The Gig Economy is NOT All About Uber: It Affects You!
By Alexandra Levit
When we think of the gig economy, ride-sharing companies like Uber and Lyft come immediately to mind. However, it’s much bigger than that. The US Department of Labor actually breaks down the four main types of alternative work arrangements into independent contractors, on-call workers, temp workers and workers employed by contract firms.
Since 2005, the number of workers in alternative arrangements has climbed by more than half, rising to nearly 16 percent of the workforce from 10 percent a decade ago, according to new research by Alan Krueger of Princeton University and Lawrence Katz of Harvard University. But the on-demand workforce (i.e. companies like Uber) employs only about 600,000 people or less than 0.5 percent of the workforce, the research found.
Krueger and Katz hired Rand Corporation to replicate their survey, sampling roughly 4,000 people. The findings showed how alternative work has spread across industries and occupations—including those not usually associated with the gig economy. For example, they estimated the share of workers in alternative arrangements has more than doubled to 11 percent in manufacturing and to 16 percent in health and education. It has quintupled, to 10 percent, in public administration.
A decade ago, the phenomenon was more common for male workers, about 12 percent of whom were in alternative arrangements compared to 8 percent of women. That gender pattern has reversed, Krueger and Katz found. Today, about 17 percent of women and 15 percent of men hold such jobs.
Traditionally white-collar industries have absolutely experienced this shift. The number of workers in alternative arrangements, in the legal industry, for example, nearly doubled over the past decade. The business process outsourcing industry had $136 billion in revenue last year and has been growing 4 percent a year since 2000, according to the industry research firm IBISWorld.
And what about government? Even federal, state and local institution increasingly use contractors throughout their ranks to carry out administrative, management and information technology tasks. A Congressional Budget Office report last year said that federal agencies spent over $500 billion for contracted products and services in 2012. Between 2000 and 2012, such spending grew more quickly than inflation and also grew as a percentage of total federal spending. The contracts were so widespread and complex that CBO said it was unable to quantify how many people were in this contract workforce.
The bottom line? Alternative workers are the future, and contractor classification is just the tip of the iceberg. If you as an HR professional don’t understand how to onboard and work with contract workers, now is the time to start.