Does Intuit's contingent labor claim stand up?
- Summary:
- Intuit made headlines with its estimate that 40% of the workforce would be contingent labor. Other research casts doubt on that estimate. What''s happening?
Many involved in HR have heard the statistic from the Intuit 2020 Report estimating that 40% of the workforce will be contingent labor by 2020. However, that number can be misleading due to a few factors. For starters, the research seems to assume that workers will be relying solely on a freelancer’s volatile pay schedule in order to make ends meet. In addition, it doesn’t provide any granularity into what kinds of work are more likely to shift towards the contingent end of the scale.
Today we’re going to analyze this shift in the context of two things: the variety of opportunities within the platform gig economy and expert insights that show an interesting twist on the growth of non-employee income.
The scale of the platform gig economy
While freelancing, project work and temporary employment have been a mainstay of the workplace for many years, newer tools are allowing businesses access to talent in ways never before imagined. The platform gig economy is formed from the systems that give individuals easy access to sell or share services with the broader marketplace. This segment of the population currently employs at least 800,000 workers (according to last count by Princeton’s Alan Kreuger).
For reference purposes, if those 800,000 workers were under a single employer entity, it would be the second largest in the United States, slotting in between Walmart and Yum! Brands, owner of KFC, Taco Bell and Pizza Hut.
And while ridesharing services are the first words on everyone’s lips when they talk about this trend, the truth is there are other segments of that market that go much deeper into the business arena with a variety of highly practical use cases.
For instance, ShiftGig is an application that allows employers to push a button to schedule an individual to show up ready to take on a task or project. There are a variety of use cases for the tool, from food service and retail to hospitality and warehousing. This option is better suited for positions that don’t require significant training or preparation.
Another more common name in the space is TaskRabbit, a service allowing individuals to offer to undertake small tasks on a casual basis. One anonymous source told us that Google uses this service for some of its administrative needs simply because it’s too expensive for admin workers to live in the vicinity of the company’s headquarters.
On the more structured side of the spectrum is a tool like Catalant, a marketplace that connects employers with more than 40,000 project workers ready to help with needs ranging from human resources and marketing to product development and strategy. The company counts multiple Fortune 100 companies in its client list, a testament to the kind of value found in this type of offering.
These are just a few of the many providers that exist in this labor platform economy. This discussion provides insight into the depth and breadth of opportunities available beyond ridesharing or meal delivery, two commonly mentioned examples.
Today’s workforce duality
After seeing some of the options available, it surprises most people to discover that these “gig workers” are usually employed in a full time capacity in addition to these various other side activities. While the media often paints the picture of these workers cobbling together a full time wage from multiple streams of income, that’s not what the data shows on average.
In a conversation last year with a company that manages a large portion of the nation’s payroll data, the representative told me that while W-2 (full-time worker) volume has remained relatively stable over recent years, W-9 (independent worker) volume has skyrocketed. This tells us something very interesting that’s missing from the common narrative: many of these contingent workers are not relying on a patchwork of smaller gigs to make up their full-time income. Instead, they are working a full-time job and are pursuing side gigs in addition.
Another validation of this was in an interview with ShiftGig, mentioned above. The company’s representative told us that their “specialists,” or gig workers, most often had a full time job and were looking for something to supplement their income through the platform.
Finally, data from the JP Morgan Chase Institute points out that those participating in labor platforms did so both while employed and while in between jobs.
Individuals relied on labor platform work not only when outside income dipped but also when they were between jobs. Labor platform participants were less likely to be employed in a traditional job in months when they were generating platform earnings (69 percent employed) compared to months when they were not (62 percent employed).
Combine these views with the fact that today’s unemployment rate is at something of a historic low, even while jobs forecasts continue to show increased growth, and I start to doubt that 40% of the workforce is going to be working on a purely contingent basis. While 40% of workers may be working an extra side hustle in addition to their day job, they won’t be relying solely on a freelance income to make ends meet.
Editor's note: When living in San Diego and making seemingly endless return trips to the airport, virtually all the drivers I came across worked part time and were, as Ben describes, ether between jobs or supplementing income to a greater or lesser degree. The same went for many of the cities I visited when traveling. The UK is different. Or at least in my part of the world where nearly all the drivers I come across consider it as their primary income source, many of whom have switched from traditional cabs/private hire. We have not seen much influx of other types of contingent work but that's not to say it won't happen.