U.S. workers are increasingly working a contract or freelance “gig” instead of having traditional employer-employee relationship, according to a new survey published Monday.
The number of people working in “alternative arrangements,” that is, working as contractors, as freelancers, through a help agency, or through on-call centers, increased by nearly 60 percent from 2005 to 2015, the National Bureau of Economic Research said in a paper written by Harvard labor economist Lawrence Katz and Princeton economist and former Obama adviser Alan Krueger.
The paper said that jump in alternative employment, representing an increase of 8.6 million workers, accounts for nearly all of the job growth during that time: 94 percent.
Yet new apps like Uber or TaskRabbit that connect workers directly to customers through the Internet played only a minor role, the survey found. Only 0.5 percent of all workers connect with customers through apps, a number that is growing but still small.
Instead, the growth in contracting and nontraditional work appears to be related to changes in how corporations operate and in worker preferences. That suggests many companies are increasingly trying to get work done through contracting rather than by employment.
Katz and Krueger concluded that many workers who have become contractors or freelancers during that time have a “preference for being their own boss,” while others who work in temporary or on-call jobs have a preference for steady work with regular hours.
Another factor is that highly-profitable firms appear to be contracting out more work in order to share the gains of their business with a “smaller core of highly compensated workers.”
The finding will likely increase the scrutiny on cases that pit companies against contract workers or staffing services that provide support for companies. Several such cases, including one high-profile one involving the giant retailer Amazon that reached the Supreme Court in 2014, have gained publicity in recent years.
The economists got those results through a survey that they performed with the RAND Corporation. The survey was designed to mimic a survey on contingent workers that in the past had been performed by the Census Bureau, but has been discontinued since 2005 because of funding issues.
The survey conducted by RAND received 3,850 responses, which were reweighted to match the demographics of the country based on Census results.
