Gig Economy

The Gig Economy — A Labor Day Tribute

Today is Labor Day, a holiday we’ve been celebrating to honor the hard work and productivity of the American worker since 1894.

The history of the holiday is less than wholly cheerful.

In May of 1894, Chicago Pullman railroad employees went on strike to protest their dissatisfaction with their pay. The American Railway Union of 150,000 railroad workers, led by famous socialist Eugene Debs, joined the strike and refused to operate Pullman train cars. That had the unfortunate consequence of shutting down mail delivery, prompting President Grover Cleveland to dispatch Federal troops to break up the strike.

To say that went poorly would be something of an understatement. Riots broke out in Chicago, buildings were torched and by the end of the event, 30 strikers were killed, 60 were injured and $80 million in property damage had been done (in 1894 dollars, adjusted for inflation, that’s almost $3 billion). It’s considered one of the bloodiest episodes in American labor history.

When all was said and done, the mail was delivered because the trains started running, the Chicago rail workers promised never to form a union and President Grover Cleveland became one of the least popular people in the United States. As part of the government’s PR rehabilitation efforts — and to make peace with labor unions before he ran for re-election — Cleveland got behind a bill to nationalize the Labor Day holiday that was already being celebrated in various U.S. states.

President Cleveland lost the 1889 election (but did come back to win in a second non-consecutive term in 1893, because U.S. politics has always been extremely weird), but Labor Day has been with us more or less since the close of the 19th century.

The labor the holiday was intended to celebrate has changed a lot since that time. According to the Bureau of Labor statistics, the majority of the turn of the 20th-century workers were either farmers (38 percent), miners and manufacturing laborers (31 percent) or service workers, who represented about 28 percent of the population. Fast forward 100 years, and only 3 percent of the U.S. population worked on farms, 19 percent of the population worked in mining and manufacturing and 78 percent of the population worked in the service industry.

The 100 years between 1900 and 2000 has also seen a number of massive demographic shifts, too. The American workforce grew six-fold (the baby boom at the halfway mark of the 20th century being a major driver there), and the makeup of the workforce has now radically shifted. At the turn of the 20th century, only 19 percent of the workforce was female, and women represented a mere 1 percent of the nation’s lawyers and 5 percent of its doctors. Children under the age of 12 were 6 percent of the workforce. By the turn of the 21st century, the American workforce was 60 percent female, with females representing 29 percent of the country’s lawyers and 25 percent of its doctors. Children under the age of 12 have more or less been banned from participating in the workforce at all.

We could play compare and contrast forever, as we celebrate the 17th Labor Day of the 21st century, but it bears remembering that the labor market is still a radically changing and reforming place.

While those changes can be characterized in any number of ways, one of the biggest and most fundamental changes to the labor force is the rise of what we now call “the gig economy.” The gig economy consists of workers who participate in the workforce as independent contractors and who are often provided the opportunity to secure those gigs through marketplaces that aggregate supply and demand.

So, what has the rise of the gig economy looked like, who is it employing and what’s next? In a tribute to Labor Day — and with the help of the PYMNTS Gig Economy Index — we can happily tell you all about it.

The Gig Economy (By the Numbers)

First off, the gig economy is big and growing. In 2017, gig workers will collectively account for $711 billion in wages. That number is expected to be well north of $1 trillion by the end of 2018. Our data suggests that nearly half (44 percent) of gig workers receive 40 percent or more of their income from those gig economy jobs. We estimate that the gig economy today represents 3.7 percent of total U.S. GDP.

As far as those jobs go, gig workers are also a lot less likely to play the field. Even though the nature of a gig worker is to move from gig to gig, more gig workers are doing that within a single marketplace. According to our Q2 2017 analysis, 35 percent of gig workers supported themselves through a single gig marketplace, up from 27 percent just three months prior.

Gig workers also like being gig workers. Sixty-nine percent of gig workers said that they would not quit their gig work for a full-time job, confirming the fact that gig work isn’t a choice made out of desperation. Workers are opting in to gig work and pursue it in the same fashion that any other worker pursues their own career ambitions.

What makes those gig workers more motivated to work more gigs more often and stay loyal to the same marketplace is how they are paid.

In some cities, gig workers will soon approach the majority of the workforce. In New York — the nation’s largest city by population — gig workers make up some 40 percent of the workforce, according to City Council Member Brad Lander.

As for what the workers are doing, gigs aren’t just Uber drivers, even though the transportation industry (Uber and its competitors) represents 19 percent of gig economy workers in our study. But before there were gig workers, there were freelancers in a variety of professional services — from graphic design and software engineers to photography even accounting services. The rise of marketplaces that make it easier for these professionals to get gigs is a very close second at 18 percent. Education and healthcare are also gaining strength.

Who’s Working the Gigs?

The simple answer to who is the average gig economy worker is, stated simply, a young, educated person. According to our Q2 Index, 76 percent of gig workers who worked in the first part of this year report at least some upper-level education under their belt.

“Overall,” the report concluded, “gig employees tended to be more highly educated than the average American.”

The data further suggests that many of these employees already have full-time jobs and want to supplement their income — or have fully dropped out of the traditional nine-to-five lifestyle in favor of a more flexible schedule.

“That’s a very different paradigm than before,” noted Michael Ting, SVP, Digital Markets at Hyperwallet. “We used to think of the way we earn money as a nine-to-five job — and that’s no longer the case. [Gig workers] can earn money at any time now.”

These gig employees, Ting noted, also have a somewhat different identity than laborers of the past — being somewhere between an entrepreneur and an employee.

“The interesting thing about the gig economy is that these workers play a dual role: They are the byproduct of these marketplace platforms, which are creating jobs and effectively employing all of these people. But, simultaneously, each one of those people, those independent workers, are themselves a small business.”

Not every gig worker might see themselves that way though. The Uber driver working random nights and weekends for supplemental income, for instance, probably doesn’t consider herself a small business. But the accountants, lawyers, writers and other skilled professionals that are increasingly using marketplaces to secure gigs “probably view themselves as small businesses. They go out and find their own market, with online platforms making that process easier than ever.” Ting said.

What’s Next

In a word, growth — as ever bigger, traditional firms are embracing a more gig economy-centric mindset.

The Marriott hotel chain launched a program to allow guests to meet, greet and maybe grab a lesson with local artists and musicians, a program that was influenced by sharing economy pioneer Airbnb’s launch of Airbnb Trips, a  product designed to offers unique travel and leisure activities developed by the platform’s hosts.

Ticket giant Live Nation purchased Universe in 2012 to give event promoters the chance to partner with local artists, chefs and freelancers.

Walmart is now competing with Amazon by offering its workers side gigs to deliver packages on their way home and is partnering with Uber to do so.

Iceland Air now pairs its willing employees with enthusiastic travelers looking to explore and experience Iceland like a local through its Stopover Buddy program.

Today is Labor Day — the day when we celebrate not just American laborers but also American labor itself and the ways that it grows and changes as the needs and capacities of the American population change. If you told people in 1900 that by 2017 less than 3 percent of the population would be working on farms, they likely would have believed you were telling them that economic apocalypse was in the United States’ future. Because where were those 35 percent of workers going to go?

And yet, apocalypse didn’t happen; the economy just evolved. And, as the numbers show, it’s still evolving.

Now, seemingly, one gig at a time.

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