Is the Contingent Workforce Growing? Interpreting the Latest Data from the Bureau of Labor Statistics

Last month, the Bureau of Labor Statistics (BLS) released the 2017 Contingent Workforce Supplement, its first since 2005. The report estimates that in May 2017, 3.8% of the U.S. workforce, or 5.9 million workers, held contingent jobs.

In the supplement, the BLS defines contingent workers as those who “do not have an implicit or explicit contract for ongoing employment.” Self-employed and independent contractors are included in this figure as long as they have been employed for under a year and expect their employment to last no more than one additional year.

If the definition were to include everyone who held “alternative employment arrangements” in 2017, the contingent workforce accounts for 10.1% of the U.S. workforce. This population includes independent contractors (6.9%), on-call workers (1.7%), temp agency workers (0.9%) and workers provided by contract firms (0.6%).

This marks a decline from the last time BLS delved into nontraditional work arrangements. In 2005, about 11% of workers were “contingent” under this definition. Naturally, this casts some doubt on the predictions of gig work replacing traditional employment.

This does not preclude, however, an increase in side gigs, as LinkedIn economist Guy Berger points out. And as the New York Times had reported, “separate data released by the Federal Reserve [in June] found that nearly a third of adults engaged in some form of gig work, either as a primary job or to supplement other sources of income.”

“Because the new BLS data focused on ‘primary’ work, it’s not clear what the trend is when looking at people taking on supplemental part-time work as a secondary source of income,” Berger says. “This could skew the results if you are thinking of the gig economy as a supplement to the traditional 9-5 job structure.”

Who Are the Contingent Workers?

The contingent workforce skews slightly younger than the non-contingent workforce, and the former is also much more likely to be enrolled in school. The BLS estimates that around 60% of contingent workers are enrolled in school, compared with 37% of non-contingent workers.

Among those who are not in school, however, contingent workers are less likely to have a bachelor’s degree or higher (8.5% compared with 11.7% for non-contingent workers). But overall, education levels are similar, with around 40% of both contingent and non-contingent workers holding a bachelor’s degree or higher.

The BLS also breaks down the numbers for 10 categories of occupations and 14 industries. Around 11% of contingent workers work in the construction and extraction sector, compared with 5% of non-contingent workers. Contingent workers are also more likely to be employed in transportation and material moving occupations or office and administrative support positions.

On the other end of the spectrum, contingent workers are less likely to work in management, business and financial operations (approximately 7.4% compared with 17.2% for non-contingent workers) and sales (5% compared with 10%).

Changes in this composition of the contingent workforce are important to consider. Berger notes that the construction industry, which tends to rely more on contingent labor, has become smaller since 2005 and the peak of the U.S. housing bubble.

“Simultaneously, the new BLS data showed there were other occupations — service occupations, management occupations and transportation occupations — [where] independent contractorship became more prevalent,” says Berger.

He continues: “Take taxi drivers. They have been considered independent workers for decades. And yes, over the past decade the number of Uber and Lyft drivers went up, but how many of those new drivers are actually former taxi drivers taking advantage of the new platform? It is noteworthy that the increase in independent contractors in transportation occupations over the past 12 years [127,000] is much smaller than the total number of Uber drivers in the U.S. [750,000].”

Whether workers like their “alternative work arrangements” will of course vary greatly, depending on industry, pay and many other factors. According to the BLS report, more than half of contingent workers would prefer a traditional, permanent job. A third preferred their contingent work arrangement, and the remainder expressed no preference.

The Bureau of Labor Statistics’ 2017 Contingent Workforce Supplement can be found here.