BLS Report on Independent Contractors
Bureau of Labor Statistics report on independent contractors: What just happened?
June 28th, 2018 |

For the last several years, we have been bombarded with industry and academic reports, telling us firmly that the gig/freelance/independent contractor (IC) population is propagating itself at record levels. The numbers (we have been told) of Americans with non-traditional W-2 work arrangements could be as high as 50 million, with the expectations to only increase. The reasons behind this rise of the gig economy have ranged from business initiatives, to emerging technology, to gig worker satisfaction, to Millennials in the marketplace, and much more.

What we had was a near-consensus in thought: by any measure, ICs are plentiful and only growing more abundant.

Then the BLS Report came out…

Specifically, on June 7, 2018 the U.S. Bureau of Labor Statistics issued its first report on the number of Americans in the contingent workforce since 2005. Rather than support the position that we are in a boom for freelancers, the report held that the number of contingent workers hadn’t changed much at all. In fact, it had gotten smaller.

Measuring numbers from May 2017, the report stated that 3.8% of workers (about 6 million people) held contingent jobs. Per the BLS, contingent workers are those who view their jobs as temporary. The last time the survey was conducted, the numbers were slightly higher.

For the same time period, there were 10.6 million independent contractors (6.9% of total employment).

The results left everyone from pundits to passerby scratching their heads. So, with that, what are some key call-outs, takeaways, and questions?

  • The report excludes app-based gig workers. According to the report, four questions were included in a supplement that addressed workers who found short-term gigs through mobile apps. The results weren’t included in the report, but we should assume the overall numbers will look different after they are released.
  • The results were inclusive of a worker’s main job only. To paraphrase the report, for workers holding more than one job, the questions referred to the characteristics of their main job. This likely leaves out lots of data for those who freelance, moonlight, or are otherwise paid on a 1099 basis in addition to holding a full-time W-2 position.
  • One way in which the report agrees with other reports is in its finding that ICs are highly satisfied with their work arrangements. Seventy-nine percent of ICs prefer their work structure to traditional jobs.
  • More than one in three ICs are age 55 or older. While this reflects that expertise gathered over a career increases workers’ worth as independent consultants, we have to ask how this finding intersects with findings in other reports stating that Millennials are embracing the IC economy.
  • How will the 2018 tax break for ICs impact this data? Many think that the large tax break starting this year will induce more workers to jump into the freelance pool. So, if the BLS runs this report again next year (and I’m hoping it won’t be another 12 years), will the 10.6 million ICs number be markedly higher?

While there are more points to highlight, ponder, and quibble within the BLS report, companies may want to use this data as a complement to other industry data to find a “happy medium.” In other words, perhaps we’re not quite in a “Gold Rush” for ICs but we also shouldn’t take this latest report to signal a death knell for the freelance economy either. Companies should take notice of the report’s data but also trust their own eyes: if the IC model is and has been good fit for your business, keep utilizing it.

Proper worker classification is a legal obligation

Lastly, whatever questions the BLS report raised, the attention given to it further illustrates that many eyes continue to be focused on the IC space. So, whether you think the numbers are under-inclusive or spot-on, remember that proper worker classification is still a company’s legal obligation, and that is fact that isn’t open to interpretation.

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