Labor Department Says Gig Workers Are Fewer Than Thought

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Jun 8, 2018

The gig economy is smaller than we think. Or maybe, it’s how we think of the gig economy that has resulted in estimates that a third of the workforce are part of it and that 57 million people earned money freelancing last year.

Whatever the situation, the Labor Department’s Bureau of Labor Statistics Thuursday said 15.5 million workers are primarily engaged in alternative employment arrangements. In addition, another 5.9 million workers held jobs they did not expect to last or who reported themselves as temporary.

Let’s put some clarity around these terms:

  • Workers considered by the BLS to be in alternative arrangements are independent contractors (10.6 million), on-call (2.6 million), temp agency (1.4 million), and workers provided by contract firms (933,000).
  • Contingent workers were broadly defined as “those who do not have an implicit or explicit contract for ongoing employment.” These are largely temporary workers hired by a business directly. The agency estimated their numbers three different ways, with the broadest estimate at 5.9 million or 3.8% of all workers.

The BLS said the percentage of contingent workers has declined since 1995 when the bureau first counted them. In the ensuing two decades each of the three different methods of estimating their numbers showed declines. In 2005, the last time contingent workers were surveyed, the broadest estimate came in at 4.1% of all workers.

Contingent workers were more than twice as likely as noncontingent workers to be under 25 years old (28% versus 12%). And while 60% of contingent workers were enrolled in school, 14% of contingent workers had less than a high school diploma. At the other end, they were slightly more likely to have a bachelor’s degree (44%) than their noncontingent counterparts (41%).

The more intriguing and controversial part of the government’s survey are the counts of workers in alternative arrangements.

Compared with February 2005 (the last time the survey was conducted), the BLS says, the percentage of workers calling themselves independent contractors has declined, while the percentage of of those in the other three alternative arrangements has barely changed.

These percentages are at odds with research and surveys by a host of others. An Intuit study of  tax returns submitted using its popular TurboTax program found 34% of the workforce to be involved in the gig economy. A report published by the Federal Reserve of Boston also came up with about a third of the adult workforce engaged in some “nonstandard” form of work.

However, the discrepancy between the government counts and others can be explained by the differences in what’s being counted. Most researchers consider the gig economy in broad terms; anyone — including those with permanent, full-time jobs — earning money moonlighting or freelancing is counted. The government, however, asked only about a person’s primary job. For individuals with more than one job, this is the job in which they usually work the most hours.”

More pointedly, the American Staffing Association questioned the BLS counts of temp and contract workers, calling the finding that the percentages haven’t changed since 2005 “puzzling.”

In a press release issued shortly after the BLS report was issued this morning, the Staffing Association pointed out that in May 2017, when the BLS gig work survey was conducted, ageny temp workers were 2% of the nation’s workforce. But the agency’s report today says that temp agency and contract workers collectively were only 1.5% of the workforce.

“Rather than bringing clarity in sizing the gig economy, the BLS study raises questions because it’s inconsistent with ASA industry data that show significant growth in flexible work arrangements,” said Steve Berchem, ASA chief operating officer. “Puzzlingly, this study shows no change for over a decade.”

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