Research 2: Cleaning Up in Contract Work

Gig economy, platform workers, on-demand economy, project economy. New ways of working—where work is increasingly decoupled from permanent standard paid employment—has been explored from many different angles. Some wonder about the extent of the shift from permanent to temporary working arrangements. Others have want to know how technology platforms have created the means by which workers can quickly access gigs. Some have explored decoupled employment in terms of leading to self-employment and entrepreneurship. Some worry about the future of a workforce unprotected by workplace benefits and regulations.

In this blog post, we  tackle head on the meme that this contract employment is primarily made up of tech workers who are exercising personal choice or service workers in tech platform-enabled services, such as drivers in car-sharing services. We wanted to get away from definitions of “jobs” and “workers” that come about when folks use data from surveys of people or look at trends in business ownership.

We looked at income reported as a result of contract work—all 1099 income. We think this is the best way to understand what people are doing while they are working “on contract” or on the side. In this way we can get a feel for how much work is done under contract, aside from whether the person has a separate employer-based job, or consider their contract work to be a version of self-employment, or not.

We used data from the Nonemployer Establishment Survey, which classifies people’s 1099 activity into North American Industry Classification System (NAICS) codes. Because NAICS is a hierarchal schema it’s a little tricky to deal with, but we did our best in pulling out non-duplicative data. (Note that what we are not counting by using 1099 data is workers who are employees of temporary placement firms, thus not technically contract workers although their job placements may be temporary).

According to national data, between 2005 and 2013, the number of people of workforce age (20 to 64) grew by 7.7%, the number of “standard W-2” jobs grew by 1.9%, while the number of people receiving 1099 income (contract workers) went up by 15.2%.

What are these contractors doing? It looks like they are primarily cleaning up after the rest of us. Of 2.8 million new contract workers, about one-quarter are working in services to people— as maids, drycleaners, auto repairers, parking lot attendants, etc. (North American Industry Classification System code 81, to be exact). About another quarter are working in services to businesses and buildings—janitors, bill collectors, administrative assistants, etc. (NAICS code 56).

Digging deeper, we found that over 375,000 (13%) of new contract workers are working in hair, nail and skin salons (NAICS 81211). The second largest growth category was in janitors, at 263,000 (NAICS 56172). Neck and neck in third place at about 5% a piece are home health care workers (NAICS 62151); landscapers (56173); and independent artists, writers and performers (NAICS 71151). (Taxi drivers, photographers, and management consultants each contributed about 3%.)

In sum, workers are increasingly finding work in the contract field, but with few exceptions, they tend to be in low-wage occupations serving others—landscapers, janitors, manicurists, etc.. There may be high-tech contract workers who are exercising free agency and taking advantage of project-based employment, but they are not the bulk of the workforce toiling in the precarity that is contract work.