Ready for our next gig.

Photographer: Lewis Mulatero/Getty Images

Gig Economy Is Growing, But Not Growing Up

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
Read More.
a | A

You weren’t totally imagining it! There really is a fast-growing contingent of Americans who get by on a variety of employments, none of them a full-time traditional job. They tend toward youth, and they increasingly find their gigs via online marketplaces.

That’s one message from two important surveys released this week: MBO Partners’ fifth annual “State of Independence” report, which came out Tuesday, and the second annual “Freelancing in America” report, sponsored by the Freelancers Union and Upwork, which is out today.

Another message is that, contrary to much recent hype, the overall share of independents or freelancers in the workforce isn’t actually growing at the moment. I already reported that the “State of Independence” survey showed a tiny (and within the margin of error) decline in the number of full-time independent workers, from 17.9 million in 2014 to 17.8 million in 2015. The “Freelancing in America” report’s much-broader measure of people who do at least some freelance or contingent work showed a modest increase in numbers, from 53 million to 53.7 million, but no change in this group’s share of the workforce, which stayed at 34 percent.

I’ve already gone on and on and on about the fact that our labor market hasn’t suddenly been transformed into a freelance bazaar, so I won’t belabor this. It is important to note that there’s a big cyclical component here. When the economy is weak, freelance or independent work rises -- as it did, sharply, in the first three years of the MBO Partners survey. When the economy is strong, full-time employment gains. So the fact that freelance work isn’t gaining as a share of employment right now doesn’t mean there couldn’t still be some sort of longer-term shift in the works.

And there are things going on in parts of the freelance or independent workforce that do seem significant. Here’s the breakdown from the “Freelancing in America” survey:

Diversified workers are those with multiple sources of income, none of them a full-time job. In the report’s charming description, this could be:

[S]omeone who works the front desk at a dentist’s office 20 hours a week and fills out the rest of his income driving for Uber and doing freelance writing.

There’s no mention of whether this someone is bearded and tattooed, but I’m guessing yes. A diversified worker could also be an 18-year-old who lives with his parents and plays video games all day but occasionally mows neighbors’ lawns or walks their dogs -- the survey counts anyone who has done any paid freelance work, which is one reason why the numbers come out so high. In any case, diversified workers were by far the fastest-growing category of freelance worker in the survey, growing in number from an estimated 9.3 million in 2014 to 14.1 million in 2015.

I doubt that almost five million people suddenly shifted to new work arrangements in just one year. Some of the change surely has to do with how people describe what they do and how the survey counts them. In the previous survey, they may have been classed as independent contractors or moonlighters, the main categories that lost people in 2015. 

Still, just the fact that people are more likely to see what they do as a mix of gigs is significant, and the growth of gig economy platforms such as Upwork, Uber and the like seems to be a factor in this. Fifty-one percent of the freelancers surveyed in 2015 had done a freelance project online, up from 42 percent the year before, and 31 percent reported getting 10 percent or more of their income “from sharing-economy platforms,” up from 17 percent the year before.

What else do we know about these freelancers? They skew young: Those aged 18 to 34 are much more strongly represented in the freelancer ranks than in the workforce as a whole. Interestingly, they are slightly underrepresented in the full-time independent worker ranks in the MBO Partners survey. Younger workers are more likely than others to do a gig here or there, but less likely to be full-on independent professionals.

Also, increasing percentages of both freelance and independent workers say they do such work by choice rather than economic necessity, which makes sense in an improving economy. It also indicates that they’re more likely to stay independent for the long haul.

So there you have it. A big segment of the workforce labors in something other than full-time, traditional jobs, while the digitally enabled gig economy is real and growing. U.S. employment laws and benefit systems, meanwhile, are still built around those full-time traditional jobs. So even if the U.S. labor market hasn't exactly undergone a freelance revolution over the past few years, change and conflict are in the offing.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor responsible for this story:
Paula Dwyer at pdwyer11@bloomberg.net