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America’s gig economy is smaller now than before Uber existed, official data show

Uber has come to symbolize the gig economy. (Lucy Nicholson/Reuters)

Companies like Uber and Lyft — which offer workers flexible work without being employed by a traditional company — have been held up as transformational forces in the American economy. Many predicted more firms would follow Uber’s lead, turning America into a nation of freelancers who have a distant and tenuous relationship with employers.

But the gig-economy, which has drawn billions of dollars in venture capital and praise but deep criticism from policymakers, appears not to have caused the massive disruption to the economy that many originally thought.

A new report from the Bureau of Labor Statistics, the first in 13 years on the topic, says the share of U.S. workers in these types of jobs has shrunk from 7.4 percent in 2005, before Uber and its like existed, to 6.9 percent in 2017.

The report, released Thursday, confounded economists who had expected that companies like Uber would have much more significantly changed the workforce. The findings suggest that while the nature of work may be changing in certain fields like transportation, there is no dramatic shift away from traditional employment in the economy.

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“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.”

Dennis Brewer, a driver for Lyft in Washington D.C., says he drives for the ride-hailing companies because he wants the extra cash, but still prefers his 30- to 35-hour-a-week job as a cashier at Safeway, and wouldn’t trade it in for a full-time Lyft gig.

“I make $14.50 hourly at Safeway,” he said in an interview. “I could use more than that, but I stay with the company because I’m moving up in salary. I never know what I’ll get with Lyft.”

Experts cautioned that tracking the gig economy is a uniquely difficult task and that the report also does not capture some profound shifts in the labor force, including the rise of subcontracting and the side hustle. More and more companies are outsourcing primary tasks —  janitorial work, computer programming, social media — to third-party companies, a trend that many economists believe suppresses wages and benefits.

The BLS asked people only about their primary job, meaning if someone is driving for Lyft in the evenings or weekends to earn more money, that does not appear in the report.

Uber is not just for ride hailing any more

While independent contracting has declined overall in the United States, it has shot up in certain industries, including business and transportation. There’s been a 50 percent jump in independent contractors in the transportation sector, which experts say is almost certainly the result of Uber and Lyft and similar companies.

Growth in freelance business and professional services has also been hefty, probably a result of baby boomers nearing retirement and opting to be consultants toward the end of their careers, a typically lucrative option. On the flip side, the share of construction workers who are independent contractors actually fell since 2005.

Most of America’s 10.6 million independent contractors are men, and a third are over 55, according to the BLS. Their work runs the gamut from Uber drivers to plumbers to consultants.

The overwhelming majority of independent contractors say they are satisfied with their jobs and like being their own boss, according to the BLS survey. Fewer than 1 in 10 say they would prefer a typical work arrangement. Pay for independent contractors is about the same as for traditional workers, although there is wide variation.

There have been numerous attempts to quantify the size of the gig economy. A oft-cited 2016 study by economists at Harvard and Princeton estimated that the share of all employees in “alternative work arrangements,” a term that includes independent contractors, on-call workers and temporary staffers rose to 15.8 percent at the end of 2015, a sizable uptick from the 10.7 percent that the BLS measured in 2005. But the latest government report showed the percentage is slightly lower now than it was in 2005.

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Concerns have been growing that workers who are not employed directly by companies aren't treated well and get fewer benefits than workers in traditional employment situations. The BLS also reported Thursday that America has 5.9 million workers in contingent jobs, meaning they are temporary hires who do not expect their jobs to last. While this is little changed since 2005, it is a population researchers say is the most vulnerable to poor working conditions.

“Income stability and access to benefits are the two largest challenges they face,” said Shelly Steward, research manager for the Future of Work Initiative at the Aspen Institute.

Temporary workers are more likely to be African American or Hispanic, according to the BLS, and they are far less likely to care for their job situation than independent contractors.

Even as the unemployment rate keeps dropping — it hit an 18-year low of 3.8 percent in May — wage growth has stayed sluggish, a trend that has boggled economists. It’s possible that after the last downturn, more Americans returned to work in part-time and less stable roles.

But while the Internet and smartphone apps have made becoming an Uber driver or hired hand easier, it does not mean traditional work is ending.

“There are changes underway in the economy and how people get jobs, but I don’t think it’s a seismic shift,” said Katharine Abraham, a former commissioner of the Bureau of Labor Statistics.

Abraham recalled these questions have been percolating for years, pointing to a 1994 Labor Department report that said “the growth of various forms of contingent work poses opportunities for good job matches between workers with differing labor force attachments and employers needing flexibility in response to changing market conditions. At the same time, some contingent work arrangements relegate workers to a second-class status of low wages, inadequate fringe benefits, lack of training and, most importantly, loss of protection of labor and employment laws and standards.”