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“Gig,” Contract, and Nontraditional Workers

Workforce Futures Initiative

January 24, 2023

A recurring theme of the Workforce Futures Initiative has been how little we know about the evolving needs of workers and businesses or even how the nation’s spatially and numerically vast labor market actually operates. This is especially true when we consider the “gig” or contract worker economy, which has grown dramatically in the past 15 years due to internet-based companies connecting market demand to worker supply. The participants in this panel weighed in on the state of our understanding and some of challenges involved in writing rules for a fluid and fast-growing segment of the economy.

Key Insights from the Working Group

  • Data relating to this group of workers are often fragmentary and contradictory. Data categories (W-2 or self-employed) are overly broad and fail to distinguish between individuals working in large businesses with significant workforces and independent contractors. Contractors themselves are a large and heterogeneous group.
  • Data suggest that over the past few years the portion of the workforce with at least some earnings from gig work has grown and that 90 percent of that growth is related to internet platform–mediated work. Over two million workers are deriving at least some of their income from such work.
  • The gig and contract workforce is “U-shaped,” concentrated among high and low earners. Among lower-income workers, gig work is often full-time. As income rises, such work becomes more supplementary to other full-time work. At the low end of the income distribution, gig work is most often in construction, transportation (rideshare), and other personal services. At the high end, there’s greater concentration in professional services and consulting. 
  • Up to 2 percent of workers appear to be miscoded on their main job. Self-employment data tend to be more robust at the lower end of the labor market because self-employment reporting is used to qualify for earned income tax credit benefits, although miscoding is especially prevalent among black and Hispanic workers and those with low educational attainment.
  • Women tend to self-select into nontraditional work roles in which the work has greater autonomy, the role allows for greater freedom to make decisions and structure activities, and the workweeks are shorter. Gig work allows for greater temporal flexibility.
  • Gig work may be especially important to individuals with criminal records, who have difficulty accessing traditional employment opportunities. The same applies to those without criminal records but with significant gaps in work history.
  • Benefit access and portability are a key problem. One study found that 80 percent of self-employed workers indicated they want and need portable benefits (health, unemployment, and pensions) that are not tied to a single organization. 
  • Gig work encompasses many different industries and people of different income levels. A one-size-fits-all policy could have far-reaching, unexpected consequences.

Areas of Consensus or Disagreement

  • Caution is advised in designing and implementing policy concerning gig workers. Public knowledge about who is working in gig and contract positions and why they participate in this type of employment is not well-defined and, at times, contradictory. 
  • Actions taken to correct perceived challenges may result in wide-ranging unintended consequences for workers and businesses. 
  • Investment is needed in data design, collection, and analysis to provide a foundation for future policy changes.
  • Experiments in improving access to portable work benefits are likely to be the most fruitful avenue for addressing strong concerns among gig and contract labor workers about the need for easier access to health, unemployment, and pension benefits.

Opportunities for Further Research

  • How did the pandemic affect the demand for flexible work, and has it changed the growth, industry profile, or demographic composition of the nontraditional workforce?
  • Did the growth and new opportunities in nontraditional work arrangements affect women’s labor force participation rate in the past two decades?