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Recent Trends in Contract Work in U.S. Labor Markets: Measurement and Implications
Saturday, Jan. 7, 2023
10:15 AM - 12:15 PM (CST)
Labor and Employment Relations Association
Massachusetts Institute of Technology and NBER
The "Gig" Economy and Independent Contracting: Evidence from California Tax Data
We use de-identified data from California personal income tax returns to measure the frequency and nature of independent contracting work in California. We identify independent contractors by the presence of a Schedule C on the tax return and/or the receipt of a Form 1099 information return. We estimate that 14.4% of California workers aged 18-64 in tax year 2016 had some independent contracting income; over half of these do not have traditional jobs generating W-2s and get all of their earnings from independent contracting. Workers with low earnings are significantly more likely to earn independent contracting income and to rely primarily or exclusively on that income. We explore the characteristics of independent contractors and their distribution across family type, geography, and industry.
The Rise of the Contract Workforce in U.S. Manufacturing and its Implications for Worker Skills Measures
Research and policy analysis on labor market issues often relies on employment measures that only capture employees of firms. Although prior studies have pointed to high and growing levels of contract labor in some segments of the economy, lack of data has hampered research into the size of this workforce and its broader implications for labor market analyses. This paper examines such implications in a study of U.S. manufacturers’ use of contract workers and its effects on measures of skills growth. Using a new research data set developed at the Bureau of Labor Statistics, we exploit granular information on establishments’ location and employment by occupation from 2000 to 2019 to impute staffing services workers in core manufacturing occupations to manufacturing industries and other sectors. We find that the share of contract workers in the manufacturing sector’s core occupations rose 45 percent from 6.9 percent in 2000 to 10.0 percent in 2019. This growth in contract use coincided with sharp declines in manufacturing employment, explaining 8 percent of the decline in manufacturing direct-hire employment in its core occupations. Notably, industries experiencing steeper overall employment declines outsourced a higher share of their core workforce on average. We estimate that the replacement of direct-hire workers with contract workers, who are concentrated in low-skilled occupations, explains 19 percent of the skills growth among workers in core occupations and 17 percent of the growth in skills among manufacturing workers in all occupations.
The Evolution of Platform Gig Work, 2019-2020
In this paper, we provide estimates of platform gig work during the first year of the COVID-19 pandemic. Following a panel of over 50 gig platforms in U.S. tax data, we show that 2020 was a year of both record entry and exit from platform gig work. Overall, we find a substantial increase in the number of platform gig workers, with nearly all of the growth coming from delivery platforms. The demographic composition of platform workers shifted significantly during the pandemic, becoming younger and more female. Entry into gig work from wage work was largest among workers in industries most affected by COVID, suggestive that gig work helped provide extra income to workers facing the largest shocks.
The Experimental Imposition of a Worker Level Minimum Wage
We study a field experiment where workers were randomly assigned to binding minimum wages in an online labor market. Treated workers commanded up to 20% higher hourly wages. However, they were 30% less likely to get hired for jobs they did apply for. They also worked fewer hours, with no effect on workers' earnings. Rather than increase their search intensity, they lowered it - treated workers with the highest minimum wage applied to 12% fewer job openings. Workers did not shift to applying in the "uncovered sector" - jobs with a fixed price rather than an hourly wage. The platform eventually implemented the minimum wage to all workers, so we are able to do a difference-in-differences analysis to capture effects in equilibrium.
J2 - Demand and Supply of Labor
J1 - Demographic Economics