(Ed. Note: The following was written back in early July for a work project but in light of a new report on the gig economy from JPMorgan that has its own questionable methodology I felt it was a good time to publish this. Many of the same points of pushback against the BLS report also apply to the new one.)
It’s been 13 years since the U.S. government measured the size of what the Bureau of Labor Statistics refers to as the “contingent workforce” but which most others know colloquially as the “gig economy.” The last report, issued in 2005, captured a workforce where 10.9 percent of workers were said to be engaged primarily in non-full time jobs.
Here’s a quick look at some aspects of the larger economic world the “Contingent Workforce Survey” has been issued into:
- The unemployment rate, which spiked at 10 percent in October 2009, has steadily fallen to its current 3.8 percent in May 2018.
- Also falling is the workforce participation rate, which stood at 66.1 percent in May 2005 but which has now stands at 62.7 percent, near its all-time low. That means fewer people either have jobs or are looking for work. This despite there being more open jobs than there are unemployed.
- Wage growth remains largely stagnant, a counter-intuitive situation given the otherwise tight labor market.
Now the most recent CWS reports that the number of contingent workers has also dropped, from 10.9 percent of the workforce in 2005 to 10.1 percent in 2017.
This would seem to go against most every trend that’s been reported in the last five to six years in particular. A 2016 Princeton survey indicated the number of American workers engaged in temporary work hit 15.8 percent in 2015, adding that 94 percent of the 10 million jobs created between 2005 and 2015 were “temporary, including contract and freelance positions.
Indeed, many news outlets seized on the idea that the CWS disproved the narrative of the growing gig economy they themselves have been reporting on.
The gig economy is actually smaller than it used to be, Labor Department says, according to MarketWatch.
Everything we thought we knew about the gig economy is wrong, according to Quartz.
New report shows that the number of contingent workers is actually declining, according to Fast Company.
How the Gig Economy Is Reshaping Work: Not So Much, according to The New York Times.
Gig economy jobs aren’t really taking over America’s workforce, according to CNN.
Those headlines reflect the narrow definition of what qualified to the BLS as “contingent” work, only including those who worked gig-type jobs as their primary source of income, not those who use that work as supplemental income while also working elsewhere. So if you have a part time job at Lowe’s but also drive an Uber in the evening, you weren’t counted. If you’re a teacher who also has to work a part-time job, you weren’t counted. If you have a full time job but do freelance design work on the side, you weren’t counted. If you were frustrated by the lack of full-time job opportunities and hung out your own freelance shingle, you weren’t counted.
Nor does the BLS include full-time contract workers in its figures, a massive oversight considering report after report indicate more and more companies are seeking out contractors instead of full-time employees. The reasons for doing so vary from not having to pay those contractors the same kind of benefits to simply finding it easier to fill short-term skill gaps with contractors as opposed to making a long-term hire.
Questions of what does or does not constitute “gig” or other contingent or freelance work have created plenty of confusion as well as no small amount of legal headaches. Uber has gone to court – and prevailed to date – to make sure its drivers are counted as independent contractors and not employees so it doesn’t have to offer benefits and protections, which would make its scale unsustainable. A recent California ruling may poke holes in that, though and there are indications Democrats may make the lack of worker protections a campaign issue this year.
While it’s true that no two private studies use the same definitions and measurements of the freelance and contract economies, it’s clear the standard employed by the BLS falls short in that it doesn’t measure:
- An individual in a part-time job who also contracts or freelances
- An individual who, unable to find full-time work, has taken on multiple part-time positions
- An individual in a full-time contracted position who also freelances or works additional contract jobs
- An individual with a full-time job that doesn’t pay sufficiently and who takes on either part-time or freelance/contract work for supplemental income
- An individual who has given up on the job search and is freelancing or consulting full-time, though clients may come and go
In short, it’s capturing only a small slice of the workforce that no longer adheres – by circumstance or choice – to a definition of full-time work that is rooted in an era of guaranteed pensions. It does not represent the current reality, where workers may be more reluctant to take a job, ask for a raise or otherwise stick their neck out for any number of reasons.
An important finding in the BLS report is that the majority of younger workers – those in the Millennial generations – still want a full-time job. It’s likely they still see that as the idea scenario instead of one where your retirement is dependent on you still having a side-hustle or where, because they’re so saddled with student loan debt and can’t strike out on their own financially until later in life, they’re going to have to work longer and harder before considering retirement.
One has to wonder, though, why people would even consider taking a full time job. Many companies don’t offer the kind of flexibility people are looking for. Or maybe they’re concerned there won’t be the kind of on-the-job training that will help them be effective and rise through the ranks. Those companies are also pushing workers to be more productive while not spending the windfall from the recent tax cut enacted by Congress on either more staff or better tools, instead prioritizing stock buybacks. And a recent Supreme Court ruling established that employers can include provisions forbidding workers from banding together in class action lawsuits to address perceived abuses.
Instead you have a workforce where 37 percent of people are freelancing in some manner. Or where 20 percent are engaged in contract positions. Both those numbers are expected to rise to the point where, in just a few short years, they will constitute a majority of the workforce.
That won’t mean full-time work won’t exist. Instead it will indicate that full-time work is no longer the single solution to making a living and supporting yourself or your family. It would be wise for those like the Bureau of Labor Statistics updated their methodology, reporting frequency and definitions to provide a more accurate and well-rounded picture of what the workforce – and workplace – looks like and will become in the future.
Chris Thilk is a freelance writer and content strategist who lives in the Chicago suburbs.