There has been a lot of hype lately about the so-called gig economy. It's huge! It's growing! We're all going to be freelancers soon! But is this actually true? Well, that depends on whom you ask.
A recent study says there are a whopping 54 million freelancers in America and concludes that "we’re entering a new era of work -- project-based, independent, exciting, potentially risky, and rich with opportunities." The paper was put out by the Freelancers Union, an insurance pool for freelance workers, and Upwork, a company that connects businesses with freelancers.
Another report published this week by the left-leaning Economic Policy Institute says the freelance economy is far smaller -- and that it actually shrank over the last year, from 19.6 million independent contractors to 18.1 million.
This issue has come to the forefront of economic policy discussion because of the number of high-profile Silicon Valley companies, like Uber, that use independent contractors rather than having employees. The real question is whether these companies represent a true shift in the economy, or whether they're just a tiny sample that's great at getting press.
There's no question that freelancers get a raw deal in the U.S., since employers tend to subsidize health insurance, retirement benefits and even taxes. The question is whether the economy is changing such that it's leaving out many more people than it did before.
The EPI report concludes that, "based on current trends there is no reason to believe that in the near or intermediate future a large and growing share of people will obtain their main source of income from freelancing or doing gig work." It refutes FU's claim that there are 54 million people freelancing in America. That's a huge number -- equal to a third of the American workforce. The problem, says Lawrence Mishel at EPI, is that it isn't totally accurate.
People who spend a significant amount of their time freelancing, as opposed to freelancing to supplement other income, are a much smaller segment of the workforce. Plus, the number of independent contractors -- those traditional kind of freelancers who get most of their income from contract-based work -- shrank in 2015 to 12.3 percent of the employed workforce over the age of 18, from 13.5 percent in 2014, per the EPI's analysis of the FU's data.
The disagreement here comes down to a quibble over definitions and statistics, as good arguments usually do. The FU study uses the broadest possible definition of a freelancer: "individuals who have engaged in supplemental, temporary, project-, or contract-based work in the last 12 months." That's basically anyone who has made money outside of a strict employer-employee relationship, even people who own their own business but have fewer than five employees. Yes, even some employers are considered freelancers, according to FU.
The EPI is only really interested in those people who rely on freelance work as a primary source of income -- those are presumably the people who struggle the most with economic policies that overlook workers without an employer.
The FU study would consider me a freelancer. I wrote a single story for a publication I don't work for this year.
While I may have briefly engaged in freelancing, I don't have any of the typical issues associated with not having an employer: I have health insurance and other benefits through my full-time job, and I always know when my paycheck is coming and how much it will be. Contract-based work this year will account for about 0.2 percent of my income.
But the FU argues it's important to include anyone who has done any work outside a traditional job. "The sooner we stop pretending people work one way or another, without any overlap, the better we’ll be able to understand our changing workforce," said Jackie Kessel, a spokeswoman for the organization.
In the EPI report, Mishel takes the data from the FU post and lays it out clearly. What's really interesting is the fact that while many of these groups saw their numbers shrink in 2015, the number of people classified as diversified workers (defined as "people with multiple sources of income from a mix of traditional employers and freelance work," but who are not necessarily primarily freelancers) jumped by more than 50 percent.
If there is a change going on in the economy, it looks like that's where the change is happening.
