The “gig economy,” RIP. Well, maybe.
As you’ll recall, the gig economy refers to a radical transformation of the nature of work and U.S. labor markets. Digital platforms better match workers with jobs (a.k.a. gigs). Uber was, and is, the prototype of this upheaval.
Its existence seemed confirmed. One survey by well-regarded labor economists Lawrence Katz of Harvard and Alan Krueger of Princeton estimated that the share of U.S. workers in various “alternative work arrangements” rose from 10.7 percent of total employment in 2005 to 15.8 percent in 2015. That’s a big deal.
Opinion has been divided. Supporters found many virtues. Workers would work when they wanted. Companies could better calibrate their workforces to their needs. Productivity would improve. Critics were unpersuaded. A bigger gig economy, they argued, would reduce job security and fringe benefits (health insurance, retirement accounts).
But suddenly, the debate has imploded; the gig economy may be a myth. A new survey by the Bureau of Labor Statistics found that, in 2017, the share of workers in “alternative employment arrangements” (gig jobs and other) was 10.1 percent of total employment, almost exactly what it was in 2005 (10.7 percent) and 1995 (9.9 percent). Whatever Uber and other digital platforms are doing, they haven’t altered long-term trends.
The 1995 survey, the first of its kind by the BLS, defined “traditional” job as permanent employment on a firm’s payroll. “Alternative” jobs fell into four groups: (1) on-call workers — for example, seasonal workers; (2) independent contractors — freelancers, self-employed consultants; (3) temps — people paid by a temp agency but who physically work at another company; and (4) contract firms that provide services to other firms (examples: security guards or cafeteria workers).
Look at the table that follows. It shows that, as a share of total employment, these types of jobs have remained remarkably stable. Independent contractors are the largest single group, representing 6.9 percent of total employment in 2017 compared with 7.4 percent in 2005 and 6.7 percent in 1995.
(Percent of total U.S. employment)
|Temporary help agency||1.0||0.9||0.9|
Source: Bureau of Labor Statistics/
“The nature of work hasn’t fundamentally changed,” argues Lawrence Mishel of the Economic Policy Institute, a left- leaning research and advocacy organization “Freelancing and gig work are not taking over.”
To be fair, there is no widely accepted definition of what constitutes a “gig” job. As a result, the gig debate can be highly confusing. Doubtlessly, Uber and similar companies have altered employment trends, but the effect is apparently much less than the perception. One explanation is that many Uber drivers regard their earnings as a second source of income, and the BLS survey counted only workers whose jobs provided their main source of income. Uber-like jobs have been undercounted.
True. But correcting for this bias may not make much difference.
In a study, Mishel reports that although Uber has about 833,000 drivers in a year, most drive only part time and for part of the year. Taking the high turnover into account, he estimates that the number of Uber drivers is equivalent to 90,521 full-time workers. Even including similar jobs at other companies, that’s only about 0.1 percent of full-time U.S. employment — one-tenth of 1 percent. Hardly a revolution.
The BLS expects to publish more data on computer-driven job creation later this year. This may clarify what the gig economy is or isn’t. For the moment, it’s best to regard the gig economy as modestly adding to the economy’s flexibility, for better or worse.
It enables households to tap a second source of income when they need it — when they’ve had unanticipated expenses or the economy dips into a recession. But the same flexibility abets job insecurity. Employers can maintain a cushion of workers — temps, contract workers or whatever — who can be more easily fired if prospects worsen.
It’s also clear that the various alternative work arrangements are not substitutes for each other, the BLS found. Independent contractors were older, and four-fifths preferred their current status to a traditional job; by contrast, temporary work agency workers were younger and more likely to be black or Hispanic, and only about two-fifths preferred their current work status.
There is a larger lesson. Be suspicious of the scribbling and chattering class (of which this reporter is obviously a member). It’s in the business of discovering and popularizing new social, political and economic trends. Sometimes our need to be noticed exaggerates trends that, when examined closely, barely exist.
Read more from Robert Samuelson’s archive.