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Economic Impact: Understanding the size of the gig economy is challenging

Performing gigs at different nightclubs and to various audiences is common for musicians.

The proliferation of smartphones and online platforms have lowered the barrier for suppliers to provide on-demand services, making it easier for more individuals to complete some small jobs and participate in the new gig economy.

It is also called the sharing economy because it has its origin as individuals giving or sharing goods and services. Uber, Airbnb and Task Rabbit are examples where peer-to-peer internet platforms connect passengers with drivers, travelers with places to stay, and homeowners with local handymen.

Individuals enjoy the flexibility of choosing their hours or supplementing full-time employment with additional income.

Users of the gig economy generally enjoy lower prices than the traditional alternatives. As a result, the gig economy is growing rapidly and is reported to threaten such well-established industries as taxi services or hotels.

But understanding the size of the gig economy is more challenging.

Neither the Census Bureau nor the Bureau of Labor Statistics publishes estimates of gig employment.

In a recent report, the Virginia Employment Commission used nonemployer statistics from the Internal Revenue Service that track businesses with no employees as a proxy for the gig economy.

Nonemployer growth in Virginia from 2010 through 2015 was faster than overall employment growth, and the gains were largest in such gig-inclined industries as ground transportation.

The census also used the nonemployer statistics to measure passenger transportation establishments without employees in all states.

California topped the list of states with 111,486 passenger transportation establishments in 2015, up 92 percent from 57,990 in 2014. New York was second with 95,201 establishments, but it grew only 16 percent over the prior year.

Virginia ranked eighth with 20,931 passenger transportation establishments, up 46 percent from the prior year.

While the data indicate the reach of ride sharing, it remains to be seen how the gig economy has penetrated other industries.

Academic studies show that the gig economy is impacting traditional sectors.

A 2017 study by Georgios Vervas, Davide Proserpio and John W. Byers in the Journal of Marketing Research found that hotel revenue from January 2003 through August 2014 was down 8 to 10 percent in Austin, Texas, where Airbnb supply was the highest. Lower-end hotels and those not catering to business travelers were most vulnerable.

Jonathan Hall and Alan Krueger used data from Uber to study the characteristics of their drivers in a 2016 study released by the National Bureau of Economic Research.

They found that the number of active Uber drivers about doubled every six months from the middle of 2012 to the end of 2015. That rate, they admitted, would undoubtedly slow down, or every American would be an Uber driver by 2020.

Measuring the gig economy is important because without that information, the growth rate of employment in the nation is understated and productivity is overstated.

In light of this need, the Bureau of Labor Statistics added four questions to its May 2017 Contingent Worker survey that measures employees who are hired on-demand by organizations.

Once the results to these four questions about the gig economy are published, we’ll have a better sense about its size in the nation.

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