Analysis: Standard work arrangements surprisingly dominate labor force since 2005
Monday, March 04, 2019
Beware of talk that we are living through the rise of nonstandard employment. We turn to a new analysis of Bureau of Labor Statistics data from the Center for Economic and Policy Research and the Economic Policy Institute based in Washington, D.C.
"In 2017, the total share of the labor force working in nonstandard arrangements was 10.1 percent, down from 10.9 percent in 2005," according to Eileen Appelbaum, Arne Kalleberg and Hye Jin Rho.
Accordingly, the fraction of workers in standard work arrangements was 89.9 percent in 2017, roughly the same as 1995. This period includes the Great Recession of 2007-2009, the worst economic downturn since the 1930s.
"Nonstandard or alternative employment relations refer to employment by a temporary help agency or contract company or as an on-call worker or day laborer," according to the three analysts. "We refer to these nonstandard employment relations (which involve an employer and employee) and independent contracting collectively as nonstandard or alternative work arrangements in this report."
One prominent part of that is the so-called gig-economy, which customers access via apps and websites. Gig workers are independent contractors, providing services such as ridesharing to customers.
"Uber and Lyft are very visible and are about four percent of people in their industry, but gig workers are a much smaller share of other industries," CEPR co-director Eileen Appelbaum told MultiBriefs in an email interview.
To sum up, about 1 percent of the American labor force toils in nonstandard work arrangements. JPMorgan Chase Institute data uses different methodology from BLS but comes to the same conclusion as the EPI and CEPR analysts.
Demographically, who is more likely to labor in nonstandard arrangements? Spoiler alert: think grey hair.
"Older workers are more likely to be independent contractors than any other age group in both 2005 and 2017," according to the EPI and CEPR analysts. "However, the share of all older workers who are independent contractors declined from 10.8 percent of those ages 55–64 and 18.3 percent of those ages 65+ in 2005, to 9.3 percent and 16.2 percent, respectively, in 2017."
Independent contractors file a 1099 Internal Revenue Service tax form, and pay the employer and employee share of Social Security. Just under 22 percent of gig economy workers labor in transportation and utilities.
Further, the median earnings of these older workers were the highest compared with other age groups of younger workers in 2005 and 2017. Apparently, experience matters while working for pay.
Workers in standard employment relations earned the highest median weekly earnings in 2017.
What is the purpose of the EPI and CEPR analysis? "Nonstandard employment relations — that is, temporary help agency and contract company employment," according to Appelbaum, Kalleberg and Rho, "and employment as an on-call worker or day laborer — as well as independent contracting have become increasingly prominent in both theoretical and policy thinking about how employment has changed in recent years in the United States and other postindustrial countries." That is not all.
On the legal front, a 2018 California Supreme Court decision, Dynamex Operations West, Inc. v. Superior Court, changes how employers classify workers as independent contractors. There are related bills moving forward in the California Legislature in 2019.
How does the future of gig work shape up? "Despite the ubiquity of Uber and Lyft drivers in our major cities, the gig economy does not currently hold the key to the future of work," Applebaum said in a statement. If the past two decades offer a map to tomorrow, 9-in-10 U.S. workers will remain in standard employment.
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