Independent
Workers and the
Gig Economy

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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:

Tito Boeri et al., “Solo Self-Employment and Alternative Work Arrangements: A Cross-Country Perspective on the Changing Composition of Jobs,” Journal of Economic Perspectives 34, no. 1 (2020): 170–95 Respondents stated that flexibility is the most important reason why they are self-employed
Edelman Intelligence, “Freelancing in America,” (2016 - 2020) "To have flexibility in my schedule" is the number one answer to a question asking part-time and full-time freelancers why they they choose to freelance
Edelman Intelligence, “Freelancing in America,” (2016 - 2020) Of those who freelance, 46 percent state freelancing gives them the flexibility they need because they are unable to work for a traditional company owing to personal circumstances (health issues or family obligations)
Hyperwallet, The Future of Gig Work Is Female: A Study on the Behaviors and Career Aspirations of Women in the Gig Economy, 2017 96 percent of female independent workers stated that "flexible hours" is the top benefit of working in the gig economy
MBO Partners, “The State of Inde- pendence in America,” for years 2017–2020 74 percent of women stated that "prioritizing flexibility" is the top reason they choose independent work
David Storey, Tony Steadman, and Charles Davis, “How the Gig Economy Is Changing the Workforce,” EY Global, November 20, 2018, Independent workers state that flexibility and control as the top benefits of doing gig work
Morning Consult, National Tracking Poll, August 16-18 2018 51 percent of respondents said either "I would be able to manage my own schedule" or "I would have more flexibility in deciding my workload" in response to the most important reason they would engage in gig work
Morning Consult, National Tracking Poll, August 16-18 2018 59 percent of gig workers indicated "very important" and 34 percent indicated "somewhat important" in response to a question about how important is flexibility when they work
James Manyika et al., Independent Work: Choice, Necessity, and the Gig Economy (New York: McKinsey Global Institute, October 2016) The top two reasons why independent workers report higher levels of satisfaction compared to traditional employees is because of "ability to choose working hours" and "flexibility regarding where to work"

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

Participation in independent work has grown since 2000, with significantly more growth among women

Some seldom think of woman engaging in independent work because gig companies like Uber and DoorDash hijack the image of the independent workforce. However, a recent study finds that if the transportation sector is omitted, women make up a greater share of income-earners on digital platforms. Consider the e-commerce website Etsy, where more than 85% of independent sellers are women. Dog walkers, massage therapists, nutritionists, and translators are also majority-female independent roles. So, what explains why some independent work roles are overrepresented and others underrepresented by women? Beyond industry, in a new study, our research empirically tests whether the work characteristics of independent jobs help explain these differences. Indeed, we find that women self-select into independent work roles where greater autonomy defines the work, where the role allows for greater freedom to make decisions and structure activities, and where the workweeks are shorter—allowing for greater temporal flexibility.

If the transportation sector is omitted, women make up a greater share of income-earners on digital platforms

"Despite independent work prospects for women, some challenges remain. Independent workers don’t have access to employment-based protections and benefits, and some public policy solutions are counterproductive. California passed Assembly Bill 5 in 2019 (later overturned by Proposition 22 for app-based transportation and delivery drivers), and the U.S. House of Representatives passed the Protecting the Right to Organize (PRO) Act last month—both of which create a stricter definition for being classified as an independent contractor. As we saw in the immediate aftermath of California’s AB5, workers in several professions neither became employees nor were able to keep their jobs as independent workers. Because of the resulting backlash, California later exempted 53 additional occupations from AB5, including musicians, writers, copy editors, photographers, and translators."

A survey of 2,000 women found that 96 percent of women working as independent contractors indicated that the primary benefit was flexible working hours.

"There must be a better way to address the challenges of independent work without regulations making women the collateral damage. A survey in 2020 found that 80% of self-employed respondents would like access to flexible or portable benefits—benefits that are not tied to a particular job or employer."

42 percent of US women and 48 percent of European women who participate in independent work are also caregivers

"Because specific nontraditional work arrangements provide flexibility to those who need it and extend work opportunities to women who are unable to participate in traditional employment, restricting the legal classification of independent contractors could disproportionately hinder women’s participation in the labor force."

Women favor jobs with more independence and shorter work weeks

"There is substantial research on women who participate in independent work because it allows them greater flexibility to structure their days, a benefit that is crucial for women who are the primary caregivers in their households. Policies that restrict independent work opportunities and reclassify or restructure independent work as traditional employment could be harmful for women who are unable to accept the nonflexible work requirements of traditional employment opportunities."

Women self-select into roles that provide less structure, increased decision-making, and place greater importance interpersonal relationships

"If the gig economy extends work opportunities to women who would otherwise be unable to take on employment, such challenges could disproportionately affect women’s labor force participation."

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