Millions of Americans are engaged in informal gig work, a phenomenon not captured in the government’s official employment statistics, as indicated by recent research shedding light on the true extent of this type of employment. If a more accurate representation of Americans’ willingness to work is considered beyond conventional economic data, the job market may be less constrained than commonly perceived, presenting more individuals open to higher-paying and more secure employment opportunities.
New research by Anat Bracha of Hebrew University Business School and Mary A. Burke of the Federal Reserve Bank of Boston, presented at a recent conference, suggests that the proportion of adults classified as employed could be up to 5.1 percentage points higher (using generous estimates) if those engaged in casual gig work accurately reported their activities in the Current Population Survey, a key factor in determining the official jobless rate.
Even with more conservative estimates, the employment-to-population ratio could have been 0.25 to 1.1 percentage points higher from 2015 to 2022. Notably, the uncounted gig workers tend to be older, more likely to have disabilities, and less likely to rely on casual work as their primary source of income. Consider, for instance, a retiree who babysits a neighbor’s child for a few hours a week and receives cash in return. When asked by the CPS about their work status in the preceding two weeks, they might respond “no,” not recognizing their casual gig as formal employment.
Bracha and Burke employed an innovative methodology to uncover the discrepancy between those who claim not to be working in surveys like the CPS and those who are actually engaged in paid activities. Utilizing the New York Fed’s Survey of Consumer Expectations, they asked similar questions to identify individuals categorized as unemployed or out of the labor force in official statistics. Subsequently, they inquired about specific paid activities, such as house cleaning or driving for Uber, revealing uncounted Americans earning money through work but not identifying as such initially.
The authors argue for a distinct perspective on gig work concerning labor market slack, positing it as a hidden labor supply that traditional employers could tap into. Many gig workers in the survey expressed a willingness to work additional hours, even alongside part-time or full-time jobs, often for meager compensation. The uncounted gig workers could represent an untapped reservoir of potential labor supply, given their inclination to seek additional income through side jobs.