Why the Government's Gig Economy Data Falls Short
Ever since the explosion of on-demand platforms put gig work in the center of the "Future of Work" discussion, policymakers and business leaders have wanted to know exactly how much truth there was to this paradigm shift in the way we work. That meant understanding the size and scope of the alternative workforce. After all, if legislators are expected to tackle issues like worker classification and portable benefits, they’d like to have some idea of how many workers (and voters) they’d be reckoning with. On June 7, it looked like the government might provide some answers with the Bureau of Labor Statistics (BLS) reviving its Contingent Workforce Study. Quickly, it became clear the government was making the right effort, but asking the wrong questions.
The last time the contingent workforce was studied by the government was 2005, before the study was put on ice for cost reasons. Let’s take a walk down memory lane to a simpler time in 2005, when:
- Only 29 percent of U.S. adults used broadband internet.
- Nokia was the most popular mobile phone company in the world.
- The iPod was Apple’s hit product.
- Facebook was barely a year old.
- President Donald Trump could be found on Days of Our Lives and Access Hollywood.
- Mariah Carey’s “We Belong Together” was Billboard’s No. 1 hit.
The point is, it was a long time ago. Our world is markedly different today than it was then, and in no area is this more clear than the impact technology and connectivity have had on the way we work. We’re more connected, we’re more mobile and we simply have more options for ways to find work and to make an income. But, while the BLS took some wrong turns in trying to find a greater truth, there is some value within its report, as well as some ways to improve it.
A 2005 view of a 2018 world
The largest glaring problem within the BLS study is its baseline methodology. The study takes on a very black and white view of work that’s simply inconsistent with today’s realities. Today, workers routinely don’t limit themselves to “traditional” 9-to-5 work or the “freelance lifestyle.” It’s a world dominated by side hustles and multiple revenue streams, with 44 million Americans having some other form of income in addition to their primary source. By explicitly focusing on a worker’s main occupation within the last week, the study negates millions of workers who utilize independent work as part of a larger income, or those who use independent work as a temporary supplement to a traditional job.
When the data reveals that the contingent workforce is smaller than it was in 2005 (1.3 percent to 3.8 percent in 2018 versus 1.8 percent to 4.1 percent of employment in 2005), it’s a limited picture of the workforce. One that forces workers to choose one particular path, rather than capturing their full economic impact and input.
Don’t throw the baby out
While the data amounts to staring through the keyhole of independent work rather than throwing the door open, there were some numbers that tell a story. The first is around happiness within the work. Freelancers and independent contractors within the study found their work rewarding and worth continuing, with nearly 80 percent saying they preferred it to traditional work. Combine that with income statistics (median income of $851 to $884 weekly) on par with traditional work and it becomes clear that freelancing is a sustainable and rewarding way to work full-time for many Americans. This continues to deflate the long-held belief that freelancing is a “fallback plan” rather than a choice.
The data also points to a spike in the percentage of freelancers who have health coverage (76 percent), reinforcing the importance and value of the Affordable Care Act to independent workers of all stripes, but specifically freelancers. For a group that skews older (one in three freelancers are 55 and older), this is extremely meaningful and allows more Americans to continue to earn a living on their own terms.
Studying how people work allows policymakers and leaders to get a full grasp of how our economy and workforce are changing. It’s the right thing to do, but it must be improved upon. Our own study captured from Census Bureau data shows just how economically meaningful skilled freelance work is, with $110 billion driven by freelancers in America’s 15 biggest cities in the last year.
Moving forward, the BLS needs to revamp and tweak its study to capture not just primary incomes or jobs worked in the last week prior to a survey. Asking about other significant income streams will create a more complete picture of the freelance economy and the workers within it. From there, lawmakers can begin to understand the pain points and learn how to bolster it. Giving light to this work more completely will give businesses and policymakers a window into how freelancing is impacting other issues within the country, such as the skills gap. If unemployment sits at 3.8 percent, but 40 percent of employers can’t find the help they need, perhaps freelancing holds the key to businesses getting things done? If traditional employment arrangements aren’t solving the problem for business builders, freelancers could prove to be a valuable solution, especially if Washington starts nurturing the freelance economy, rather than depressing its employment and economic value.