The BLS Study: Is the Gig Economy Stalling Out?

This week’s jobs-related news featured some surprising and controversial Bureau of Labor Statistics research on non-payroll employment.  First though, a few items on how this section of the workforce does not need to be.

The first was from the April 30^th New York Times, as Noam Scheiber told us that the “Gig Economy Business Model” was “Dealt a Blow in California Ruling.”  That’s not correct, unless those employers never need to “follow minimum-wage and overtime laws and to pay workers’ compensation and unemployment insurance and payroll taxes,” even if, as “industry executives” said, that “tends to cost 20 to 30 percent more.”  Boo hoo!  The second gaffe, by Christina Caron in the same publication on June 12^th, “Cheesecake Factory Is Found Partly Liable in $4.6 Million Janitor Wage Theft Case,” was a well-known company apparently thinking that hiring workers as contractors would allow them to forget about required breaks and hold them, presumably without pay, until “kitchen managers conducted walk-throughs to review their work.”  Those offenses weren’t mitigated much by the vice president of legal services saying “we take matters of this nature very seriously.”  Then we have the old vinegar-turned wine of multilevel marketing now surprising the Atlantic in the April 2018 “Beware of Selling Yoga Pants on Facebook,” which called that old shell game “the social-media gig economy.”  Repeat after me:  Online auspices do NOT constitute new business models!  And nothing in this paragraph is inherent to this way of earning money.

So, back to the BLS paper.  It said, per Ben Casselman’s June 7^th New York Times “How the Gig Economy Is Reshaping Work:  Not So Much,” that “roughly 10 percent of American workers in 2017 were employed in some form of what the government calls “alternative work arrangements,” a broad category including Uber drivers, freelance writers and people employed through temporary-help agencies,” and which “represents a slight decline from 2005,” also a good economic year.

Several people responded to how this result came about.  First was in this same article, with Casselman writing that “separate data released by the Federal Reserve this month” replaced the 10% with “nearly a third,” a finding echoed by “private-sector studies.”  The BLS study, also per Casselman, did not include those with regular-job equivalents employed by outside agencies, or those “selling products online or working erratically as a freelancer.”  He also quoted a former BLS commissioner saying that “we’re not asking the right questions,” and noted that “income-generating activities that people might not consider “work,” like renting out a home on Airbnb,” were not included.  In “What gig economy?  Fewer working as freelancers, contractors than believed” (Paul Davidson, USA Today, June 7^th), we got a Staffing Industry Analysts report result that 29% of the American labor force “performed contingent work in 2015,” and news that the BLS data did not include people with “side hustles” as well as conventional jobs.  That exact phrase also turned up in the headline of Daniel B. Kline’s June 10^th Motley Fool piece; “Side hustles are changing how people plan for retirement” related how these additional propositions were on the rise, as I predicted six years ago, and usually undertaken to pay off debt.  That’s nothing new – in decades past they were called “second jobs” – but are facilitated, not dictated, by opportunities using modern technology.

John Younger’s June 11^th Forbes “The Death Of The Freelance Revolution Is Greatly Exaggerated” made a different point.  It acknowledged the inferior-good nature of most gig assignments, but mentioned an opposite proposition, “lawyers, doctors and other highly skilled professionals” who “earn as much, on average, as standard employees,” even if they tend to get less in benefits, and of whom “nearly eight in 10 say they prefer being an independent contractor to being an employee,” some of which was also cited by Casselman.  There are likely more of these than there were 13 years ago. 

What can we conclude from this study and those writing about it?  Clearly it missed two-thirds of the data it was supposedly trying to capture.  Working on the side is becoming more common, and may be closer to the spirit of the gig economy than being employed full-time, temporarily, while seeking a W-2 position.  To conclude that fewer, not more, people are earning money through these modern-setting temporary-help propositions, we need more of a breakdown.  And when, not if, the next recession hits, we will all be able to see the value, for many, the gig economy truly has.