Gig Workers Make Up 30% Of Labor Force, Says McKinsey Study

By Carolyn Said
San Francisco Chronicle

WWR Article Summary (tl;dr) Like it or not, the gig economy has come of age. 162 million working-age people in the U.S. and Western Europe are engaging in some kind of independent work.

San Francisco Chronicle

Traditional 9-to-5 jobs are evaporating as more people make a living as independent workers. Now a major study from McKinsey Global Institute has found that the gig economy is much bigger than previously thought.

“Up to 30 percent of working-age people in the United States and Western Europe are engaging in independent work, either as their primary source or supplemental source of income,” said Susan Lund, a partner at the McKinsey think tank which released the study on Monday at O’Reilly Media’s Next:Economy conference in San Francisco. “That’s 162 million people — almost 60 million in the U.S.”

Some 70 percent reported that they fly solo out of choice. “They enjoy being their own boss, they have more creativity, and more opportunity to learn and grow,” Lund said.

The study shattered some common perceptions. Only a minority of independent workers are Uber or Lyft drivers, a visible segment that many people think of first when the subject of gig workers comes up. Instead, most have more familiar occupations: doctors and dentists, accountants and therapists, plumbers and electricians, gardeners and construction workers, retail clerks and computer programmers.

About 15 percent of independent workers rely on digital services like apps or websites to find work. That translates to about 4 percent of the working-age U.S. population.

The majority of those use the Internet to sell goods through marketplaces like eBay and Etsy. Fewer use apps like Uber, Lyft, TaskRabbit and Thumbtack to sell their services, while an even smaller segment are using listing services like Airbnb to rent out assets such as homes or rooms, the report said.

Rebecca Saylor of San Francisco quit a high-powered job as a tech corporate recruiter four years ago and started OodleBaDoodle, making whimsical home-decor pillows and selling them on Etsy. While her income dropped by half, she’s much happier. “It’s one of the greatest feelings in the world to create something and someone gives you money for it,” she said.

Marco Zappacosta, CEO of San Francisco’s Thumbtack, an online marketplace that connects service providers with customers, said he wasn’t surprised that offering labor digitally remains relatively small.

Thumbtack has 250,000 active professionals nationwide, ranging from caterers to movers to painters. The entire working-age U.S. population is about 210 million people.

“Local services have only recently moved online,” he said. “It takes more trust to hire someone to come into your home and watch your child or officiate your wedding than to buy a pair of shoes on the Internet.”

Concord resident Baron Lambert exemplifies that emerging segment. He quit a job at 24 Hour Fitness a couple of years ago to start his own personal training business; Thumbtack is one way he finds customers.

“I wanted to do something on my own and not have that corporate hierarchy above me,” he said. “I love having that freedom around scheduling.” Business has boomed to the extent that he’s already brought on two other trainers.

In fact, job creation is an important factor with independent workers, Zappacosta said. “Folks who go out on their own to be independent professionals often end up employing other people,” he said. “They are the future business owners and entrepreneurs of this country.”

The McKinsey report didn’t look at some of the controversies swirling around independent work, such as lawsuits over whether workers for Uber, Lyft, Postmates, DoorDash and other services should be reclassified as employees; nor the growing discussion about creating some form of portable benefits so that independent workers have safety nets similar to those of employees.

The report grouped independent workers into four categories: free agents, accounting for 30 percent, make their living from independent work by choice; casual earners (40 percent) who choose it to supplement their incomes; reluctants (14 percent) make their living from independent work but would prefer traditional jobs; and financially strapped (16 percent) who are forced by necessity to take supplemental gigs.

Demographically diverse, the independent workers represent all ages, genders, incomes and education levels. “It’s much broader and more widespread than we’d realized; not just a Millennial thing,” Lund said. The highest rates of independent workers are both those under 25 and those over 65, but there’s strong participation across other age groups as well.

McKinsey did an online survey of 8,000 gig workers as well as analyzing data from government and other sources. That methodology could have somewhat skewed its report toward better-educated, more affluent people who are online more often, Lund said, and minimized those who might have less digital access, such as day laborers.

Still, the overall conclusion remains inescapable, she said. “The evidence is, independent work is growing, and we need to redesign what it means to have a career or a job.”

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