Better data on gig workers needed to inform policy

written by Pam Ferrara for the Salem Reporter

May 23, 2024

If you are a trivia fan, you may have met Salem resident Aaron Padilla hosting a trivia game in a local restaurant, tavern, or organizational venue. Padilla is participating in a new workforce trend, the gig economy.

Padilla, aged 47, came to Oregon from Colorado to get out of an “8 to 5 grind” working as a manager in a big-box store. Studies in fermentation science led to employment as a Cidermaker at an Independence distillery. That work is somewhat seasonal so he’s taken on graphic design and general labor at the distillery and the trivia gig is an addition to his schedule and income. 

“The gig economy” is generally defined as non-standard work and workers in the labor market. Definitions of gig workers range from narrow ones – only workers obtaining work from on-line platforms such as Lyft and DoorDash – to broad ones – anyone who does any type of short-term, project-based work, including selling goods on the internet.

Not surprisingly, estimates of the size of this workforce vary widely, and predictions about it range from a statement that it is declining, to another that gig workers will make up half of the workforce by 2027.

It is important to note that gig workers are not covered by standard labor market regulations, such as wage and hour laws, minimum wage, overtime pay, rest periods, workers compensation, and eligibility for unemployment insurance benefits. 

If most gig workers are 18-year-olds, earning extra money for entertainment expenses, or saving for college, lack of worker protections and benefits likely isn’t important. If most are adults struggling to make a living, it likely is.

So, let’s look at advantages and disadvantages of gig work, estimates of the size of this workforce including in the Salem area, demographics of gig workers, an issue regarding the lack of eligibility for unemployment benefits, and some conclusions about this complex topic. 

The advantages and disadvantages of work in the gig economy were succinctly described in a 2020 article by the Corporate Finance Institute, which offers on-line courses for various financial certifications. Simply put, the advantage for businesses is cost effectiveness, as they don’t pay employee benefits – gig workers are independent contractors, not employees. For workers, flexibility was important – gig workers work when they want to. 

Now for estimating the size of the gig economy – dozens of studies have attempted to do this, and the following estimates are just a sample.

The federal Bureau of Labor Statistics (BLS), the official source for labor market information, did a survey in 2017 of “contingent” workers, defining them as workers who did not expect their jobs to last, and estimated them to be 3.8 percent of the workforce, some six million workers. “Alternative employment arrangements” were also estimated at 10.1 percent of all workers – these were independent contractors, “on-call” workers, temporary help agency workers, and contracted workers. 

BLS tested questions in the 2017 survey regarding electronically mediated work, short-term jobs that workers found through websites or mobile apps. Responders had difficulty understanding the questions, so results were unreliable. BLS concluded that the questions would need to be reworked in future surveys. 

Aspen, a non-partisan research organization, partnered with the Institute of Labor Relations at Cornell University to create a “Gig Economy Data Hub”  to analyze other studies’ estimates. Aspen, defining gig workers broadly, concluded that one in four workers engaged in gig work in 2023. 

Bank of America reported in April of 2024 that 3.8 percent of their customers used debit cards or direct deposit for gig income. 

The PEW Research Center, another non-profit, interviewed nearly 6,000 working age adults and estimated in 2021 that 16 percent of U.S. adults had ever earned income through an on-line platform, and nine percent had earned platform-generated income in the previous year. 

PEW also provided detailed information about several types of non-standard work. (see table below).

Percentage of U.S. Adults Who Say They Have Ever Earned Money By:

Doing Any gig platform work Making deliveries for a delivery app Performing household tasks or running errands Driving for a ride-hailing app Shopping or delivering groceries or household items Using a personal vehicle to deliver packages via an app or website Doing something else
U.S. Adults 16 7 6 5 4 3 4
White 12 4 4 3 2 1 3
Black 20 10 8 7 7 5 6
Hispanic 30 16 12 9 7 6 6
Among adults ages 18-49
White 16 6 5 5 4 2 2
Black 27 15 7 9 10 7 7
Hispanic 34 19 13 10 9 7 7
Among adults ages 50+
White 8 1 3 1 1 1 3
Black 13 4 8 6 3 4 4
Hispanic 18 8 10 5 3 3 3
Source: PEW Research Center, August 2021

More people of color tended to perform non-standard work than other people, in any of PEW’s seven categories of non-standard work.

Researchers at the Upjohn Institute, in a 2018 study, found that non-standard work was more prevalent among the economically disadvantaged. Those who found it difficult to get by financially were 14 percentage points more likely to have engaged in non-standard work than those who did not struggle financially, and ten points more likely to have worked in two or more non-standard jobs.

The pandemic put a spotlight on the fact that gig workers were not eligible for regular unemployment insurance benefits, a safety net for many workers. The federal CARES Act passed in March of 2020 made funds available to the states to pay unemployment benefits to those not eligible for regular benefits, including gig workers. Oregon received about a $1 billion of this funding.

The pandemic experience also highlighted the fact that unemployment benefits are normally funded by employers’ taxes. Ride-share companies and other “platforms” offering gig employment do not pay these taxes. Their workers are not employees but rather independent contractors, and the companies are not employers, in most states including Oregon.

This classification was questioned by the state of New Jersey. The state claimed that ride-share companies were employers, and their drivers, employees, not independent contractors. After a years-long investigation, New Jersey successfully sued Uber in 2022 for $100 million, which was deposited to the state’s unemployment benefits trust fund. New York, Pennsylvania and Massachusetts have similar lawsuits in the works.

In 2023 Washington became the first state in the country to pass legislation making unemployment insurance available to ride-share drivers. The ride-share companies, called “transportation network companies” in the legislation, report wages to the Washington state Employment Security Department and pay unemployment insurance taxes.

Washington also created a pilot program to provide gig workers access to paid family leave, worker’s compensation and paid sick time. The cities of Chicago, New York and Seattle, as well as the states of Colorado, Connecticut and Minnesota, have either enacted or are considering mandating a minimum wage guarantee and other protections for gig workers.

How large is the gig workforce in the Salem area? The Salem area workforce was estimated to be 183,100 individuals in March of 2024. Using Aspen’s estimate of one in four workers engaged in non-standard work, that would mean about 48,000 workers or so with non-standard “gigs” including Aaron Padilla.

Many gig workers enjoy their work and Padilla is one of them – he says he really enjoys hosting trivia games by making sure people playing have fun, and enjoys his distillery work as well. However, when asked about concern for financial security in his older years, he replied “…I worry about my financial security all the time.”

The only indisputable conclusion is this: there needs to be a consistent and accurate way to measure the size of the gig workforce, and to understand the demographics of gig workers.

There will be a new official count soon. BLS surveyed non-standard work arrangements in 2023, including electronically mediated employment, and will publish results sometime later this year. The issues surrounding gig workers are complicated and important to the well-being of workers and families, and will be debated by policy makers for the foreseeable future. Having an accurate official count will help.

Pam Ferrara of the Willamette Workforce Partnership continues a regular column examining local economic issues. She may be contacted at [email protected]