Is Gig Work Transforming the Labor Market?
Is Gig Work Transforming the Labor Market?
The emergence of rideshare apps has not heralded a broader labor-market shift towards gig work & one-size-fits-all policy reforms may have unintended consequences on diverse set of independent workers
This morning, the Economic Innovation Group featured this essay, “Is Gig Work Transforming the Labor Market?” by economist Andy Garin on what the recent trends in the gig economy might imply for broader labor markets.
Some key takeaways:
While online platforms like Uber may be relatively new, freelance work and broader self-employment have been constant features in the American labor market for decades.
Drivers classified as contractors are not an invention of apps like Uber and Lyft—in many cities, taxi drivers had been classified as contractors for decades.
The piece explains how driving-based platforms primarily disrupted the taxi market by eliminating barriers to entry, which created winners (the millions of workers who now make occasional extra cash through app-based driving each year), and losers (full-time drivers, like taxi drivers often protected by taxi medallion regulations, who had to compete with a new pool of occasional drivers).
The debate on how big the independent workforce is stems from who we count as part of this workforce.
The share of full-time freelancers is smaller than the share of workers who have done any type of contract or self-employed work in the last year. I’ve highlighted this point in my paper for AEI on “Understanding Non-Traditional Work Arrangements.” The table below (on page 6 in my AEI piece) shows the vastly different estimates we get across different data sources and how “independent worker” is measured in that data.
The number of workers with payments from app-based platforms rose dramatically beginning in 2014, but the rise has been entirely driven by driving-based platforms (e.g. ridesharing, delivery).
Most of these app-based drivers treat their jobs as merely “gigs.” They have full-time employment elsewhere and are supplemental earners, or only work intermittently on platforms, etc.
This is one of the most common myths about the gig economy. I also highlighted this point in my testimony to the Massachusetts Legislature.
The emergence of rideshare apps has not heralded a broader labor-market shift towards gig work—it is the only such shift.
The independent workforce is diverse. One-size-fits-all policy reforms may have unintended consequences on a highly diverse freelance and gig workforce.
The Bottom Line:
“Freelance and gig work are fairly widespread, but nothing new. While apps have upended the market for driving work, their rise is a red herring, not the herald of a broader shift in the nature of work. As a result, debates over ABC laws and other reforms to independent contractor standards likely focus too much on ride-hailing specifically—a job largely done by contractors even before the rise of the apps—and too little on the wide array of less-visible jobs that most low-end contractors have done for decades. Well-designed reforms should protect vulnerable workers who do most of their work full-time for a single firm, while maintaining the ability of high-end professionals to work freely as freelancers.”
You can read the full essay here, which is part of the Economic Innovation Group’s “American Worker” project.