The 'gig economy' is hugely overhyped, new study says
The so-called U.S. gig economy is not the transformational 57-million worker trend that it’s been made out to be, according to a new study from non-profit business-research organization Conference Board.
The term “gig economy” first emerged during the Great Recession. According to Bloomberg, “the perceived rise of such freelance, independent work has spurred much discussion of whether labor laws and employee benefits needed to be restructured in order to reflect the new reality of gig work.”
Conference Board defines gig workers, or nontraditional occupations, as those which usually “perform non-core functions, offer relatively low pay, are tied to seasonal or varying demand, call for recent or emerging skills or hard-to-find skill sets, don’t require institutional knowledge, and involve specific well-defined tasks where output is easily measured and monitored.” Main examples include independent contractors, temp workers, and contract workers.
The study found that since 1995, the number of independent contractors, temp workers, and contract workers has actually remained relatively unchanged over the years. It has never risen above 10% of the total workforce.
‘The labor market is tightening’
In 1995, independent contractors made up 6.7% of the labor force, temp workers were 1%, and contract workers were 0.5%. In 2017, independent contractors were 6.9%, temp workers were 0.9%, and contract workers were 0.6%.
“The fact that the labor market is tightening,” combined with fluctuations in the supply and demand for work, “makes it difficult to recruit,” Gad Levanon, chief economist for Conference Board North America, told Yahoo Finance.
A Bureau of Labor Statistics survey released in June 2018 showed that the number of nontraditional workers decreased from 2005. As the labor market tightens, more and more nontraditional workers are likely to find a regular job. Levanon thinks that this limiting factor is something that will continue to “impact the growth” of the nontraditional sector.
One exception
The exception to this overhype notion is ridesharing and transportation delivery, although Levanon noted that it makes up a “very small part” of the economy.
The transportation sector has seen a major increase in the percentage of self-employed workers over the last two decades. Since 1998, it has jumped by approximately 35% and has not shown signs of a slowdown.
Brian Schaitkin, a senior economist for Conference Board, believes that one of the reasons why the transportation delivery space has seen such success in labor market platforms is because jobs are easy to find.