Uber, But for Job Growth

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Here are two data points about the so-called “1099” or “sharing” economy, made up of companies like Uber, Lyft, Homejoy, Postmates, and TaskRabbit. The number of workers with gig-type jobs surged to 32 million in 2014, up from 20 million in 2001. At the same time, though, the share of all workers who are self-employed fell to 6.5 percent, down from 7.7 percent as of 2005. The share of workers with part-time jobs fell too.

Those data points are seemingly at odds: 1099 firms are either part of a major divergence between “work” and “employment,” or they are an interesting but marginal phenomenon. As Josh Zumbrun and Anna Louie Sussman wrote in The Wall Street Journal last weekend, it is really hard to see much evidence of a gig revolution by looking at major macroeconomic statistics. Yet as Noam Scheiber wrote in the Times this month, there is clear evidence of a major trend toward employers using “contingent” workers, who in many cases might as well be staffers but for the fact that they are not direct hires. The muddy truth is that both narratives might be true, given a few complicating factors.

The first of these factors — one that both the Times and Journal pieces grapple with — is a lack of data. In a perfect world for interpreting changes in the labor market, government functionaries would interview every American every so often, parsing out the changes in how they spent their time and who paid them for what labor. Alas, we do not live in that world. We have the big, loose household survey. We have some private surveys. We have employer and tax data. We do not have a long-term, stable monthly report tracking the contingent or gig workforce. There used to be a program that did just that, but, as the Journal points out, its funding got cut. The statistics we have just might not be fine-grained enough to pick up the growth of companies like Uber.

There’s a second big data issue, which is misreporting or mislabeling. Let’s say that you had a full-time job but occasionally did deliveries with Postmates at the end of the month when you needed to make your rent. If interviewed, would you say that you were a contingent worker as well as a full-time worker? Would you say that you had multiple jobs? My guess is that you might elide that relatively minor part of your work life.

Those two factors combined might help to explain why a big jobs trend is not showing up in major statistics. That’s the tentative theory of two prominent labor economists, Lawrence Katz of Harvard and Alan Krueger of Princeton. They point out that tax data indicates a shift to gig work, even if labor surveys do not: The filing of 1099 and Schedule C forms has risen, even if self-reports of self-employment are down. “These discrepancies suggest a growth of ‘gig’ and ‘share’ economy workers who receive 1099 income, file Schedule C forms on their taxes, but don’t answer the standard [government] question as indicating they are self-employed and don’t say they are a multiple job holder,” Katz told Fusion.

I suspect there might be a major third factor in play, too. Journalists, investors, and shareholders tend to live in the cities where these services have sprouted up. Journalists, investors, and shareholders tend to be the sort of white-collar workers who might have a little extra cash to spend on these services. As such, the prominence of these companies in media reports and investors’ minds tends to vastly outweigh their actual importance to the economy.

Think of it this way: By the end of 2014, Uber had 160,000 drivers working for it, up from essentially zero in the middle of 2012. That’s truly remarkable — perhaps unprecedented — employment growth coming from a single start-up. (Facebook, a much older company, only has about 10,000 people working for it.) But over that same period of time, the number of people working in “ambulatory health care services,” a category that includes many medical assistants and secretaries, grew by 467,200. The number of people working in “social assistance,” a category that includes home health aides and child-care workers, grew by 362,000.

Even the biggest start-ups just are not that big, employment-wise. The true drivers of jobs in America are established firms or government offices in sectors like health care, education, state and local government, retail, and leisure and hospitality. All of the start-ups that have emerged from San Francisco and Silicon Valley in the past five years combined would barely make a dent in the aggregate statistics. Moreover, the shift to contingent work, as Scheiber points out, is much bigger than Uber or TaskRabbit. It’s in no small part about big companies buying work instead of hiring workers, rendering people who might have once been full-time, payroll employees temps, freelancers, or contractors.

That’s the thing: Uber is generating a lot of work for a firm. But it’s not providing a lot of work for the whole economy.