Last month, UpWork and Freelancers Union released their fourth annual “Freelancing in America” study and announced that the freelancing ranks continued to grow and reached 57.3 million participants. This compares to the 2017 MBO Partners “State of Independence in America” which pegged the number at a more conservative 41 million participants. Who is right on all of this Gig Economy data? Is the data contradictory, erroneous or just misunderstood? I opt for misunderstood, and you would too, if you understood, the three things you need to know about gig economy data.
1. There is no single source of reliable Gig Economy data
The US Department of Labor discontinued its “Contingent Labor” report in 2005. As such, there is no government sponsored source of data. Which isn’t to say that the government’s methodology would have been perfectly suited to understanding and quantifying the growth in independent work. Rather it would have served as an objective standard by which market watchers could evaluate trends.
As a result, to fill the void left by no official governmental report, many entities have stepped in to make estimates. Think tanks like the Brookings Institution or the McKinsey Global Institute have published reports. Industry participants, like Upwork and MBO Partners have also done studies on their own or in partnership with research organizations. Finally, companies in adjacent industries who serve the gig economy ecosystem, like The Staffing Industry Analysts, JPMorgan Chase and Hyperwallet have conducted research on specific dimensions of the world of independent work. All of these efforts resulted in interesting different numbers, because the methodologies and assumptions employed varied.
Frustrated by the absence of data, The Oxford Internet Institute launched an effort to create new objective data on the Gig Economy. They are developing the Online Labor Index (OLI) using publicly available information on the major digital platforms that focus on work for hire, i.e. software development projects and not Uber drivers. The OLI measures the supply and demand of online freelance activity across countries and occupations by tracking in real-time the number of projects on the six major platforms that represent collectively 65% of the market. As cool as it is, and do check it out because it is cool, it does not yet provide any income information or demographic data on the workers other than their country of origin. That said, they are actively looking to improve the value of the measure and expand the factors they track, so stay tuned.
2. Data discrepancies arise from the fundamental question of who is an independent worker.
If you are researching the gig economy, you need to start with the definition of who is included as an independent worker. The range is broad.
At the most expansive end are those that include independent workers, but some researchers also include those who are Air BNB hosts. In my book, Thriving in the Gig Economy, I exclude the latter, because it is a Sharing Economy play. The Gig Economy by definition is about work. Although there is work involved in being an Air BNB host, the truth is the purchase decision is based on the asset; I rent the condo in Colorado because it is near the lifts, has the number of bedrooms I need, is available when I want it and is at the right price point. The work of the host does not enter into the calculus. Similarly, some studies include people who sell things on E Bay. This could include independent merchants, but it could also include someone who sold his mother’s dining room table just once.
Ay the narrow end of the market estimation spectrum are those who include only freelancers who secure their work on digital platforms. A major study done by JP Morgan Chase using income data in over 600,000 accounts used that definition. That was due in large part because they were tracking the payments made from those platforms to come up with estimates of participation levels. The narrow definition however, does not include the vast majority of freelancers who secure their work on their own or through staffing firms or other intermediaries.
Nonetheless, according to a recent Aspen Institute report, if you compare these reports and adjust for the differences in definitions the numbers do turn out to correlate well.
3. Nonetheless less all the reports share a common message – that the trend is increasing worldwide.
Whether the grow rate is x or y, the common theme in all of the reports is that the trend toward independent work is increasing. Other common themes that come out through the research are:
– Most independent workers are doing so by choice, not because they have no other options;
– Independent workers are very satisfied with their work mode and enjoy the benefits of flexibility and control over their lifestyles;
– The key challenge faced by these workers is income volatility and the concern about maintaining a stable cash flow.
– The talent market is international and independent work is being pursued in a range of professions from lower level roles to highly skilled ones worldwide.