Can We Accurately Measure Gig Economy Growth?

Sort of. But the numbers are still interesting.

Photo credit: Núcleo Editorial, CC BY 2.0.

If you had to guess what percentage of self-employed workers were working in the “rides and rooms” industries, would you guess 50 percent, 70 percent, or more than 90 percent? Also: do you think these workers have displaced taxi drivers and hotel employees, or are jobs growing on both sides of the industry?

New research from Mark Muro and Ian Hathaway at the Brookings Institution answers both of those questions. They used an IRS category called “nonemployer firms” (i.e. self-employed workers) to track how many gig economy workers might be out there, and how those numbers have grown over the years. This data is imperfect, because not all gig economy workers are reporting their income to the IRS, but it’s a start.

Tracking the gig economy: New numbers | Brookings Institution

As it happens, the vast majority of these “businesses” — up to 93 percent of them in the rides and rooms industries — turn out to be self-employed, unincorporated sole proprietors. In other words, they are individuals earning income by freelancing or contracting with other businesses such as Uber, Lyft, and Airbnb.

Up to 93 percent of “nonemployer firms” are in the rides and rooms industries? I have so many questions about that, starting with the fact that the Brookings data notes that growth in nonemployer firms has slowed in the past decade.

[EDIT: Our team of savvy commenters has aptly noted that the Brookings quote probably means “As it happens, the vast majority of these “businesses”—up to 93 percent of all businesses in the rides and rooms industries—turn out to be self-employed, unincorporated sole proprietors.” That puts an entirely different spin on the data.]

I’ll quote the Washington Post’s analysis:

Uber and Airbnb helped expand the gig economy. These researchers think they’ve measured how much.

For example, the report found that there were 24 million nonemployer firms in the United States in 2014, up from 15 million in 1997 and 22 million in 2007. That means the overall growth rate in nonemployer firms has been slower in recent years despite the arrival of resource-sharing apps.

[EDIT: I removed two paragraphs of curiosity about how 93 percent of 24 million nonemployer firms are working in “rides and rooms,” since it looks like the data isn’t actually making that point. THAT SENTENCE WAS CONFUSING, Y’ALL.]

Brookings notes that these gig economy workers are not actually displacing “traditional employees:”

Despite the uptick in nonemployer contractors, payroll employment in “rides and rooms” industries has not declined during the last five years. Instead, payroll employment has increased in these industries, particularly in the passenger ground transit sectors. […] This rise contradicts the widely held belief that platform-based freelancing has displaced wide swaths of existing businesses.

We are a country that loves our rides and rooms, apparently, which probably says something about our lack of accessible and attractive public transportation — as well as something about our growing cultural expectation that we be able to travel to any town or city at any time.

Take a look at the Brookings data—which is extensive and includes fun charts—and let us know what questions you have. (Here are two more of my questions: what percentage of nonemployer firms are in creative and media industries, since I would have pegged that number as higher than “less than 7 percent of all freelancers?” [EDIT: Which it probably is.] Also: in which industry are nonemployer firms reporting the highest income?)

Support The Billfold

The Billfold continues to exist thanks to support from our readers. Help us continue to do our work by making a monthly pledge on Patreon or a one-time-only contribution through PayPal.