According to new data released by the Bureau of Labor Statistics (BLS), in May 2017, 3.8% of workers—5.9 million people—held contingent jobs in the United States; however, the new data show a slight dip in the number of people working in the gig economy.
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The Contingent and Alternative Employment Arrangements report, released by the BLS, states that contingent workers accounted for 1.3% to 3.8% of total employment in May 2017. In February 2005, the last time the survey was conducted, these numbers were slightly higher, ranging from 1.8% to 4.1% of employment.
With unemployment at an all-time low, and companies reporting difficulty finding skilled labor, employers must now create alternative working arrangements to fill the employment void. And that’s where contingent workers come into play. Using contingent workers may provide employers with flexibility and cost savings, and many employers are seeing this.
According to Scott Fraleigh, president of MSP and Payrolling for global human capital solutions provider Randstad Sourceright, “[E]mployers are ready to embrace alternative employment structures. More than 75% of HR leaders say they are willing to fill open positions with contingent workers and 1-in-4 are already planning to shift traditional full-time positions to alternative arrangements over the next year.”
“This report offers new, hard data on workers in contingent and alternative employment arrangements which will help guide the broader debate on the pros and cons of the so-called ‘gig economy.’ Certainly, the numbers overall remain confusing, and the more hard data we have, the better,” says Camille Olson of law firm Seyfarth Shaw.
Changing Work Arrangements
In addition to contingent workers, the report also identified workers who have various alternative work arrangements. According to the report, in May 2017, there were:
- 6 million independent contractors (6.9% of total employment),
- 6 million on-call workers (1.7% of total employment),
- 4 million temporary help agency workers (0.9% of total employment), and
- 933,000 workers provided by contract firms (0.6% of total employment).
The BLS states, “Contingent work and alternative employment arrangements are measured separately. Some workers are both contingent and working in an alternative arrangement, but this is not automatically the case. The measures of contingent work and alternative employment arrangements apply only to a person’s sole or main job. For individuals with more than one job, this is the job in which they usually work the most hours.”
Report Findings
The BLS report data were obtained from the Current Population Survey (CPS), a monthly sample survey of about 60,000 households that provides data on employment and unemployment in the United States. Data on contingent and alternative employment arrangements were collected periodically in supplements to the CPS from February 1995 to February 2005. The May 2017 supplement was sponsored by the U.S. Department of Labor’s Chief Evaluation Office. Additional findings include:
- Under the broadest measure of contingency, there were 5.9 million contingent workers; these workers who did not expect their jobs to last accounted for 3.8% of total employment.
- Contingent workers were more than twice as likely as noncontingent workers to be under age 25. They were also more than twice as likely as noncontingent workers to work part time.
- Young contingent workers (16- to 24-year-olds) were much more likely than their noncontingent counterparts to be enrolled in school (62% and 36%, respectively).
- Contingent workers were more likely to work in professional and related occupations and in construction and extraction occupations than noncontingent workers.
- More than half of contingent workers (55%) would have preferred a permanent job.
- The demographic characteristics of workers in alternative employment arrangements varied among the four arrangements. Compared to workers in traditional arrangements:
- Independent contractors were more likely to be older.
- Temporary help agency workers were more likely to be Black or Hispanic or Latino.
- Workers provided by contract companies were more likely to be men.
- While 79% of independent contractors preferred their arrangement over a traditional job, only 44% of on-call workers and 39% of temporary help agency workers preferred their work arrangement.
- The proportion of workers employed in alternative arrangements who also were classified as contingent workers ranged from 3% of independent contractors to 42% of temporary help agency workers.
Compensation and Benefits Concerns
The report also uncovered contingent worker compensation practices, and the findings prove to be unfavorable for these gig workers. Contingent workers earned less than their noncontingent counterparts in May 2017.
Among full-time workers, median weekly earnings for contingent workers ($685) were 77% of those of noncontingent workers ($886). The disparity in earnings likely reflects the many differences in the demographic characteristics of contingent and noncontingent workers and the jobs they hold.
Contingent wage and salary workers were half as likely to be covered by employer-provided health insurance as noncontingent workers. One-fourth of contingent workers had employer-provided health insurance in May 2017 compared with half of noncontingent workers. Although most contingent workers did not receive health insurance from their jobs, a substantial share—nearly three in four—had health insurance from some source, including coverage from another family member’s policy; through a government program; or by purchasing it on their own.
Overall, contingent workers were less likely than noncontingent workers to have health insurance coverage from any source (73% and 84%, respectively). The gap in health insurance coverage between contingent and noncontingent workers is smaller than in 2005.
Among wage and salary workers, contingent workers were about half as likely as noncontingent workers to be eligible for employer-provided pension or retirement plans in May 2017—23% of contingent workers compared with 48% of noncontingent workers. Overall, the proportion of contingent workers who actually participated in employer-provided plans (18%) also was much lower than that of noncontingent workers (43%).
“Not surprisingly, we see similar levels of satisfaction of those who participate in other forms of alternative work arrangements. Still, the report clearly reveals continuing concerns over compensation and benefits which deserve further examination by our nation’s policymakers,” Olson adds.
To view the full report findings, click here.