New data on contingent workers in the United States
On Thursday, June 7, the U.S. Bureau of Labor Statistics will release data from its freshly collected Contingent Worker Supplement. It’s important for policymakers and economists alike to know what to look for ahead of Thursday’s data release.
The BLS had collected this data from 1995 until 2005, when it stopped fielding the survey as part of its Current Population Survey due to funding constraints. But the increasing visibility of gig work with the onset of platform-based employment has emphasized the need to understand contingent work, which is defined by the agency as wage and salary workers who do not expect their job to last, self-employed workers, and independent contractors.
The revived Contingent Worker Supplement will reveal how different sectors of contingent and more broadly nonstandard work—of which contingent work is one type—have changed throughout the past decade. In the meantime, since 2005, mixed evidence has demonstrated the need for continual collection of data on this workforce. Economists Lawrence Katz at Harvard University and Alan Krueger at Princeton University replicated the Contingent Worker Supplement for the years 2005 to 2015 with the RAND American Life Panel. Overall, they estimate that contingent workers increased from 10.7 percent of workers in 2005 to 15.8 percent in 2015, with the largest increase being workers hired out through contract companies.
This finding supports the analysis done by the U.S. Department of Labor’s former Administrator of the Wage and Hour Division David Weil, now the dean of the Heller School for Social Policy and Management at Brandeis University, who found that the workplace is increasingly fissured, with subcontracting through a network of companies with “core competencies.” This fissuring leaves workers at the lower rungs with little room for growth. It will be important to see how much this sector of contingent work has grown since then when the BLS releases the new data on Thursday.
Then there is the data within the data on platform-based employment such as drivers for Uber Technologies Inc. and Lyft Inc.—workers who loom large in the public perception even though there is mixed evidence on the exact level of employment through online application-driven gig employment. A recently published survey by the Federal Reserve Board found that 16 percent of respondents report earning money through online activities, which they note includes driving through a ride-sharing app such as Uber or selling things online through a platform such as eBay Inc. Yet having earned money online at some point does not necessarily reflect one’s typical experience in the economy.
The Katz and Krueger study replicating the Contingent Worker Survey, for example, found that only 0.5 percent of all workers were providing services through an online intermediary such as Uber. A JPMorgan Chase Institute study found that regular monthly participation in what it calls the “Online Platform Economy” grew from 0.1 percent to 1 percent of their sample from 2012 to 2015—a huge increase, but still a small proportion of the overall economy. The JPM Chase Institute research on the platform economy indicates that employment in the online gig economy is starting to plateau, with a slowdown in growth in both monthly participation and year-over-year growth in earnings. The new BLS data will help refine estimates of the size and the earnings of this small but popular sector of the workforce.
Another important sector of contingent work includes self-employed workers and independent contractors, who are asked about their employment status in the Current Population Survey, as well as in other economic surveys, but generally do not have much additional detail. These workers range from high-income entrepreneurs to gig workers hustling to patch together volatile earnings. In 2016, 6.2 percent of the workforce, or 10 million workers, reported being independent contractors as their primary job, according to calculations with the CPS Annual Social and Economic Supplement. The ASEC is the only U.S. Census Bureau-fielded survey that asks detailed earnings questions for self-employed workers, but even then, self-reported earnings for independent contractors are often regarded as inaccurate due in part to the difficulty in measuring total earnings when patching different sources of income.
The Contingent Worker Supplement is one of the broadest definitions of nonstandard work, but it is just one type of nonstandard work arrangement. Others include part-time workers and on-call workers. The Government Accountability Office reported on all workers in alternative work arrangements and found that this type of employment has grown from 35 percent of the workforce in 2006 to 40 percent in 2010. Many of these arrangements have existed for a long time, but the pressure to understand them comes from the changing structure of the U.S. economy and open questions about the future of work.
The crux of the contingent-work issue is that these various types of work arrangements may be associated with economic insecurity since by definition contingent work is that which you do not expect to last. Rising economic inequality and the fissured workplace have drawn attention to the need for policies that ensure all types of workers and jobs have opportunity and security at the same time. But without reliable data on the size of this workforce and how those engaged in contingent work are faring, policymakers can neither make the case that policies are needed to cater to the unique needs of workers in alternative arrangements nor examine what types of policies may be effective for them. Thursday’s release of the topline figures from the new Contingent Worker Supplement and the subsequent microdata release will give researchers an opportunity to understand who these workers are and what conditions they face, which in turn will help shape policies that affect this segment of the labor market as it may become increasingly important in the future of work.