Until this past year, we knew very little about the work and workers in the sharing/on-demand economy. Indeed, the last official government survey of the contingent workforce broadly was conducted in 2005 — before Uber or Airbnb even existed. But this year, research from JPMorgan Chase Institute, Lawrence Katz and Alan Krueger, Intuit and Emergent Research, among others, has dramatically advanced our understanding.
In September, the Aspen Institute Future of Work Initiative released a paper, Data and the Sharing/On-Demand Economy: What We Know and Don’t Know, to catalog and establish insights from credible research in this area and to identify areas for future inquiry. This paper was the outcome of our efforts over the last year to convene roundtables of research experts in both Washington D.C. and San Francisco; and to conduct original surveys to understand the trends and preferences of on-demand workers and businesses in partnership with TIME Magazine and Burson-Marsteller.
This Fall has brought an additional bounty of data to help build our understanding of contingent work. In November, the Federal Reserve released its Enterprising and Informal Work Activities (EIWA) Survey, a nationally representative survey conducted in Fall 2015 to explore the many ways adults are generating income, regardless of their employment status and the frequency of these activities. They found:
- 36% of Americans undertook informal work during a six month period, either as a substitute for or complement to traditional employment.
- 11% of adults in the United States have engaged in paid services using an online platform over the previous six months.
- 25% of informal workers indicated that informal and contingent work activities have been “very much” or “somewhat” a regular and consistent source of their monthly income, while 19% of them were engaged in three or more informal paid work activities (online and/or offline) in the prior six months.
The EIWA survey is unique in that it addresses a measurement problem that has characterized previous surveys of the contingent workforce: respondents often do not consider informal work “a job,” which can lead to undercounting. The Federal Reserve aimed to address these shortcomings through the design of an entirely new survey instrument. Instead of asking only about “jobs” or “employment”, they asked about “sources of income;” instead of disqualifying individuals traditionally considered “unemployed” (such as students, retirees and homemakers), they included all adults. The result is a report that may well provide one of the most accurate portrayals of how we earn income — and a new view into just how pervasive non-traditional income streams are for a large percentage of Americans.
For the purpose of future data collection, especially efforts led by Federal Government agencies, one of the most critical insights from the Fed’s research is that work has already begun to break out of our traditional definitions. For example, they saw people self-identify with “self-employed retiree”: “retiree” would traditionally be considered a disqualifier for a survey about employment, and the hybrid term would be considered an oxymoron. We need a new taxonomy that reflects the nature of work today. And more broadly, as Fed Governor Brainard pointed out in November, “growth in flexible work arrangements may alter the natural rate of employment and how the labor market reacts to shocks,” demanding that we rethink how we measure and evaluate traditional indicators, such as labor force participation, employment, hours worked and underemployment.
JPMorgan Chase Institute (JPMCI) also released a new report in November: The Online Platform Economy: Has Growth Peaked? As in its previous studies, JPMCI uses actual customer data, and specifically deposits of income into customer accounts, to draw conclusions about the size and trajectory of the Online Platform Economy. This report raises some questions about the sustainability of labor supply for online platform economy models. A few of their key insights:
- Monthly participation in online labor platforms continues to grow, though the rate of growth has slowed, from over 200% annual growth in 2014 to 171% halfway through 2016. Total participation in online labor platforms reached 0.5% in June 2016.
- Despite rising participation, monthly earnings have fallen by 6% over the last two years.
- Turnover in the online platform economy is high; 17% of workers on labor platforms are new in any given month, and 52% of workers exit the online labor platform economy within a year. This reliance on new workers is important because as the traditional labor market strengthens, recruiting and retaining online platform workers may become more difficult.
Other new research has also been released in recent weeks, including survey data from McKinsey Global Institute, Pew Research, and Stride Health, as well as an upcoming General Social Survey analysis from the American Action Forum and the Future of Work Initiative. When considering the validity of any such report, methodology is key — we wanted to highlight a few data points that stood out to us, but recognize that with such varied results and survey instruments it can be difficult to cross-compare or to fully understand what the data is telling us:
- McKinsey Global Institute found that 22-27% of the working age population in the U.S. engage in some kind of independent work. More than half of these earners use independent work to supplement another source of income. 70% of these workers prefer this form of work over traditional work.
- The Pew Research Center found that gig workers using online labor platforms are disproportionately low-income (under $30k income), tend to lack a college degree, and are more likely to be non-white, while over half are motivated by the flexibility that platform work provides.
- Stride Health found that 35% of gig workers do not have health insurance, which is three times the rate of all workers.
Our understanding of the online platform economy and broader contingent workforce advanced significantly in 2016, but many questions remain. The nature of this portion of the economy is relevant to a wide variety of policy areas, including economic security, workforce training, macroeconomic stabilization, tax policy, urban planning, and more — and as we look to 2017, it is vital that policymakers better understand this segment of the economy as they address these issues. The Future of Work Initiative looks forward to continuing our work in 2017 to ensure that policy proposals are carefully considered and reflect the best understanding of the on-demand economy based on the growing body of data available.