The BLS Strikes Back

"You talkin' to me?" That famous line could describe the response of the Bureau of Labor Statistics to a critical NBER study, which suggested that the Current Population Survey's labor force questions undercount the nation's employed and multiple job holders because they fail to capture much of the informal economy—or gig work.

The BLS has fired back, defending the CPS labor force questions in a recent Monthly Labor Review article. In the article, BLS researchers compare results from the CPS with those from the American Time Use Survey, which asks respondents about "income-generating activities" in addition to whether they have a main or other job. The finding: the nation’s overall employment figures are minimally affected by including respondents who report unemployment on the CPS and income-generating activities on the ATUS. This inclusion would increase overall employment by between 0.4 and 3.0 percent. A bigger effect is seen for multiple job holders. By including in the multiple job holder count those who report having a single job on the CPS and additional income-generating activities on ATUS, the increase in multiple job holders ranges from between 3.0 and a substantial 20.7 percent. The increase is especially large for young adults (as high as 42 percent for people under age 25), women (27 percent), and the less educated (23 percent for those with a high school diploma or less education).

While admitting there could be more multiple job holders than the official CPS numbers indicate, the BLS dismisses the notion that the CPS has missed a surge in gig work. The article concludes: "Despite anecdotal evidence of a large increase in the number of gig workers in recent years, ATUS estimates do not show a marked increase since 2003–07 in either the percentage of people who did income-generating activities or in the amount of time spent by those who did these activities."

Source: Bureau of Labor Statistics, Measuring Labor Market Activity Today: Are the Words Work and Job too Limiting for Surveys?

How Wrong Are the Official Counts of Gig Work?

Eyebrows were raised a few months ago when the Bureau of Labor Statistics Contingent Worker Supplement revealed no growth in the alternative workforce between 2005 (the last time the survey was taken) and 2017, despite the apparent growth of the gig economy. Surprise turned to dismay when the Bureau admitted its failure to successfully measure "electronically mediated employment"— or gig work arranged and paid for through online platforms.

Could it be that the Bureau of Labor Statistics' effort to measure a growing and vital segment of the workforce is way off track? The answer is yes. Although study after study after study finds a substantial percentage of Americans participating in the gig economy, these workers are eluding the government's official efforts to measure them.

There's a reason for this. The employment questions asked by the monthly Current Population Survey, which is the official measure of the labor force, do not capture informal work activity. This is the finding of a National Bureau of Economic Research study by Katharine G. Abraham of the University of Maryland and Ashley Amaya of RTI International.

The Current Population Survey asks respondents whether they did any work for 'pay' or 'profit' during the survey reference week. It also asks whether respondents have more than one 'job' or 'business.' Abraham and Amaya have a problem with these questions, which were formulated years ago when the labor force was less complex: "It is not clear...that respondents are likely to think of money earned through informal work activity as either 'pay' or 'profit' or to consider such activity to be a 'job' or 'business.'" To test this hypothesis, they surveyed Mechanical Turk (Amazon's crowdsourcing platform) participants and asked respondents not only the standard CPS employment questions but also additional questions to probe for informal work activity.

What a difference those additional questions made. Fully 22 percent of respondents had engaged in additional work activity in the past week that would have been missed by the CPS. Among those identified by the CPS questions as having no work activity in the past week, 23.5 percent had engaged in informal paid work. Among those identified by the CPS as having one job in the past week, 23.3 percent were engaging in informal work as well. Among those the CPS identified as having two jobs, an additional 15.9 percent also performed informal paid work on top of their busy schedules. Those who engaged in informal work in the past week devoted a substantial 8.2 hours, on average, to the activity.

The researchers admit that their Mechanical Turk sample is not representative of the U.S. population as a whole. But, they say, their findings "provide important evidence about the sensitivity of survey estimates to asking more probing questions." It's too late for this insight to make a difference in the long-awaited (12 years!) 2017 Contingent Worker Supplement, which took "as its starting point the employment reported in response to the standard CPS questions." Let's hope the Bureau of Labor Statistics will take these findings seriously and field a better survey of the gig workforce—ASAP.

Source: National Bureau of Economic Research, Probing for Informal Work Activity, Working Paper 24880 ($5)

BLS: Don't Do What We Did

Wow, what a mess. In a 33-page Monthly Labor Review article, the Bureau of Labor Statistics explains its delay in releasing the data on what it calls "electronically-mediated work"—defined as "short jobs or tasks that workers find through websites or mobile apps that both connect them with customers and arrange payment for the tasks." Here is the key sentence:

"BLS should not again attempt to collect data about electronically mediated work using the four new questions fielded in the May 2017 CWS [Contingent Worker Survey]."

In other words, the first attempt made by the BLS to count the number of electronically-mediated workers was a failure.

Some background: In June, the BLS released its estimate of the gig workforce, measured by a special supplement to the 2017 Current Population Survey. The results were surprising, showing no growth or even decline in the gig workforce since 2005. But the survey did not include those who engaged in electronically-mediated work. These figures would be revealed, said the BLS, before September 30 in a Monthly Labor Review article. As promised, the article appeared on the BLS web site on Friday, September 28th. It is a sorry tale of earnest efforts to add four questions on electronically-mediated work to the Contingent Worker Supplement of the Current Population Survey and the flawed numbers that resulted from those efforts.

So flawed were the results, in fact, that the BLS was forced to recode the answers. There were too many false positives. To recode, BLS statisticians probed the survey's microdata files for clues as to whether respondents were or were not actually engaged in electronically-mediated work. The "yes" answers to the survey's four questions summed to 5 million respondents engaging in electronically-mediated work in the past week, or 3.3 percent of the nation's employed workers. But after probing the microdata and diligently recoding, BLS statisticians reduced the number to just 1.6 million, or 1.0 percent of the employed.

"If BLS were to collect data about electronically mediated work in the future," the article concludes, "questions would need to be substantially revised. It may simply be that the concepts are too complicated for four questions to properly identify all the information BLS was attempting to measure." Kudos to the BLS for being forthcoming about this failure, but we're back to square one in our understanding of the size and shape of the gig economy.

Source: Bureau of Labor Statistics, Monthly Labor Review, Electronically mediated work: new questions in the Contingent Worker Supplement

Everything You Wanted To Know about Uber Drivers

How many Uber drivers are there? A lot—460,000 as of the end of 2015 (defined as those who have provided four or more Uber trips in the past month). How much do they make? They earn an average of $19/hour. Why do they drive? They partner with Uber not only to earn extra money (91 percent) but also to have more flexibility in balancing work and family (85 percent). Those are just a few of the findings presented in a National Bureau of Economic Research working paper by Uber's Jonathan V. Hall and Princeton economist Alan B. Krueger.

Analyzing Uber's administrative records and two surveys of drivers, Hall and Krueger examine the characteristics of the rapidly growing ranks of Americans who have partnered with Uber. The authors offer this eyebrow-raising perspective on Uber's rapid growth: "The number of active Uber driver-partners approximately doubled every six months from the middle of 2012 to the end of 2015. At this growth rate, every American would be an Uber driver within five years."

Why are we so eager to drive for Uber? In a word, flexibility. The great majority of drivers say Uber has made their lives better by giving them more control over their schedule. Most drivers work only 1 to 15 hours a week (two-thirds of drivers have another full- or part-time job), and their hours vary greatly from week to week. Fully 65 percent of drivers report driving 25 percent more or 25 percent less in the current week than they drove in the previous week.

Source: National Bureau of Economic Research, An Analysis of the Labor Market for Uber's Driver-Partners in the United States, Working Paper #22843 ($5)

24% Earn Money in Gig Economy

Nearly one in four American adults earned money in the digital commerce ("gig") economy in the past year, according to a Pew Research Center survey: 18 percent earned money by selling goods online (such as Ebay), 8 percent earned money by selling their labor through a digital platform (such as Uber), and 1 percent rented out their property on a home-sharing site (such as Airbnb).

Percent earning money in past year by selling goods online
Aged 18 to 29: 23%
Aged 30 to 49: 27%
Aged 50 to 64: 12%
Aged 65-plus: 7%

Percent earning money in past year by selling labor through digital platform
Aged 18 to 29: 16%
Aged 30 to 49: 10%
Aged 50 to 64: 4%
Aged 65-plus: 2%

Among those participating in digital commerce, the importance of gig earnings varies greatly. The 56 percent majority of those who earned money by selling their labor through a digital platform say their earnings are important or essential. Among those who earned money by selling goods online, the figure was only 20 percent.

Source: Pew Research Center, Gig Work, Online Selling and Home Sharing

Measuring Rides and Rooms

Another day, another study of the gig economy—whose presence can be felt, but whose size and shape remain a mystery. That's because the Bureau of Labor Statistics has not measured what it calls "alternative work arrangements" since 2005 (it will do so again in 2017). To fill the gap, a number of economists have attempted to measure the gig economy by adding questions about alternative work to the Federal Reserve Bank of New York's Survey of Consumer Expectations and to RAND's American Life Panel.

Now researchers at the Brookings Institution have mined the Census Bureau's data on nonemployer firms (the majority are self-employed, unincorporated sole proprietors), and they find a rapid rise in these small businesses over the past few years—particularly in the transportation (rides, such as Uber and Lyft) and accommodation (rooms, such as Airbnb) industries. Most of the gig growth in these industries has taken place in the 25 largest metro areas, with 92 percent of rides growth and 70 percent of rooms growth taking place in the top 50 metro areas. But—and surprisingly—the analysis also shows that rides and rooms gigging has not yet cut into payroll (traditional) employment.

"These data lend credence to the contention that Uber and Airbnb are meeting unmet consumer demand or stimulating new demand through innovative service offerings," the researchers conclude. "Yet it is still early," they caution.

Source: Brookings Institution, Tracking the Gig Economy: New Numbers

New Survey of Alternative Workers

Every year the Bureau of Labor Statistics plumbs Current Population Survey data to estimate the number of self-employed American workers, and every year for many years that number has been declining. In 2015, only 6.4 percent of workers aged 16 or older were self-employed, down from 7.4 percent a decade earlier. Now two economists are calling that number—and the downward trend—into question. That's just one of the eyebrow-raising findings in a new survey of alternative work arrangements.

Apparently economists have been frustrated with the lack of an update for the Bureau of Labor Statistics' Contingent Worker Survey (CWS), last fielded in 2005. (Here is the Federal Reserve Bank of Boston's attempt to update the numbers earlier this year.) That's because so much has happened in the 10-plus years since the BLS last asked Americans about "gig" work, or what the BLS calls alternative work arrangements. So economists Lawrence F. Katz and Alan B. Krueger decided to do something about it. They fielded a version of the CWS as part of the RAND American Life Panel in 2015. Their goal was to determine the number of Americans aged 18 or older whose main job was independent contractor or freelancer (the self-employed), contract worker, on-call worker, or temporary help agency worker.

They found the motherlode—millions of workers and a rapidly growing workforce that may account for most of the nation's labor force growth over the decade. Fully 15.8 percent of workers in 2015 had an alternative work arrangement, up from 10.7 percent in 2005. The number of alternative workers grew from 15.0 million to 23.6 million during those years—a 57 percent increase. A comparison of alternative and traditional work force growth shows alternative workers increasing by 8.6 million between 2005 and 2015 and traditional workers increasing by just 0.5 million. Wow.

Which brings us back to that 6.4 percent (and falling) self-employment rate in Current Population Survey data. Katz and Krueger find a significantly larger 8.4 percent self-employment rate. IRS data backs up their claim of growing rather than shrinking numbers of self-employed. "Understanding the reasons underlying the divergent trends between the IRS and CPS data on self-employment should be a priority for future research," state the authors.

Much more information about alternative workers in 2015 is available in the NBER working paper, The Rise and Nature of Alternative Work Arrangements in the United States, 1995-2015, Working Paper 22667 ($5)