Antoinette Kunda wasn’t always rushing to make deliveries for strangers and pick up riders. Prior to the Great Recession, she worked as an executive administrative assistant at American Express
where she earned $80,000 a year, or approximately $6,667 a month.
Today, she works in the gig economy. “I do not consider myself having a primary job,” Kunda said. She works for Uber, Lyft, Postmates, Instacart, DoorDash, Grubhub and various other on-demand delivery and rideshare apps. “My primary job is putting a roof over my head,” she said.
The government reported a sharp rise in wages in August, but Antoinette Kunda’s income is notoriously unpredictable.
Her current goal is to make $5,000 a month but, in reality, she said she is lucky if she can pocket $100 a day or $2,800 a month. Last week, the Bureau of Labor Statistics reported a sharp rise in wages in December reaching a post-recession high of 3.9%, but Kunda’s income is notoriously unpredictable, which means she often has to work longer hours than when she had her 9 to 5 office job.
Yet, all of her work and the work of other so-called “side hustlers” or “gig workers” who typically take on multiple jobs, is essentially invisible in the eyes of the U.S. Bureau of Labor statistics. Though the agency is a key source of information about the labor market, it doesn’t keep tabs on how much people make in what the government calls “non-primary work.”
On Monday, The Wall Street Journal reported on a new study, citing gig-economy experts who say economists have overestimated its impact on the U.S. economy. “Alan Krueger of Princeton University and Lawrence Katz of Harvard sifted through new evidence to explain how, in a 2015 survey, they overestimated how people cobbling together a living from odd jobs, especially via apps like Uber, would upend traditional work arrangements,” the paper said.
That’s a problem because the gig economy matters. All that missing data could help economists understand the state of our economy and the changing nature of the workforce, and — in a climate of stagnant wage growth — shed more light on how much money people earn. It’s also crucial for policy makers who may seek to enact minimum wage and overtime pay laws for workers.
These laws could help drivers who are struggling to make ends meet, said Harry Campbell, who runs a blog advising drivers called the Rideshare Guy and currently drives for Uber and Lyft. “A lot of drivers are living paycheck to paycheck and they know they need to make $100 each day,” he said.
Having reliable wage data helps lawmakers, companies and workers make plans. “It tells us how the economy is doing and how much money people are going to be spending,” said Aparna Mathur, a resident scholar in economic policy studies at the American Enterprise Institute, a conservative think tank in Washington D.C. “Tracking the labor market is key to everything else in the economy because it informs investment decisions,” she said.
There is no agreed upon definition of the gig economy
It’s tough to measure something when no one can agree on what’s being measured.
The BLS does not have an explicit definition for a gig worker, or a formal way of tracking them. It comes closest in a survey called the Contingent Worker Supplement, which studies “contingent workers” in temporary working arrangements that they don’t expect to last more than a year.
But prior to last month, the BLS had not released the Contingent Worker Supplement since 2005 due in large part to a lack of funding. The most recent report found that 5.9 million people or 3.8% of all workers are contingent workers.
“It’s not that the BLS doesn’t care about secondary work, they do,” said Demetra Nightingale, an economist at the Urban Institute, a think tank based in Washington D.C. But without adequate funding it is difficult for the BLS to study those workers, she said.
These workers come in many forms. They include side hustlers with regular jobs and freelancers who take on extra clients on their off-hours, according to Freelancing in America, a 2017 survey conducted in part by Freelancers Union. That survey estimated that 57.3 million Americans are freelancing, or 36% of the workforce, but those freelancing could be choppy and not well paid.
Other estimates say the gig economy is even larger than that. The Federal Reserve has a very broad definition of people working in the gig economy. The Fed says gig workers could be anyone from a babysitter to an Uber driver. According to that definition, there are as many as 75 million gig workers.
Lawrence Mishel, a distinguished fellow at the Economic Policy Institute and former president of the left-leaning- pro-labor think tank, said it’s important to avoid using broad definitions of gig workers that risk overstating the number of gig workers and their ability to impact the economy.
“Many reporters wrongfully equate gig work with the work of independent contractors,” he said. “Then some people, including the Federal Reserve, refer to gig work as informal work which is anything you do to make a buck.”
The Bureau of Labor Statistics is trying to get better estimates
Another reason for the lack of certainty with the government estimates: There are big gaps in the Contingent Worker Supplement. The survey only asks questions about an individual’s main job, whether it’s full-time or part-time, and gathers no information about wages and hours worked for non-primary work.
“The fundamental basic question we ask in the CWS is did you do any work for profit,” said Karen Kosanovich, an economist at the BLS. “If you did any work last week then you have a job.”
To better gauge the extent of the gig economy the BLS included four new questions in the May 2017 Contingent Worker Supplement, which is currently being evaluated and will be released in September 2018. That’s in addition to the 240 questions on previous versions of the CWS.
The amount of questions respondents answer varies significantly depending upon the individual’s current working circumstances. On average, the BLS estimates that it takes respondents nine minutes to complete the questionnaire.
The four new questions are:
- Did you earn income through a short in-person task using a website or app last week?
- “Was that for your main job, your second job, or other additional work for pay?”
- Did you perform any work for pay “through companies that maintain lists that are accessed through an app or a website?”
- Was that work for your main job, second job or additional work for pay?
None of the questions ask respondents the number of hours they work or the wages they earn in completing these types of jobs. (If this was their main job, the wage data would appear in the Current Population Survey, which is used to determine the monthly unemployment and wage rate.)
And if it is not their main job? “The sample size would be too small,” said Julie Hatch Maxfield, assistant commissioner from the Office of Current Employment Analysis at the BLS. She said people who take on gig work are typically supplementing their income from their primary job.
As a result, the BLS cannot say for certain how many Uber drivers exist in the U.S. “The BLS is missing a lot of these workers who don’t think of themselves as having a primary job,” Mathur said. And that’s why “people are telling them to ask more specific questions to understand what is considered non-traditional work.”
Meanwhile, Antoinette Kunda feels like all her hard work goes largely unrecorded by economists. “The government doesn’t have a freaking clue about the work that I do,” she said.
(This story was updated on Jan. 7, 2019.)
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