Gig Economy Update: What Business Leaders Should Know

New data about the contingent workforce sheds some light on the nature of the gig economy. Here’s what experts have to say.
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There might not be as many contingent workers as the business world once thought. The Bureau of Labor Statistics reported June 7 that between February 2005 and May 2017, the share of contingent workers actually fell, from between 1.8 to 4.1 percent of total employment to 1.3 to 3.8 percent.

Before the most recent report, survey data from various companies found that the contingent labor force was much higher, or employers planned to increase their use of freelance talent. As previously reported by Talent Economy, EY found that 40 percent of organizations surveyed planned to increase use of contingent workers, with 55 percent of those organizations saying that this is a method to control labor costs. The BLS report didn’t reflect those previously reported trends.

Still, there is a supplemental survey to this report, which is set for release in September. This will include information about “how the internet and mobile apps have led to new types of work arrangements,” according to the Department of Labor press release. It used “four new questions designed to measure an emerging type of work — electronically mediated employment, generally defined as short jobs or tasks that workers find through mobile apps that both connect them with customers and arrange payment for the tasks,” according to Karen Kosanovich, economist at the Office of Employment and Unemployment Statistics in the Bureau of Labor Statistics. This survey will reveal if this type of work were for a main source of income, for a second job or additional pay.

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It’s important to note that the BLS does not have a definition of “gig economy” or “gig workers.” “In fact, researchers use many different definitions when they talk about the gig economy,” Kosanovich said. “These definitions may overlap with contingent workers and some of those in alternative employment arrangements.”

The Changing Nature of Work?

Employment experts who spoke with Talent Economy said that the contingent and alternative employment arrangement data could help put to rest the narrative that the gig economy is dramatically changing how work gets done.

“People have wrongly said we have a rapidly changing nature of work and the future of work is we’re all going to be freelancers or gig workers,” said Lawrence Mishel, distinguished fellow and labor market economist at Economic Policy Institute, a nonpartisan research organization based in Washington, D.C. “And anyone paying attention to data — at least in my view — would have known that that’s not true.”

While he sees an increase in activity for apps and websites that place workers with temporary work, these have a core of people who do this kind of work on a very part-time basis for supplementary income. There is a difference between the prevalence of gig work and how jobs as a whole change. If making the argument that the gig economy is central to work, then the BLS was right to look at just contingent workers doing these tasks as a main part of their income, he said. Still, he thinks the BLS survey vastly undercounts people working for temporary help firms and staffing firms, as well as the fissured economy, or subcontractors.

His main takeaway from the BLS report is that “it should end the hype that we’re all becoming freelancers of gig workers,” he said. “Traditional jobs are not going out of business.”

What Business Leaders Should Know

A leader of a gig work platform agrees that many of these workers still have a main job and use gig work to supplement income. Wade Burgess, CEO of Shiftgig, a Chicago-based company with a mobile marketplace that specializes in short-term gigs, said his company’s survey of gig workers found that 51 percent of these respondents have full-time jobs.

The driving force of these side hustles is that it is becoming easier to work this way. “As soon as you can put that control in palm of your hand, and it’s as easy to book that side hustle as it is to order pizza, then it’s really open to a lot more workers,” Burgess said.

And that control mirrors the hold that workers have on employment today. With 4 percent unemployment, it’s a job seeker’s market, and “it’s increasingly important to know the worker is in control,” Burgess said.

For jobs of any kind to be seen by top talent, employer branding is crucial. Employers should create fun environments, understand that first impressions are important and welcome the gig worker into the team, culture and values of the organization, Burgess said.

“Great companies know that talent is their top priority. If they don’t realize that, they’re going to get beat by companies that do realize that,” Burgess said.

Other advice for business leaders includes taking ownership of employment data, as well as properly classifying workers.

“Take each report you see, including the BLS, with a bit of a grain of salt,” said Rob Cruz, vice president of contingent workforce compliance and senior legal counsel at TalentWave, a Denver-based SaaS company that helps companies engage with freelance talent. While this report says there are 10.6 million independent contractors, others might say there are 30-50 million people working in this manner. Come to grips that the true number is probably somewhere in between, he said.

Also, “businesses should be trusting their own eyes,” Cruz said. Are organizations actually seeing reported trends? Now is a good time to examine the BLS report and use it as a springboard to conduct internal surveys and audits, identifying all independent contractors and vet if the workers are properly classified. “These studies have to be also taken in light of the fact that misclassification is still an extremely important issue and it’s a hard legal requirement,” Cruz said, adding that the best defense against misclassification is to work with an expert, whether that be through internal programs or with outside counsel.

Lauren Dixon is senior editor at Talent Economy. To comment, email editor@talenteconomy.io.