We mentioned yesterday that there is a recently formed consensus that the gig economy is large and growing.
We also mentioned there is not a consensus as to how big it is or how fast it's growing. This is especially true for the online gig economy.
It also turns out there's no consensus on what "work" is, especially, again, in the online gig economy.
Evidence of this comes from recent studies from two highly respected research organizations. Pew Research says about 24% of adult Americans earned money in the digital “platform economy” in the past year. This works out to about 59 million Americans.
JP Morgan Chase Institute's recent study shows about .9%, or about 2.5 million Americans, work in the online gig economy.
So who's right?
The quick answer is both, neither, or one or the other. It all depends on how you define the "online gig economy" and, more interestingly, how you define "work".
Pew takes a broad view of both of these concepts. Their survey asks:
"In the last year, did you earn money by selling something online?"
18% of adult Americans surveyed said yes.
But such a broad question means many people who sold used goods on places like Craigslist, even just once over the past year, answered yes. In fact, 74% of the people who responded yes to this question said they had sold used or 2nd hand goods in a follow-up question.
Pew also asked a very broad question about "work" performed through the use of online marketplaces. They asked:
Some people find paid jobs or tasks by connecting directly with people who want to hire them using a particular type of website or mobile app. These sites require workers to create a user profile in order to find and accept assignments, and they also coordinate payment once the work is complete. In the last year, have you earned money by taking on jobs through this type of website or mobile app (for example, by driving someone from one place to another, cleaning someone’s home, or doing online tasks)?
8% of the survey respondents said yes to this.
But 60% of those who said yes said they performed tasks online like completing surveys or doing data entry. And again, people who just did this once over the prior year could easily answer yes to this question.
The broadness of Pew's questions are reflected in the fact that 42% of their respondents said they do this "work" for fun.
While the Pew study takes a very broad view, the JP Morgan Chase Institute takes a narrow view. They only look at "work" performed by the use of 42 specific (and unnamed) online work platforms.
They do this by analyzing the bank records of over 6 million of their bank customers. This is a very cool methodology.
But limiting it to 42 platforms narrowly defines the the gig economy and online gig "work". It also clearly excludes a lot of sources of online "work" as defined by Pew. This is why JP Morgan Chase's numbers are so much lower than Pew's.
Given this range of numbers, it's easy to see why there is so much confusion about the size of the gig economy.
In our work we focus on people who do gig economy work on a regular basis and the income generated by these activities is an important share (10% or more) of their household income.
To us, this definition means these people are actually "working" in the gig economy and are not just hobbyists, holding occasional garage sales, just having fun, or killing time.
Because of this, our estimates of the size of the gig economy workforce are much smaller than other sources. For example, our most recent study - the 2016 MBO Partners State of Independence study - shows about 40 million Americans work in the gig economy by our definition.
Other studies with broader definitions of gig "work" show 55 million (Upwork/Freelancers Union) or even as many as 68 million (McKinsey) work in the gig economy. We're not suggesting the definitions these studies used are wrong. They're not. They're simply broader than ours and this is due to these studies having different objectives than ours.
When we first started trying to quantify the size of the gig economy (back in 2009) we got a lot of push back on our numbers. Pretty much everyone said they were way too high.
Now, people tell us we're way too low.
We used to think it all depended on what your definition of an independent worker/freelancer was. We now see it also depends on your definition of "work".
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