Beyond Gig: Understanding the Role of Independent Contracting in CaliforniaGetting clarity on the growth of self employment in the new economy

 

The growth of on-demand platforms like Uber or Taskrabbit has created a perception that the ‘gig economy’ is rapidly expanding and freelancing will soon become the norm. Yet we lack reliable information about independent contracting, its growth, or its effect on employment trends. Until now, studies have relied on worker surveys and unemployment insurance records, which are oriented toward traditional jobs.

Through this unique partnership with the California Franchise Tax Board, a research team led by Annette Bernhardt and Jesse Rothstein will analyze over 80 million California tax returns to uncover key insights about the nature and prevalence of independent contracting in today’s economy.  The study will provide answers to longstanding and important questions such as:

  • How many workers are in the so-called “gig economy”?  In what industries is independent contracting most common?
  • How do workers use freelance gigs?  As their main job? As supplemental income?  Sporadically or consistently?
  • How does the use of independent contracting vary across different points of the income distribution and across the life cycle, and how does it fit into workers’ career trajectories? Do low-income workers differ in their use of independent contractor income compared to higher-income workers?  Are older workers freelancing well into retirement?
  • Is unemployment associated with transition into independent contracting, and does that work persist or is it used primarily to smooth income fluctuations?
  • Has independent contracting become more common  in recent years, and if so, is that growth due to the emergence of on-demand platforms or the conversion of jobs previously classified as employees?

As an important component of this project, the research team will create a multi-year dataset to facilitate further analyses of employment, taxation, and safety net participation.  Initial findings are expected to be released in mid-2019.

This project is a partnership between the Franchise Tax Board, the California Policy Lab (CPL) and the UC Berkeley Labor Center. Generous funding was provided by the Ewing Marion Kauffman Foundation, the Alfred P. Sloan Foundation, and the U.S. Department of Labor.

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