KIOS-FM

1 In 10 Workers Is An Independent Contractor, Labor Department Says

Jun 7, 2018
Originally published on June 7, 2018 7:07 pm

Updated at 4:41 p.m. ET

For years, various reports have indicated that the contract workforce is growing rapidly in the U.S.

On Thursday, the Labor Department poured a bucket of cold water on that notion. It released a report showing contract workers make up a slightly smaller share of the workforce than the last time the survey was done 13 years ago.

It said that last year, 10.1 percent of the workforce was independent contractors — down from 10.7 percent in 2005, the last time it conducted the survey.

That represents about 15.5 million people in 2017, compared with 14.8 million in 2005, when the overall U.S. workforce was smaller.

Those figures appear to go against other surveys showing huge growth in contract work, which is transforming the U.S. labor market. A survey conducted in December by NPR/Marist found that contract work makes up 20 percent or more of the U.S. workforce.

Why the seemingly large discrepancy?

Many point to the government's methodology. The Labor Department, for example, did not include people who augment their income through contract work, or who did not work within the week the survey was conducted. That would not include many of the people who work for online platforms such as Uber, TaskRabbit, or food delivery apps, for example. It also excludes those who might have another primary job.

Based on other surveys and estimates, including those workers would roughly double the size of the estimated contract workforce.

Another reason the numbers look lower than expected is that today's job market is far stronger than in 2005, when the Labor Department last conducted its survey.

Sam Katzen, a spokesperson for Fiverr, a marketplace for freelancers to find work said the numbers are misleading. The report "doesn't really represent how work has changed since this report last came out," he said.

Alastair Fitzpayne, director of the Aspen Institute's Future of Work Initiative noted that unemployment is "historically low." And employers are actively competing for workers, which means traditional employers are likely offering more full-time positions to attract and retain talent. If the economy were to weaken, Fitzpayne said, the number of contract workers would also likely spike.

The Labor Department's report underscores other data showing a minority of contract workers receive employment benefits. It found only 41 percent of contract workers received health insurance through their employer. (The NPR/Marist poll found 51 percent do not receive health care and other benefits through their jobs.)

Not everyone agrees the government's latest report is misleading. "The whole idea that we're all becoming freelancers is just that much: hype," said Lawrence Mishel, a fellow at the Economic Policy Institute.

But Mishel does agree many more workers are using contract work to supplement their income. And that, he says, speaks to other problems in the job market.

"The fact that alternate work has not grown does not diminish one iota the fact that we really need to pay attention to wage stagnation and deteriorating job quality," Mishel says.

Worker advocates say the government's report and other data will help shape policy discussions about how to address the needs of workers who are largely not covered by existing workplace benefits and legal protections.

Jennifer Curry, a senior director at Samaschool, a San Francisco training program for low-income contract workers, estimates the government left out 25 million to 30 million freelance or contract workers who do some part-time work.

"Without capturing those other millions of people who are doing this work on the side, it doesn't really give us the full picture," she said. "So it doesn't tell us enough about their training needs, the supports they need, the benefits that they're lacking. We definitely need to know more."

Copyright 2018 NPR. To see more, visit http://www.npr.org/.

MARY LOUISE KELLY, HOST:

For years, it's been assumed the contract labor force is growing rapidly in the U.S. Today the Labor Department poured a bucket of cold water on that notion. It released a report showing contract workers make up a slightly smaller share of the workforce than the last time the survey was done more than a decade ago. NPR's Yuki Noguchi has this report.

YUKI NOGUCHI, BYLINE: The last time the U.S. government surveyed the size of the independent contractor workforce, it was 2005, before the Great Recession and before it was possible to hail a ride with your phone. Other surveys have found growth in freelance or contract work rapidly outstripping conventional full-time employment. A recent NPR Marist Poll, for example, found 20 percent of workers relied on contract work as their primary source of income.

The Labor Department's latest data contradict these studies. It found a slight increase in the number of contract workers to 15 1/2 million. But it also found their share of the overall workforce actually declined slightly to 10.1 percent. Sam Katzen is a spokesperson for Fiverr, a marketplace for freelancers to find work.

SAM KATZEN: The numbers are misleading because it doesn't really represent how work has changed since this report last came out.

NOGUCHI: A big problem, Katzen says, is the Labor Department's methodology. Even though more people work multiple jobs, the government counted only those who rely on contract work as their main income. Also, defining contract work is tricky. Some surveys use a broad definition that includes very short-term gigs. Louis Hyman is director of the Institute for Workplace Studies at Cornell University.

LOUIS HYMAN: It speaks to the fact that the language that we have around work hasn't really caught up with the ways in which people are working these days.

NOGUCHI: The economy might be yet another factor in the government's very different figures. The job market now is stronger than it was in 2005, which might mean employers are more likely to offer full-time positions to attract and retain talent. There is a lot of interest in the size of the contract workforce because it forms the basis for public policy. Jennifer Curry is a senior director at Samaschool, a San Francisco training program for low-income contract workers. She estimates the government left out 25 to 30 million freelance or contract workers who do some part-time work.

JENNIFER CURRY: Without capturing those other millions of people who are doing this work on the side, it doesn't really give us the full picture. So it doesn't tell us enough about, you know, their training needs, the supports they need, the benefits that they're lacking. We definitely need to know more.

NOGUCHI: Not everyone agrees the government's latest report is misleading. Lawrence Mishel is a fellow at the Economic Policy Institute.

LAWRENCE MISHEL: So the whole idea that we're all becoming freelancers is just that much - hype.

NOGUCHI: But Mishel does agree many more workers are using contract work to supplement their income. And that, he says, speaks to other problems in the job market.

MISHEL: The fact that alternative work has not grown does not diminish one iota the fact that we really need to pay attention to wage stagnation and deteriorating job quality.

NOGUCHI: There is one thing everyone does agree on - this report underscores the need for still more and better data. Yuki Noguchi, NPR News, Washington.

(SOUNDBITE OF ELIGH AND AMP LIVE'S "BEAUTIFUL ADDICTION (INSTRUMENTAL)") Transcript provided by NPR, Copyright NPR.