Despite the gig-economy hype, the share of independent workers in the U.S. has dropped over the last decade. And Uber itself has a smaller role as an employer
Wait, so now the gig economy isn’t the future of work?
That’s the big takeaway from a new report out of the Bureau of Labor Statistics that reveals that gig work makes up only 6.9 percent of the U.S. workforce. Not only is this a modest number, it’s getting smaller. Over the past decade, as contingent-labor-driven platforms like Uber proliferated and tech evangelists promised to disrupt the old institution of full-time labor, the share of American workers working for themselves actually went down. In 2005, 7.4 percent of workers reported being independent contractors.
These revelations complicate the idea that the U.S. is becoming a nation of proverbial Uber drivers, flitting from task to task in a ceaseless dance orchestrated by various on-demand sharing-economy platforms. As Katharine Abraham, a former commissioner of the Bureau of Labor Statistics, told the Washington Post: “There are changes underway in the economy and how people get jobs, but I don’t think it’s a seismic shift.”
The BLS report also has implications for our understanding of Uber, the quintessential gig economy gig. There’s a growing body of work suggesting that the pool of Uber drivers isn’t as large, or as prosperous, as the company’s outsized influence would lead you to believe.
Not all of the skepticism has been grounded in reality—when dramatic figures out of MIT and Stanford’s Center for Automative Research indicated that Uber driver wages were sub-$4 an hour, Uber quickly pointed out errors in their math. But another report from the Economic Policy Institute published last month has an updated, and more robust analysis, based on data from Uber’s chief economist. According to author Lawrence Mishel, Uber driver compensation averages $11.77 an hour, placing them in the lowest 10 percent of paid U.S. workers. And their ranks are small: Together, Uber drivers only account for .56 percent of total employment nationwide, and only .034 percent of total compensation.
Yes, $11.77 an hour sounds a lot better than $4. But in order to figure out their “real” wages, Mishel had to account for the extra costs incurred by the drivers who are doing the gigs. “You realize that Uber drivers don’t have any healthcare, they don’t have any pensions, they don’t have workers’ compensation which kicks in when you get injured, and they don’t have unemployment insurance,” said Mishel. To cover those gaps, many drivers are forced to buy their own standard benefits packages. They’re also covering their Social Security and Medicaid payments in full, because Uber isn’t.
Add vehicle maintenance and Uber booking fees and commission (about a third of each ride cost), and now Uber wages average only $9.21 an hour. That’s more than the federal minimum wage of $7.25. But 29 states have implemented local minimum wage laws of more than $10.
Low wages correspond to a high turnover rate. While more than 800,000 people drive for Uber in a year, the average driver lasts around three months and drives less than half time, or only 17 hours per week. If you weigh Uber drivers by their time spent in the car each week, they’d amount to only 90,521 full-time, full-year equivalent workers. That’s only .07 percent of national workers employed full-time and full-year.
Taken together, these trends could suggest that most workers are simply supplementing their income by driving for Uber, which means that some of them—like many other gig-economy participants—aren’t really fully vested in the gig economy. They have other jobs in the regular old economy, the one that offers benefits packages and regular hours. But the third that does drive full-time provides roughly half of all passenger rides. ”Uber is a duality,” said Mishel. “It’s got a lot of people who are there less than 10 to 12 hours a week, and a bunch of core, full-time drivers—and that’s also true in other surveys of all gig platform work.”
So why does all this matter? Partly, it—like the BLS report—suggests economists really need to re-evaluate the importance of the gig economy (and perhaps insist we all use the less-buzzy term for it: “alternative work”). And it’s also a reminder to refocus efforts on improving the quality of full-time work in the U.S., says Mishel.
“We should first and foremost focus on the fact that the quality of jobs has degraded so much over the last 30 to 40 years, and not be so focused on app-based jobs, which are far less than one percent of total employment or total hours worked,” he said. “One of my explicit assumptions is that the future of work involves people working full time.”