A recent piece on NPR has touted the gig economy as the future of work for millennials and Generation Z. While it’s true that gigs provide less work security and fewer benefits than stable, full-time, structured employment, they do seem to offer that meaningful and romantic Kerouac-like work where adventure and independence is a major motivator.
So are gigs the way of the future for young workers? Are they good jobs? Should colleges and universities focus on them?
When we look at the data, the answer appears to be not yet.
Gigs: What and why?
What is a gig? Just what it sounds like. A gig is a freelance project, a short-term job, or a “side-hustle” as Uber likes to say. Gigs can be anything, but they tend to cluster in the following areas:
- the arts (writing, graphic design, photography)
- personal and home care (in-home healthcare, yard care, housekeepers, fitness trainers, barbers, hairdressers)
- construction (roofers) and skilled trades
- sales (door-to-door work, real-estate, street vendors)
- secretaries and office assistance (personal assistants, bookkeepers)
- transportation (ride-sharing, driving, and material moving/handling)
Generally speaking, if you engage in the gig economy, you’ll be classified as an independent contractor in the tax records.
Why do people work gigs? Some need extra cash. Others create gigs out of hobbies that they haven’t successfully turned into full-time jobs. (Everyone wants to be a photographer, but few manage to make ends meet with just a camera.) Many gigs are seasonal work: harvest, farmers markets, holidays, weddings, festivals, concerts. Still others (think of college students) flock to the gig economy simply to gain real-world experience—so they don’t have to work gigs.
How many people work in gigs?
A precise number is hard to calculate. According to a 2016 report by Emergent Research and MBO Partners, there are 30 million full-time and part-time gig workers. This month, Upwork and the Freelancers Union calculated much higher: as many as 55 million, or 35% of the US workforce. Intuit research from 2015 showed that 36% of the workforce takes part in side jobs and that by 2020 it will be 43%. The Department of Labor has plans to start measuring and reporting on the actual size this year.
Using self-employed data to study the gig economy
By exploring the trends for self-employed workers in each of these categories, we can gain perspective on the gigs themselves in terms of job growth, wages, and demand. Then we will better evaluate whether gigs will likely be the future of work for many people entering the workforce.
Why does self-employed data help us here? First, because many gigs (as part-time or freelance work) occur in the same areas as self-employment—which is something we can measure using administrative data provided by the US government. Second, the self-employed are sole-proprietors who work for themselves as their main form of income; hence, their work is often gig-like. They tend to move from job-to-job and are can be seen as the “romantic” workers who depend on themselves and don’t really fit into the big corporate categories. They are also distinguished from employees: people who work for other people/employers.
Also of note: Many major industries like health care (hospitals, doctor’s offices), manufacturing (factories), education (schools, colleges), retail trade (malls), IT (software companies), management (skyscrapers), accommodation (hotels), and government (big gray boxy buildings built in the 60s) do not lend themselves to self-employment or gigs. They depend on a large, specialized workforce. A few self-employed or freelance people might help them out from time to time (like groundskeepers for hotels, or web designers for schools), but they aren’t the key worker bees on the full-time payroll.
Do gigs make good jobs? Should the education system focus on preparing students for gigs?
With the explosion of the gig economy, the question arises: Should colleges offer curriculum that prepares students specifically for gigs? How should we approach that? Much of that depends on the nature of the gigs themselves, what sort of knowledge and skills they require, and the quality of life they would provide.
Once again, it is difficult to look directly at freelance jobs and come away with the insight we need, so we will try a little experiment using self-employment data. According to the latest Emsi data, there are 10.3M self-employed workers across the nation. This means 6.4% of the total U.S. workforce (159M) derive their primary income from self-employment. From 2013 to 2017, jobs for employees (folks who work for others and are on the payroll of a boss or business) grew steadily by some 9.3M jobs (7%) while jobs for self-employed increased by 4% (380,000 jobs). Self-employment is also a lot more volatile. Over the past five years it has ebbed and flowed while the covered or employee workforce has grown steadily.
Also of note, in 2013 there were 14.2 employee jobs for every one self-employed job. In 2017, that ratio widened slightly to 14.9 employees to every self-employed—likely because of a growing labor market. So, our first observation here is that within the major job sectors, more and more self-employed workers are shifting from self-employment to full-time employee work. This would run contrary to more people striking out on their own. I think this is the case, because employers can provide more steady work and benefits that the self-employed likely struggle to afford on their own.
These are the types of jobs with the highest percentage of self-employed workers:
- Personal & home care – maids/housekeepers, janitors/cleaners, animal caretakers, barbers/hairdressers, manicurists/pedicurists, childcare workers, fitness trainers, in-home health care providers
- Skilled trades – electricians, carpenters, roofers, plumbers, laborers
- Creative jobs – graphic design, creative writing, musicians, photographers
- Agriculture – farmers and ranchers
- Transportation – truck drivers, taxi drivers (including ride-sharing)
- Sales – real estate brokers, insurance sales, door-to-door sales
- Office & finance – secretaries and administrative assistance, bookkeepers, accountants.
- IT – web designers
- Educators – self-enrichment teachers
For the purpose of this analysis, we isolated 40 common gig-like occupations that contain at least 30,000 self-employed workers. (Other job categories contain fewer and aren’t considered here.) We removed occupations such as doctors and lawyers since we wouldn’t associate such work—once you’ve spent all that time in school and need to keep up your licenses and training—as gigs.
About 21% of workers for these 40 occupations (5.4M out of 25M workers) are self-employed. Here is what we found.
1. Healthcare, Personal Care, Household Maintenance
By far the biggest sector for self-employment is a combination of healthcare support, building and grounds maintenance, and personal care and service. Twelve of the 40 self-employed jobs (and over 40% of all self-employed workers from a raw numbers point of view) fall into this category.
From 2013 to 2017, these jobs grew by 6%, adding some 126,000 new jobs. On average, they pay $11.50 per hour—significantly below the national average, which is $22.00 per hour. These jobs require either no formal education or a non-degree certificate.
The fastest growing job is fitness trainer (21% growth). There are 47,000 self-employed fitness trainers across the US. Average wages are $17.28 per hour. Self-employed trainers make up 15% of the total trainer workforce (302,000). Employee fitness trainers earn a bit more than the self-employed (average of $18.41, largely due to benefits).
The largest occupation in this category is childcare workers. There are 509,000 of them and their average wage is only $6.77. Many of them might not work full 40-hour weeks, which brings the average wage down.
2. Skilled trades
The second largest self-employed sector is skilled trades. Seven of the 40 jobs are in this category, employing 824,000 people. Like the jobs in the previous sector, these jobs require either no formal education or only a non-degree certificate. The average wage is slightly higher at $13.71.
But the key observation here is that self-employment in the skilled trades has been pretty flat over the past five years. (In contrast, the “employee workforce” grew by nearly 393,000 new jobs, or 12% growth.) The only self-employed occupation that grew here is construction laborers (13,315 new jobs, 4% growth). Everything else declined, most notably carpenters (shedding 16,300 jobs).
3. Creative jobs
The third sector is the one that comes to mind when we think of gigs: the arts. They include seven of the 40 jobs and represent 9% (457,000) of the jobs. Writers and authors are the most plentiful (89,300), followed by photographers (86,300). Coaches and scouts have grown the most: 6,000 new jobs (18%). The highest-paying job is interior designers, earning an average of almost $20 per hour. Unlike the previous two sectors, many of these jobs require formal education. Five of the seven typically need bachelor’s degrees. Overall these jobs grew by 9% over the past five years. They also average about $15.40 per hour.
Self-employed sales jobs are largely represented by real-estate brokers and agents and door-to-door workers and street vendors. There are some 339,000 across the nation, and like a lot of the other categories, have declined since 2013, and do not typically require any formal education. However, since employee sales jobs are growing (5%) and typically offer attractive wages, the examples here might still make good side gigs.
5. Office & finance
The highest-paying group of self-employed jobs on this list are office and finance jobs. This is largely because we include personal financial advisors (average wage is $37.42 per hour) and accountants (average wage is $26.62 per hour). The major thing to note here is that these jobs are not growing from a self-employment point of view.
This sector includes another well-known example of the gig economy: drivers. Companies like Uber and Lyft have big brands and put lots of money into advertising to persuade people to give ride-sharing a try. People who report driving as their primary form of income has climbed by nearly 20% in just five years. Right now we see 90,000 individuals work as self-employed drivers and another 300,000 people do it as employees.
Even larger than driving and ride-sharing is trucking, containing some 206,000 self-employed people, but declining over the past five years. In contrast, employee truck drivers (currently 2M) have grown by 8%. It is likely that self-employed truckers are attracted by the higher wages and better benefits of employee work and are being drawn into the companies as full-time employees.
There are 407,000 self-employed people working as farmers and ranchers. While this category represents 8% of the jobs on our list, it has declined the most since 2013 (9%). As you can imagine, much of this work is seasonal and often without high wages.
8 & 9. IT & Educators
Lastly, we have IT jobs (mainly web developers) and educators (mainly self-enrichment teachers). Of course, lots of IT and teaching positions can and do freelance, but none of them tend to have very high levels of self-employment compared to web developers and self-enrichment teachers.
If you want to pursue gig work, what skills do you need? First, you’ll need up-to-date skills related to your craft. Web developers need to be amazing web developers, photographers need to be fantastic photographers. But to succeed at freelancing, that’s just the beginning, which might be the primary drawback of gig work in these areas. When you’re a freelancer, you are essentially your own business. You must sell and negotiate prices, be your own project manager, keep your books, market your services, and communicate with your clients. See valuable discussion about this here, here, and here.
Very few of us have this combination of incredible technical, organizational, and sales skills. But they are what make gig work work!
What Do Online Profiles Say?
So far, we’ve used administrative data from government sources in our analysis. Before concluding, let’s quickly analyze the creative jobs using Emsi’s new dataset that explore professional online profiles.
Out of 65 million online professional profiles, there are 512,000 for fine artists, graphic designers, musicians, singers, coaches, scouts, writers, interior designers, and photographers. They are concentrated in the usual spots: New York City, Los Angeles, Chicago, San Francisco, etc. About 2,000 of the profiles we tracked were tagged with “self-employed” or “freelance.”
For employee workers, they reported working in companies like Lifetouch, Beachbody, the US Army, Walt Disney, Merrill Lynch, and Apple. So while many creative types work for themselves, it appears that many more are employed at big companies that can likely pay a lot more.
Overall: Sure, gigs could be the way of the future…for some
So should jobseekers go for gigs? Should schools train for them?
For now, although the gig economy is big and definitely growing, it’s probably the key to a great future for only a small number of us, given the lower wages and higher instability. Self-employed people (those working in gig-friendly areas) generally earn less and don’t make up as many jobs as we tend to think. On top of that, every career sector except two (IT and the arts) is seeing the employee headcount grow faster than the self-employed headcount. Over the past five years more people are working in full-time employee jobs.
And since many of the jobs in the gig economy do not require much or any formal education (think about the huge number of skilled trades, personal and home care, etc) schools don’t necessarily need to focus on training (other than perhaps some vocational certificates) for “gigs” specifically. Job growth tends to be spikey and unpredictable. Look at the chart below that compares the jobs that require further education with the jobs that don’t. In each case, the more education you have, the less erratic the job growth.
Any training that does take place should focus on instilling the skills in need throughout the labor market—technical skills that will help students qualify for and keep jobs (like customer service, organization, and sales ability).
Now, it might be true that gig work congregates in the arts and IT, both of which are growing areas filled with demand. However, the data reveals that self-employed IT workers aren’t nearly as numerous as the self-employed in other sectors. Most of the lucrative employment occurs inside businesses, not in coffee shops and basements. Of course it’s possible to make good money freelancing; we all have that artistic friend who is really good at doing their own thing. But that person is an outlier.
As for the arts, it does appear that many of these folks will be major participants in the gig economy of the future. But it is not an easy way to go. Wages are generally mediocre and competition is high. If you want to make a career out of being creative, remember the skills you need as a freelancer: Be exceptionally good at your work, be able to sell and charge a lot, and be able to manage your own projects. If this isn’t you, then I suggest another form of employment.
Overall, gigs appear to be great opportunities to earn extra cash or gain experience, but—for now—precious few would actually offer full-time, long-term employment.
For more about the data, feel free to email Rob Sentz (email@example.com).