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Report

Is California's gig economy growing? Exploring trends in independent contracting

1 Jun 2016
Description

Recent reports on the “gig economy” create an impression that a dizzying mix of technological and competitive forces is fundamentally reworking the landscape of employment in the United States. A central aspect of this change is the perceived rise of independent contracting as an alternative to the conventional employer-employee relationship. However, even quantifying whether and to what extent the ascendance of the gig economy is an empirical fact remains beset by a number of challenges. Taking stock of those challenges, this report explores trends in publicly available sources of data, each of which provides an imperfect proxy at best for independent contracting, to arrive at several tentative conclusions regarding the gig economy in California.

A specific type of app-driven work epitomized by the Uber model has shaped recent debates over gig work, along with the apparently increasingly widespread practice of freelancing and continuing concerns over the many manifestations of low-wage and contingent work. Given the paucity of available data, a small but growing set of survey-based research has put forth national-level estimates, finding modest increases in rates of independent contracting (Katz and Krueger 2016, GAO 2015).

Echoing the findings of previous research, this report presents evidence at the economy-wide level of stasis in traditional proxy measures for independent contracting, such as the “self-employed, unincorporated” worker. Other measures, such as types of small businesses that overlap with independent contractors, have shown some growth relative to wage and salary employment. Positive evidence of a pervasive shake-up in the nature of work remains elusive. However, this general trend masks a more diverse set of stories at the level of more specific industry and occupational sectors. Available data suggests that most of the growth in independent contracting has been in service industries that fall outside of the major service sectors, like health care; white-collar management, finance, and technology; retail; and food service. Instead, the majority of growth in independent contracting appears to be drawn from relatively low-wage industries that provide personal services, services to households, and marginal support services to other businesses. This industry shift is likely a contributing factor to another finding: earnings from types of self-employment that overlap with independent contracting have declined relative to where they were a decade ago and relative to employee wages and salaries over the same period.

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2016
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