Perhaps because of AB5, the new law regulating independent contractors in California, I have been getting a lot of calls from journalists, think tanks and thought leaders about the #GigEconomy. (I even got one from a reporter in Iowa on the eve of the caucus. “Really?”, I asked, “shouldn’t you be writing about the election?” Nonetheless in preparation for these discussions, I updated some of the data from my book, Thriving in the Gig Economy, which came out in the fall of 2017.
- The number of independent workers in the US remained essentially the same at 41 million and they generated $1.4 million in GDP, which is roughly the equivalent of the economy of Spain. Domestically, independent workers have more of an economic contribution than the construction, mining or transportation industries.
- Skilled services is 45% of all independent work.
- Side hustles, #gig work done occasionally and/or by those who are otherwise employed is up 45%, numbering 15million workers. The low wage growth in many sectors despite the full employment economy is the explanation.
- Millennials have displaced Boomers as the largest cohort, making up 38% and 33% of the independent workforce respectively.
- Average income for full-time independents according to one study, was 16% higher at $68.3k than the national average of $59k.
- 70% of full-time independents plan to continue working on their own, valuing the flexibility it offers.
- Similarly, for the first time, the majority of independent workers feel more financially secure as an independent than as an employee. Surprisingly, only 38% cite retirement planning as a challenge.
Implications for Companies
- Some talent will only be available on a contract/gig basis given the preferences of the workers. Flexibility has inherent and growing value.
- 47% of independent workers, say they have interesting work, compared to only 37% of full-time workers. Firms will need to offer more challenging work to satisfy both types of workers.
Implications for Policy Makers
The popular press and lawmakers tend to define the #gigeconomy as only the on-demand segment of the marketplace which is the commodity side of the industry. (See my Book for more about how I view the industry. ) The on-demand, app based models are what led lawmakers to pass ill-advised legislation like AB5, which continues to ripple deleteriously through the California economy. California based freelance writers are losing gigs by the hundreds, as companies try to avoid the implications of a law that has so many unintended consequences. The workers on these on-demand platforms represent less than 2% of the independent workers in the US; there are 80,000 UBER drivers in America. Multiplying that by 10 to capture all the others – Lyft, Instacart, Caviar etc – means a very small cohort is driving the legislation, pardon the pun. Lawmakers must recognize the diversity of skill, industry, expertise and income that is represented by the independent workforce and formulate policies and legislation that supports these entrepreneurs rather than dashes their opportunities.