If the Gig Is Up, What Really is the Future of Work?

gig economy

There seems to be many ideas and questions about how work and work arrangements are changing and where it’s all headed. There is a lot of loose talk — often by pundits — about the “future of work.” But if you don’t simply swallow it and really think about it, the concept is a hopelessly intractable, even metaphysical, one.

And then there is all the endless chatter about on-demand platforms and gig workers (e.g., Uber, Postmates, Grubhub). But really--how significant is that?

New opportunities for progress in spend visibility, analysis and savings are emerging in an unlikely place: the fast-growing category of independent workers. Read our research paper to learn more.

Granted, it is true that we are at a point in time when work and work arrangements are changing, driven by an interplay of many forces (economic and technological, to name just two). Not only is the “future of work” up in the air (like pie in the sky), the gig economy may be far less consequential than it would appear to be these days. There has been a lot of hand-wringing about the “future of work” for an increasing on-demand workforce, but are these concerns are actually misplaced?

Is the Gig Up?

A recent Wall Street Journal article has previewed the new research, by Alan Krueger of Princeton University and Lawrence Katz of Harvard University, that sheds new light on this subject. Krueger and Katz are esteemed economists who have been looking at the changes in the U.S. workforce in the recent years, including the fast growing, mostly part-time on-demand workforce. Krueger and Katz rose up last year calling attention to the dismal state of real data and information about gig work, self-employment, contingent work, on-call work — the whole spectrum that the Bureau of Labor Statistics refers to as "alternative work arrangements.” So they conducted their own research and have come up with some interesting findings.

With regard to on-demand platform businesses, it appears that, other than Uber, on-demand platform companies may not be doing so well. The research of Krueger and Katz shows that the “so-called gig economy barely registers in traditional labor-market data,” according to the WSJ. Instead, the research indicates that “there’s been a large growth in tenuous work arrangements … growth has taken place largely offline — in traditional jobs and industries where a growing number of workers are in contract arrangements.”

Data tells a different story than the hyped-up popular “narrative.” Krueger and Katz estimated growth (measured as a percent of total workforce) in four specific work arrangement categories between 1995 and 2015: independent contractors, workers provided by contract firms, temporary agency workers and on-call workers.

Word Arrangement Categories 1995 2015
Independent Contractors 6.3% 8.0%
Workers provided by contract firms 0.5% 3.0%
Temporary agency workers 1.0% 1.7%
On-call workers 1.7% 2.6%

Gig workers are included in the independent contractor category 2015 data point but make up only less than 0.5% of that 8% of the total U.S. workforce.

Where the really significant rise in alternative work arrangements has been occurring is in traditional categories of work in industries and occupations that were mainly full-time and quite stable. These are some of the findings, again measured in percent of total U.S. workforce:

  • Overall, from 1995 to 2005, the percentage barely budged at about 10%. But in 2015 it rose to about 17%.
  • In a number of work categories, the percentage of total workforce rose between 2005 and 2015. Sample categories:
    • Community and social service: 4%–23%
    • Education and training: 7%–20%
    • Healthcare support: 9%–18%
    • Transportation: 9%–17%

It will be fascinating to see the full results of the Kroeger and Katz research when it becomes available. But the story that the data tell us at this point is that there is a lot of hype about certain innovative parts of the labor economy, which, incidentally, tells us very little about the future of work. And, if we can discern anything from this and other data, it is that work arrangements are becoming more contingent and even tenuous for many categories of work. Separately, we also know with 100% certainty that technology will increasingly have a significant effect on work, work arrangements and the intermediation of supply and demand.

For businesses, all of this is a double-edged sword: getting a more flexible workforce, but one that too often is more insecure and vulnerable. Procurement practitioners like to keep their feet on the ground and look squarely at what faces them. The future of work is indefinite, but changes in how businesses source and engage human capabilities will present unprecedented challenges. This is where we are headed.

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