
Independent Workers and the Gig Economy
Overview:
A majority of independent workers prefer their nontraditional job arrangements over an employment arrangement because independent work provides far more flexibility in terms of work schedule. Work-schedule flexibility in nontraditional arrangements gives workers more freedom to choose what time to work, how often to work, and where to work. In contrast, traditional employment often means a specified schedule (e.g., nine-to-five), a specified quantity of work (e.g., 48 weeks a year), and a specified office location.
The US Bureau of Labor Statistics reported that 79 percent of primary-earning independent workers preferred their arrangement over a traditional job and fewer than 1 in 10 independent workers would prefer a traditional work arrangement instead.
All survey research on independent workers suggests that a vast majority of independent workers would prefer to keep their nontraditional job arrangements rather than enter an employment arrangement, because the former provides extensive work-schedule flexibility (See table 1 or other visual). In fact, in one survey, 51 percent of individuals engaging in independent work indicated that there is no amount of money that would entice them to switch back to traditional employment.
Key Takeaways from Survey Research:
Who Are Independent Workers?
Independent Work (sometimes known as ‘the gig economy’) is growing and extending job opportunities to Americans who might otherwise have remained outside the workforce. These workers make income (either as their primary or supplementary source) outside of the typical employment relationship.
Independent work is critical to the American economy. One out of every 10 Americans use independent work as their primary source of income, and 1-in-3 Americans supplement their primary job with income from independent work.
You’d be surprised how many businesses, professions, and jobs are a part of the independent workforce. For example, independent workers are freelance musicians, tutors, online marketplace sellers, delivery drivers, electricians, software developers, translators, financial consultants, nannies, and 120 other professions. The independence of their work, which is outside of the typical employment relationship, unites these very different workers in a special way.
Figure 1: Who are Independent Workers?
Independent work extends far beyond Uber, Lyft, and DoorDash. An IRS report found that after including many different gig platforms for labor services (far beyond just Uber, Lyft and Doordash), this type of worker constituted only 8.6 percent of the independent workforce (see Figure 2).
One important study using U.S. tax data followed all workers making primary or supplementary income through independent work, and it found that industries with the greatest share of independent workers are “professional, scientific, and technical services,” followed by “health care” and “other services” (repairing, grant-making, personal and pet care services, civic and religious service, etc.). All three of these industries have seen the greatest growth in the number of independent workers since 2001.
A survey of over 6,000 individuals in the U.S. found that the top occupations with the greatest shares of independent workers, either as primary or supplementary earners, are in Arts & Design, Entertainment, Construction, Architecture/Engineering and Computer/Mathematics (see Figure 3).
About 1 in 10 Americans engage in independent work as their primary source of income. According to the Bureau of Labor Statistics, Professional and Business Services (i.e. providing scientific, technical, or administrative), Construction, Other Services (i.e. repairing, grant-making, personal and pet care services, civic and religious service), Education and Health Services, and Financial Activities are the top 5 industries with the greatest percent of primary-earning independent workers (see Figure 4). The transportation industry, which would capture many of the gig economy drivers and deliverers, is far lower on the list and only has 5.7 percent of primary-earning independent occupations.
Women and the Gig Economy
Resources:
Research and Public Comments
- Two-Page Policy Spotlight: The Gig-Economy
- Working Paper: Employee vs Independent Worker
- Working Paper: Women as Independent Workers in the Gig Economy
- Journal Article: The Gig Economy, Smart Contracts, and Disruption of Traditional Work Arrangements
- Journal Article: Disrupting the Employee and Contractor Laws
- Policy Paper: Barriers to Portable Benefits Solutions for Gig Economy Workers
- Policy Brief: Consequences of Restricting Independent Work
- Public Comments to Department of Labor: How to Help Improve Understanding of Alternative Work Arrangements and the Gig Economy
- Public Comments to Department of Labor: Evaluating the Department of Labor’s Withdrawal of the Independent Contractor Rule
- Public Comments to Department of Labor: Exploring the Consequences of Worker Reclassification Proposals
- Public Comments to Department of Labor: Four Recommendations for Analyzing the Proposed Rule on Employees vs. Independent Contractors
Commentary and Podcasts:
- The Hill: Four ‘gig work’ misconceptions driving counterproductive reforms
- Fortune: The gig economy is making the future of work brighter for women
- The Hill: UK Uber ruling shows old labor regs don’t fit today’s workforce
- The Register-Guard: Will Congress play politics with the PRO Act, or listen to workers?
- The Hill: Why is the Biden administration trying to drag workers back to the 1950s?
- The Hill: Freelancers win in California - but the worker classification battle continues
- Hardly Working, AEI Podcast: Liya Palagashvili on the Gig Economy
- She Thinks Podcast: New Data on the Gig Economy and Women in the Freelancing World
- Policy-ish Talk: The PRO Act Explained