Philip Cross: Busting a few myths about the gig economy
Critics of capitalism have established a narrative that more people, especially youths, are condemned to an underclass of “gig” work, precariously extracting a threadbare existence from freelance work as Uber taxi drivers or TaskRabbit handymen. The counter-narrative is that gig work is the inevitable reaction to excessive government regulation of the workplace. The reality, according to a report from Statistics Canada titled “Measuring the gig economy in Canada using administrative data,” is that gig work is a small part of the economy in which few participants are unwillingly trapped for long.
We should be encouraging people to choose the working arrangements that suit them best, not denigrating their choices
Gig work is hardly new. Construction, trucking, freelance writing and many other professions have always had contingent work. The new and supposedly more menacing era of gig work combines technology and rapacious corporate greed to undermine the traditional employer-employee relationship that provides secure employment as well as job training, pension and health benefits. What’s not explained in the new conventional wisdom is why employers suddenly treat their labour force as a liability to be minimized and not an asset to be maximized.
Estimates of the size of the gig economy have been all over the map, partly because most studies have had serious methodological flaws. One predicted in 2017 that by 2020 fully 50 per cent of U.S. workers would be contractors on digital platforms, let alone people working gigs not arranged online. The Bank of Canada speculated that 30 per cent of Canadians participate in the gig economy, though that estimate was based on the shaky foundation of a small sample conducted online combined with an expansive definition of the gig economy. As StatCan wryly noted, the Bank of Canada’s survey included everyday activities like babysitting, dog walking, lawn mowing and housekeeping that “have always been part of daily life, but are not usually considered labour market activities.”
In its new study, Statistics Canada used tax data (which is more precise than surveys) to measure gig work, which it defines as “unincorporated self-employed workers who enter into various contracts with firms or individuals to complete a specific task or to work for a specific time period.”
Its results show that in 2016 8.2 per cent of workers participated at least a little in the gig economy, up from 5.5 per cent 11 years earlier. It accounts for an even smaller part of GDP, as gig work generated only $4,303 a year per person on average, reflecting the fact that most workers only dabbled in the gig economy for a short time to supplement rather than replace their main source of income.
Gig workers are far from being a permanent underclass struggling to join the mainstream labour force: only one-quarter of them stayed in the sector for three years or more. That represents two per cent of all workers. Though “non-negligible,” in StatCan’s words, this hardly represents a fundamental shift in work arrangements or the labour market. Lots of groups make up two per cent of our labour force while getting only a fraction of the attention given to the gig economy. Nearly two per cent of workers are 70 years or older. Another two per cent work in New Brunswick. Neither drives public perceptions of the economy, however worthy and deserving these groups may be.
Another myth-busting finding concerns the common perception that taxi services such as Uber or Lyft dominate gig work. In fact, the taxi industry accounts for only three per cent of men working in the gig economy. Other urban myths do have a kernel of truth: the arts, entertainment and recreation industry, which coined the word “gig” to describe a one-night musical job, employs the most gig workers, who account for about 16 per cent of their labour force. Female gig workers are especially concentrated in health care and such services as cooks, maids and nannies.
Although push and pull factors doubtless motivate people to join the gig economy, the data simply do not allow for their precise measurement. The push factors include job loss — gig work rose during the 2008-2009 recession — or the struggle, especially among youths and immigrants, to find that first job. On the pull side, gig work attracts parents wanting to work flexible hours or older people looking to stay active without a formal or full-time job.
Not everyone is forced into the gig economy. Many people willingly choose work in the gig economy either to stay busy or top up income from their main job. In fact, people over 65 years of age were twice as likely to have gig work as people 25 and under, which belies the image of a lost generation of youths condemned to living precariously from contract to contract.
So another myth about “late stage” capitalism is found to have little foundation in reality. Despite the stereotype of youths being bullied by corporations into accepting precarious freelance work, a more typical gig person works a few hours a month in select years to top up their income, to allow for flexibility in parenting, or to stay busy in retirement. We should be encouraging people to choose the working arrangements that suit them best, not denigrating their choices.
Philip Cross is a Senior Fellow at the Macdonald-Laurier Institute and former Chief Economic Analyst at Statistics Canada.