If the job market is so good, why is gig work thriving?
By Lydia DePillis
American workers are experiencing, by many measures, one of the best job markets ever. The unemployment rate has matched a 53-year low. Job listings per available worker are at historic highs. Wages, although not quite keeping up with inflation, are rising at their fastest pace in decades.
So why would people keep doing gig work, a notoriously difficult and insecure way to make a living?
Online platforms such as Uber and Lyft say the number of people providing services on their networks is rebounding steadily after a sharp decline early in the pandemic, while businesses such as hotels and restaurants are breaking work into hour-by-hour increments available on demand.
Picking up shifts offers something that traditional permanent employment still generally doesn’t: the ability to work when and as much as you want, demand permitting, which is often essential to balance life obligations such as school or child care.
And lately, inflation has provided an extra incentive. As the cost of rent and food soars, gig work can supplement primary jobs that don’t provide enough to live on or are otherwise unsatisfying.
Lexi Gervis, an executive at a financial management app called Steady, said that users’ data showed that more people were involved in gig work — and that the average gig income per worker grew — from the start of the pandemic through this summer.
“We were seeing this move towards multiple income streams, because that work was picked up as a stopgap and then continued,” Gervis said.
Take Denae Bettis, a 23-year-old Steady user living in Severn, Maryland. After dropping out of college, she got a job at UPS and, after a few years, rose to become a safety supervisor, usually starting at 4 a.m. During the pandemic, she took on more responsibilities.
“The job got really stressful, and I felt like I had no way out,” Bettis said. So in June 2020, she started a side gig through Instacart, shopping for people holed up at home. The next month, she quit her job, making it easier for her to pursue her passion: working as a personal makeup artist, which often requires taking early-morning appointments.
Surviving on income from gigs — which for Bettis now include DoorDash and Instacart — isn’t easy. But Bettis thinks she can save enough money to open her own storefront.
“We just went through a period where millions died, so are you going to spend your time at your job if it doesn’t fulfill you?” Bettis said, summing up gig work’s appeal. “Everybody loves stability, but if the flexibility isn’t there, I don’t think a lot of people are going to go back.”
Labor advocates have long been concerned about businesses that depend on independent contractors, since those workers aren’t entitled to the rights and benefits that come with employee status, including employer contributions to payroll taxes and unemployment insurance. But although the model has gained traction, it has been difficult to pin down how fast the ranks of gig workers are growing.
The most accurate measure is IRS data on 1099 tax forms — the freelancers’ counterpart to the W-2 forms filed for employees — but that is available only to select researchers and released with a lag of several years. At last count, in 2018, a team of economists found that about 1.2% of workers with any earnings had at least some income from online platform work. (A Pew survey from 2021 found that the share of all adults with gig income in a 12-month period was about 9%.)
The closest government metric that is more timely comes from the Bureau of Labor Statistics, which asks people whether they count themselves as self-employed. That number rose significantly as a share of the labor force from early 2020 to early this year. But it generally captures people for whom self-employment is the main source of income — which, for most gig workers, it isn’t. More likely, the bump represents an increase in the number of people working as home-improvement contractors and owner-operator truck drivers — two longtime means of self-employment that surged during the pandemic — and some white-collar freelancers.
Less comprehensive but more specific data comes from third-party platforms such as Steady, which allows nearly 6 million workers to track their often-variable sources of income and posts incentives from gig platforms to try working for them. From February 2020 to June 2022, Steady recorded a 31% increase in the share of workers on the app with 1099 income. More of those were women than men, with particular growth among single mothers. Freelance income per gig worker increased 13%.
Although gig work has retained and even enhanced its appeal through the pandemic and recovery, it is not clear what will happen if the economy tips into recession and the number of conventional jobs starts to shrink.
Gig companies say it will bolster their labor supply, as the hardship caused by rising prices has. Uber said on its second-quarter earnings call that for 70% of its new drivers, the cost of living influenced their decision to join. “There’s no question that this operating environment is stronger for us,” said CEO Dara Khosrowshahi.
But in an economic downturn, an increase in worker availability for online platforms could coincide with a fall in demand. If customers reduce delivery orders and take fewer cab rides, it would be harder for those who depend on the apps to make a living.
That worries Willy Solis, a driver for Target-owned delivery service Shipt in the Dallas area who has been an organizer for better conditions.
“When people are desperate for work, that’s usually what they want to do, is find something that’s easily obtainable,” he said. But what is good for the gig-work companies may not be good for the workers, he added. “Whenever they do hiring sprees,” he said, “we see an influx in gig work and a decrease in the amount of work that’s available to us.”