Workers in Nontraditional Jobs May Lack Choices
The vast majority of workers are in traditional jobs, receiving a regular paycheck from an employer or their own business. But a small and growing number are filling nontraditional jobs, working not as employees but as contractors for all types of businesses or online services such as Uber and Care.com.
In just four years, the share of nontraditional workers increased by a full percentage point, to nearly 5 percent of the U.S. labor force, according to a new study based on U.S. Census data. Because these workers are still only a fraction of workers, little has been known about them.
RAND researchers have uncovered new information about who they are. Putting various clues in the data together, they concluded that workers in nontraditional jobs are often “unsuccessful in attaining” a traditional employment arrangement on a company’s payroll.
They define nontraditional workers as having no other sources of income in any given year except for one or more of these jobs. That distinguishes them from another group – the “straddlers” – who have a traditional job and moonlight in a side job.
The nature and quality of nontraditional jobs are difficult to determine. Instead, the researchers tried to infer what they could about the jobs by looking at the types of workers who fill them.
Black Americans, for example, are the least likely to be in nontraditional work, the researchers found. The jobs are more likely to be filled by people who have not completed high school, including the undocumented Hispanic immigrants gravitating to them. Not surprisingly, nontraditional workers earn less than payroll workers, and they usually don’t have benefits.
Age is another determining factor. Americans over 55, who may have difficulty competing for jobs against workers in their prime, are more often in nontraditional work. Social Security recipients are also more likely to have the jobs, which might supplement their income after they’ve officially retired or if the older worker, unable to find a regular job, started Social Security earlier than she’d planned.
The straddlers – the smallest category of workers – have a different makeup. Their earnings are relatively high, and they tend to have bachelor’s or even graduate and professional degrees. In this way, they are like purely traditional workers. But the people who straddle traditional and nontraditional work may be doing so because the nontraditional jobs offer a chance to make some extra money on a flexible schedule or do the work remotely.
One telling finding is that the probability of being a straddler declines in periods of high unemployment. In a weak labor market, higher-paying forms of nontraditional work may be harder to find. Or the low-paying jobs, already less appealing, may pay even less and not be worth pursuing by someone who is on a company payroll.
The straddlers’ set of characteristics support the argument that when they do engage in these work arrangements, it is not because they lack options the researchers said. “Our straddler type provides support for [this being a] preference.”
As more workers move into nontraditional jobs because they face barriers to more solid forms of employment, it raises all sorts of questions about the jobs themselves, the researchers said.
Are employers classifying employees as nonemployee contractors to save money? Are recent immigrants being hired for off-the-books jobs that pay cash? And who employs these workers and what types of working conditions do they face?
This RAND study opens up a new vein of research to explore these questions.
To read this study by Kathryn Anne Edwards and Daniel Schwam, see “Traditional and Nontraditional Earnings: Demographic, Financial, and Beneficiary Patterns.”
The research reported herein was derived in whole or in part from research activities performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium. The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, or Boston College. Neither the United States Government nor any agency thereof, nor any of their employees, make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report. Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.
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The “gig economy” is bigger than the Census Bureau believes. The Bureau of Economic Analysis reports that self-employed “proprietors” are 25% of all work situations. These aren’t off-the-books workers. This is based on W-2s for wage and salary employees and Schedule C, 1099s for the self-employed.
Why is the Census Bureau’s share for the “self-employed” so much lower?
First of all, the Bureau classifies anyone who incorporates as an employee of their own corporation — even if they are the only one. That removes some people at the top. Look at the highest level of detail, if it is still provided, and “employee of own corporation” has almost as many people as “self-employed.”
Second, if the “gig” work is a “side hustle,” the worker may report themselves as an employee based on their main job.
But third, many of the so-called “self-employed” are employees in all but name and may report themselves as such. This removes lots of people at the bottom. The Census Bureau data is individual people filling out forms.
Moreover, those who work as “temps” are classified as employees in both cases. Even as large numbers of young “temps” work alongside older “employees” on assembly lines, receiving none of the health care and other benefits that actual employees do (which is why they are temps). But unlike the self-employed, they don’t have to pay both halves of FICA themselves.