceed the income it generates, sole proprietorships can often claim tax exemptions on a portion of their income.
“But as with the reconsideration of small duty exemptions, fiscal authorities may have to reassess tax-free allowances for side businesses,” he warned.
The issue actually came up recently in Florida, where a Republican gubernatorial candidate proposed a 50% “sin tax” on OnlyFans creators to combat “cultural decay” and stop young women from selling nude photos of themselves.
This sparked the ire of content creator Sophie Rain, who Tell people Magazine It was “the stupidest thing I’ve ever heard.”
“No one forced me to start OnlyFans, it was my decision, so I don’t need a 31-year-old man to tell me I can’t sell my body online,” she said. “I’m a Christian and God knows what I’m doing and I know He’s happy with me. This is the only validation I need.”
This story was originally published on wealth network