The new trend in the American workforce features a large number of workers who are, in various ways, self-employed or freelancers tackling short-term jobs or projects.
It’s called the “gig economy.”
These workers go from one gig to the next acting as an independent contractor, or through a temporary services agency or as an on-call employee.
The sheer number of these workers is staggering. According to the New York Times, new research has found that the number of Americans relying on these alternate work arrangements rose 9.4 million from 2005 to 2015. That was greater than the rise in overall employment, meaning there was a small net decline in the number of workers with conventional jobs in that same 10-year time frame.
Nearly six years after the end of the recession, another lingering trend is the segment of the workforce that consists of part-time workers who can’t find full-time employment. Bridge Magazine reports that in Michigan approximately 300,000 residents have given up finding work or work part time but want a full-time job.
Michigan’s unemployment rate has fallen below 5 percent, but another 6 percent of Michigan workers in 2015 were looking for full-time work yet stuck in part-time jobs of less than 35 hours a week. Only Florida, California, Arizona and Nevada were worse than Michigan in that category of underemployment.
As for the roughly 16 percent of workers nationwide in unconventional work arrangements, the Times blog “The Upshot” points out that these workers do not receive benefits, giving employers a big reduction in their labor costs.
Here’s how Neil Irwin of The Upshot describes the situation:
This change in behavior has profound implications on social insurance. More so than in many advanced countries, employers in the United States carry a lot of the burden of protecting their workers from the things that can go wrong in life. They frequently provide health insurance, and paid medical leave for employees who become ill.
They pay for workers’ compensation insurance for people who are injured on the job, and unemployment insurance benefits for those who are laid off. They help fund their workers’ existence after retirement, at one time through pensions, now more commonly through 401(k) plans.
… So Uber alone may not be a major force reshaping the nature of work. But the same technologies that made it possible could be making employers more interested in building a work force of nonemployees. A weak job market has probably given them more ability to make it a reality.
A big question for the next decade is whether this was a one-time shift or whether it will continue in the years ahead, even with a tighter labor market. The answer may determine if the employer-provided social insurance that was a staple of the 20th-century American economy will remain there in the 21st.
