What do we know or not know about the Gig Economy?
Last month I was pleased to speak to the Indiana Legislative Study Committee on the size and growth of the gig economy. Indiana, like other states recognizes that the gig economy plays an increasingly important role in labor markets, and its size and scope matter for a wide variety of policies. Among these are how to consider unemployment insurance participation.
There’s a lot to consider here, which I’ll leave to another post. Here I want to just talk about the definition and what we do, and do not know about the size, growth and scope of gig work. I began with a definition.
The next step is to consider the possible scope of the gig economy, or which industries are represented. The non-Employer Statistics offer some size context for the state. Not surprising, this includes personal services, consulting, and other sectors (Ebay perhaps), trades and transport.
We also know that nationally, self employment tax reporting indicates pretty constant growth (we don’t have COVID related data on this yet). This is mimicked by the growth of W-2’s, here from the very fine Mercatus Center study of 1099 growth.
At the same time, business applications during COVID absolutely soared. The timing of this suggests something more than filing for benefits is at play, so we might have just had a single very large entrepreneurial shock to our economy. This isn’t necessarily gig work, but more businesses likely means more gig economy.
At the same time, help wanted ads in Indiana with the keyword ‘remote’ have spiked, and now sit at >13% of all job ads.
The consistent growth of the keyword ‘flexibility’ in help wanted ads suggests more gig type work. If you have more ‘on-demand’ scheduling, this is an important emerging skill.
Likely sectors for the gig economy include delivery, food delivery and rideshare. These industry sectors from the Quarterly Workforce Indicators are more broad (4, not 6 digit), but they exhibit the cyclical pattern associated with the pandemic. Interestingly, they move in opposite directions, so working across several gig platforms may be viewed as an employment/income stabilizer for many gig workers. If people stop going to bars, maybe you won’t make money on late night Uber/Lyft, so instead you work at Doordash.
At the same time, there’s a lot we don’t know. Who gig workers are, how dependent are they on the income, how do platforms change gig work (Uber/Lyft, Doordash, Shipt) and how does availability of these services affect local labor supply are all key questions. How does the gig economy affect tax and spending, and what are the influences of fiscal policy on gig work. Finally, what are the lingering COVID effects on gig work., and how do we craft a policy response to parts that are unwelcomed?