Originally published by Bloomberg View, Justin Fox
June 8, 2016
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There's been a shift in the U.S. economy over the past decade toward more work being done by independent contractors, on-call workers and others in what the government calls "alternative work arrangements." Economists Lawrence Katz and Alan Kruegerdocumented that earlier this year, showing that these "gig economy" workers went from 10.1 percent of the workforce in 2005 to an estimated 15.8 percent in 2015.
But there is also a long-established cyclical pattern in which people leave self-employment and contracting gigs for full-time work as the job market improves, and this economic expansion is proving to be no exception.
The source of this data, MBO Partners, provides back-office services for independent workers, which for the purposes of its survey are defined as those "who turn to consulting, freelancing, contract work, temporary assignments or on-call work regularly each week." That's pretty similar to the definition of alternative work arrangements in the Katz-Krueger survey. It's less expansive than other estimates of the independent or freelance workforce you may have heard about, which get to bigger numbers by including part-time workers or those with conventional jobs who freelance on the side, among others.
Full-time independents, those who put in more than 15 hours a week, now number an estimated 16.9 million (about 11 percent of employed U.S. civilians), according to MBO Partners. Another 12.4 million do independent work less than 15 hours a week.
Last year's MBO survey showed a slight decline in the number of independent workers, to 17.8 million from 17.9 million, but the difference wasn't statistically significant. The decline to 16.9 million definitely is. From this year's MBO State of Independence report, which was released Tuesday:
With a robust payroll jobs market, it is clear that some of those who were not satisfied with independent work returned to traditional employment.
At 16.9 million, the number is back to where it was in 2012. That year, on the strength of a 900,000-person increase from the year before,MBO predicted that full-time independent workers would number 23 million by 2016. Didn't happen. "I'm still confident that the long term trend towards independent work is still in place," wrote Steve King of Emergent Research, which designs the MBO surveys, in an email. "But it's clear now we underestimated the extent of business cycle impacts on this sector."
The survey has shown a significant gain in the number of independent workers making $100,000 or more a year to 3 million from 2 million in 2011. But that could be as much a result of paychecks boosted by the improving economic picture as it is of more people moving into high-end independent work.
The shift toward independent or freelance work has alternatively been painted over the years as an empowering development in which workers take advantage of new technologies and changing industry structures to strike out on their own, and an exploitative onein which corporations shift work from full-time jobs with benefits to low-pay, low-security gigs. It's surely a bit of both. But this latest survey is evidence that good old-fashioned jobs retain their allure. Not everybody wants to be independent, and the U.S. labor market is not being transformed wholesale overnight.
Then again, with the job market now sputtering, independence could be back in fashion soon enough.