Gig economy just poking along?
Data: Independent contractors down in U.S. since 2005
Companies such as Uber and Lyft — which offer workers flexible jobs without being employed by a traditional company — have been held up as transformational forces in the American economy, reshaping the relationship between businesses and their employees.
But the so-called “gig economy,” which has drawn massive attention, tens of billions of dollars in venture capital, and praise and steep criticism from policymakers, may not be quite the cause of massive disruption it has seemed.
That is a clear takeaway from a new report by the Bureau of Labor Statistics, which for the first time since 2005 assessed the size of the “gig economy.” The report found that the share of American workers in these types of jobs has shrunk over the past 13 years — a time before Uber and its brethren even existed.
In 2017, 6.9 percent of workers were independent contractors — meaning for their primary job, they were not directly employed by a company. That was down from 7.4 percent in 2005. The survey involved 60,000 households last year.
Experts cautioned that members of the gig economy are uniquely difficult to track, but the numbers raise the prospect that traditional employment remains the principal driver of economic activity in the United States and is not easily replaced by a newer work arrangement facilitated by technology.
Other, less-measured shifts are believed to be having a pronounced effect. For example, more and more companies are outsourcing primary tasks — from janitorial work to computer programming — to third-party companies, a trend that many economists believe holds down wages.
“What this says to me is the vast majority of workers in the United States still have traditional jobs as their main source of income,” said Heidi Shierholz, a former chief economist at the Labor Department. “We should be spending most of our time thinking about boosting wages in traditional jobs so people don’t need a side hustle.”
Alastair Fitzpayne, executive director of the Future of Work Initiative at the Aspen Institute, a think tank in Washington, said people who work on demand or contract may juggle multiple jobs for a living. Their fluctuating workloads could make it tough to name a primary source of income on any given day. The government report, meanwhile, doesn’t count people who do gig work part-time, such as the rideshare driver who may also work at a grocery store.
“In a world where people have irregular schedules and could have been doing something very different a month or two months ago,” he said, “the survey is missing the potential for capturing occasional workers and the bigger picture.”
Josh Wright, chief economist at iCIMS, a software company, said the BLS numbers bring more questions than answers. Millions of app-based workers have hit the economy since 2005: What kind of other roles have faded? “Obviously, we’ve had a lot of growth elsewhere,” Wright said, referencing the near decade-long expansion.
The gig economy, he said, doesn’t seem to be growing as quickly as more traditional jobs in sales, manufacturing, health care and professional services.
Martha Gimbel, director of economic research at Indeed Hiring Lab, also advised against concluding the gig economy has dwindled. “All measures of contingent work are down from 2005, but it’s hard for us to know if this reflects the strength of our economy or a structural shift, which is why we need data like this more often,” she said in a statement.
Others saw the government’s report as a sign that workers are working gigs to make ends meet until something better comes along.
Academics have previously produced larger estimates of the gig workforce.
A 2016 study by economists at Harvard and Princeton estimated the share of on-call workers, contract employees, freelancers, temporary staffers and others in “alternative work arrangements” rose to 15.8 percent at the end of 2015 from 10.7 percent in 2005. Unlike the BLS report, this included people who did this work not as part of their primary job.
As workers appeared more detached from the traditional model, analysts wondered why they took on jobs that don’t have to offer benefits, including health insurance, paid time off and 401(k) matches.
Researchers at the McKinsey Global Institute surveyed roughly 8,000 members of the independent workforce two years ago in the U.S. and Europe and found that 30 percent said they preferred the arrangement, 40 percent used it to supplement their income, 14 percent wished they had more stable work and 13 percent said they did odd jobs to survive.
Shelly Steward, research manager for the Future of Work Initiative at the Aspen Institute, said data is scarce on wages in the gig economy, but surveys have shown workers worry more about paying the bills than their full-time counterparts.
“Income stability and access to benefits are the two largest challenges they face,” said Steward.
Stephanie Hoopes, director of the United Way’s ALICE Project, which focuses on poverty in the U.S., said unpredictable hours, changing schedules and project-based work are all associated with lower pay. “You work when there’s more demand and yet your bills stay the same,” she said.
The upside, she added, is workers have more flexibility and have more opportunities to earn extra cash on the side than in the past. But a growing gig economy could reflect as much insecurity as prosperity.