How Big is the “Gig” Economy? What about “Permatemps”?

Mike Shedlock
Posted: Mar 28, 2016 12:01 AM
How Big is the “Gig” Economy? What about “Permatemps”?

I just looked up the term “gig”.

Merriam-Webster provides 4 definitions: “Something whirled, someone of grotesque appearance, a rowboat, and a two-wheeled one-horse carriage”.

Clearly that’s not what we are talking about.

Even the Urban Dictionary is behind the times with its description “A live performance, either musical, theatrical, or physical.”

Curiously, the Urban Dictionary managed to misspell the word tomorrow in its example “The band has a gig tomorrow night.”

The Wall Street Journal uses the term “gig” meaning an “alternative work arrangement job”.

With that definition in mind, how big is the “gig” economy?

New research shows labor shift affects health care, education and other industries that have traditionally offered stable employment. However, the Wall Street Journal reports Contract Workforce Outpaces Growth in Silicon-Valley Style ‘Gig’ Jobs.

Uber drivers aren’t the only “gig” workers rattling the U.S. economy. Older workers, especially women, increasingly are filling in as contractors across a range of traditional industries, from highway inspectors to health aides.

As companies look to shed noncore tasks and government budgets come under strain, an expanding share of the workforce has come untethered from stable employment and its attendant benefits and job protections.

The explosive growth of Silicon Valley companies such as Uber Technologies Inc., where on-demand drivers summoned by an app set their own hours and are paid by the ride instead of an hourly wage, has shined a bright light on the so-called gig economy. But new research shows this shift away from steady employment has taken place largely in the shadows.

The Labor Department breaks down the four main types of alternative work arrangements into independent contractors, on-call workers, temp workers and workers employed by contract firms, but it hasn’t updated its count of such workers since 2005.

Messrs. Krueger and Katz hired Rand Corp. to replicate the survey, sampling roughly 4,000 people. The findings show how alternative work has spread across industries and occupations—including those not associated with the gig economy.

For example, they estimate the share of workers in alternative arrangements has more than doubled to 11% in manufacturing and to 16% in health and education. It has quintupled, to 10%, in public administration.

Workers in these alternative arrangements often find themselves with erratic schedules, spotty earnings and few benefits such as health insurance, Social Security or a retirement plan.

The Gig Is Up

From 1995 to 2005 the “gig” workforce grew from 9% or the jobs to 10% of the jobs. Since then, the “gig” workforce grew to 16% of all jobs.

Today, the survey estimates 17% of women and 15% of men hold “gig” jobs.

Permatemps and Giggers

Even though some giggers (can I say that?) work full time, the rising cost of benefits and salary differentials means there is little to no chance companies will hire them. The polite new term for this plight is “permatemp”.

Neither Merriam-Webster nor the Urban Dictionary provided any definition of “permatemp”.

After I wrote “gigger”, a term I thought I made up, I decided to take a look and discovered an article on with a theme of Solopreneur vs. Side-Gigger.

We now have gigger, side-gigger, permatemp, Silicon-Valley style gigger, full-time gigger, on-demand gigger, and solopreneur in the language lexicon.

According to Entrepreneur, a “side-gigger” works less than 15 hours a week. If a full-time gigger works 35 hours a week, is a part-time gigger someone who works gigs between 15 and 35 hours a week?

Clearly we need new terms here.

Definition of Gig Reviewed

The Journal reports “Since 2005, the number of workers in alternative arrangements has climbed by more than half, rising to nearly 16% of the workforce from 10% a decade ago, according to forthcoming research by Alan Krueger of Princeton University and Lawrence Katz of Harvard University. Meanwhile, the on-demand workforce or gig economy employs only about 600,000 people, or less than 0.5% of the workforce, the research finds.”

So, is a “gig” an “on-demand job” as the Journal defined? Or is a “gig” an “alternative workforce arrangement job” as the Journal also defined the term?

Either way, I am more interested in the overall effect on jobs and unemployment than the precise number of “Silicon-Valley Style Gigs”.

Gig Effect on Jobs and Unemployment

Based on the study (at least on the facts as presented in the Journal), we cannot measure gig effects on the U6 unemployment rate because the article failed to mention how many were full-time jobs.

U6 is a measure of unemployment that includes those working part-time. Those who work as little as one hour a week are counted as “employed”.

However, we can estimate the growth in “gig” employment, using the term to “gig” mean an “alternative workforce arrangement job”.

Gig Statistics

  1. Total employment in December 2010: 139,301,000
  2. Total employment December 2015: 149,929,000
  3. 2010 “gig” employment (10% of line 1): 1,393,010
  4. 2015 “gig” employment (16% of line 2): 2,398,864

The growth in “gig” employment since 2010 is approximately 1,005,854, using “Civilian Employment“, a household survey measure, in my calculations.

The Wall Street Journal stated “the economy has added nearly 14 million jobs since 2014”.

The correct comparison statistic for “gig” analysis is on the order of 10 million, not 14 million (subtracting line 1 from line 2).

It appears the Journal used “Total Nonfarm Employees“, a payroll-based number.

Since the authors of the report measured via a 4,000 survey sample, the correct comparison is to employment, not jobs.

Final Thoughts

Some people may be working a “gig” and a job, or multiple gigs, or multiple jobs. To the BLS, a job is a job is a job.

However, Obamacare had a huge impact on the number of people working multiple jobs, especially multiple part-time jobs.

Many of those those multiple part-timers are double counted in the nonfarm payroll jobs report that comes out monthly.

Those working “gigs” and how they are paid, adds to the existing measurement confusion and double-counting of those working multiple part-time jobs. All of the unemployment and job reports are suspect because of these shifts.