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The Gig Economy and BLS Surveys

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This is a cautionary column. The staff at the Bureau of Labor Statistics have an impossible task. They claim the “Employment Cost Index or ECI measures changes in the cost of employees to employers over time.”  But increasingly the so-called gig economy opens to question the accuracy of their statistics. 

To be fair, in the strictest understanding of the terms “employees” and “employers,” the ECI sentence may be accurate. However, it’s not stated in many BLS announcements that their surveys rely heavily on administrative data from state unemployment insurance programs. Two core points flow from that linkage:  

  1. State unemployment laws differ on a number of somewhat obscure points, which means the data are not strictly comparable from state to state, and 
  2. All individuals paid for their services are not covered for unemployment insurance—think gig workers—and therefore their work information is not included in BLS data.  

That undermines our confidence in BLS statements such as, “The Quarterly Census of Employment and Wages (QCEW) . . . covers more than 95% of U.S. jobs available at the county, Metropolitan Statistical Area (MSA), state, and national level . . .”  That is simply not accurate.

BLS data could include sample data from virtually all “traditional” jobs but experts who have written about the gig economy argue the government’s data miss a rapidly growing number of workers. With each year that passes, the voids in the data are expanding; the fact is government does not understand the gig economy and currently does not have the capability to document relevant data.

Why does this matter? BLS survey data are the statutory basis for the deliberations by the Federal Salary Council to recommend adjustments to the General Schedule. The Federal Employee Pay Comparability Act mandates the use of the data in question. It’s never been explained but in the three decades since passage of FEPCA each President, Republicans and Democrats, has chosen not to base their decision on the BLS data. This further erodes the value of the data.

Gig Economy Estimates

At this stage, experts are quick to acknowledge there is no agreement on the facts. Perhaps the most credible source is the research reported on the National Bureau of Economic Research website. An August 2018 article, “Measuring the Gig Economy: Current Knowledge and Open Issues,” appears to be the most recent. Two of the four authors work for the Census Bureau. The article focuses on the measurement problems and reaches a key conclusion: Government simply does not understand this growing segment of the labor force.  

When FEPCA was enacted it was assumed that BLS pay data would be limited to the then standard jobs and employees who 1) are paid a wage or salary; 2) have an expectation of job security; 3) may be full time or part time; 4) have hours and earnings that are reasonably predictable; and 5) are supervised by the same firm that pays their wage or salary. That includes on-call workers as well as direct hire temporary workers. The test is whether a worker appears on a payroll and in 1990 that was close to universal (except for part time jobs held by youth, personal service workers and illegal workers).

It’s the workers and jobs that do not satisfy those criteria that are the basis for the gig economy. One estimate of the size of this workforce, based on a 2019 “Freelancing in America” survey, claims it includes 57 million workers over the age 18. BLS surveys show the US labor force has roughly 155 million “wage and salary” workers in all sectors. That means the gig workforce is 36% of the size of the labor force in more traditional jobs.  

Significantly the freelancing survey also shows:

  • The full time freelancers increased from 17% in 2014 to 28%.
  • Skilled services are the most common type of freelance work, with 45% providing skills such as programming, marketing and business consulting.
  • The top reason for choosing freelance work is flexibility. A high percentage work from home.
  • Freelancing opens the door to opportunities for those who otherwise might not be able to work.
  • Freelancers were found in all age groups—29% of Baby Boomers, 31% of Gen X workers, 40% of Millennials, and 53% of Gen Z workers.

As I was writing this, I noticed the Wall Street Journal website was running a sponsored-content campaign that succinctly summarizes what’s unfolding: 

The Future Is Here—And It’s Flexible: In the past, large companies used independent professionals sparingly; now, they increasingly see them as integral to their success.

As confirmation, the Federal Reserve’s May 2018 report on the economic well-being of U.S. households, found that 31% of adults are engaged in independent work—up 3 percentage points from the 2016 report. Other studies by McKinsey and Upwork show that 36% of the American working age population engages in independent work. There is no accepted definition of the gig economy but it is large and growing.

Those workers are not included in BLS pay estimates and that is a serious omission. Everyone is aware of the gig workers making home deliveries (e.g., DoorDash) and providing rides (e.g., Lyft) but no one to date has developed a methodology to document the numbers of workers, their occupations, hours of work, locations or, most importantly, the pay levels. They clearly are competing with the more traditional employees reflected in BLS surveys.

Gig workers are seen as a cost saving alternative to adding full time employees. There have been reports that gig workers making deliveries are dissatisfied with how much they earn. That may be true in other gig roles as well. There is also scattered data showing the average hourly pay in some gig jobs is higher than the pay of full-time employees. Gig employees, however, are rarely eligible for benefits or paid time off.  Plus, since they are not employees, they can be terminated at any time with no recourse. But the facts have never been documented; we simply don’t know how the compensation of gig workers compares.

What is the Value of BLS Data?

Each year the Salary Council and the Pay Agent fulfill the roles set forth in FEPCA and submit recommendations for GS salary increases based on BLS survey data. FEPCA also allows the President to reject the recommendations and rely on the alternative plan authority in proposing increases. Each president, starting with Clinton, has annually rejected the recommendations.  

That track record raises questions about the value or utility of the BLS data, more specifically the value of the National Compensation Survey. The cost is buried in the BLS budget but it has to be in the millions. As a far less costly alternative, government could purchase or gain access at no cost by participating in the surveys used by other employers. There are hundreds covering every sector and occupation.

Those surveys are not statistically valid but the participating employers are known, the reliance on the data is solidly established, and the data are integral to talent management. The use of survey data is routine and universally accepted in other sectors.

BLS claims their data are used for several purposes. The first topping the list: “Business owners and human resources professionals make decisions about pay and benefits to stay competitive in the labor market.” But there is no evidence of this in the HR literature.

It’s not clear if or when the BLS has ever asked data users listed on the BLS website—the business owners and HR professionals, budget and contract specialists, etc.— how they use the data or what they think of the data. Instead, BLS has focused internally on developing an incomprehensible statistical methodology.

The most obvious shortcoming that undermines the value of BLS data for employers is the inability to report what jobs are paid. Employers also need to understand program management practices like the role of cash incentives. BLS fails to report that information. That’s what determines the value of pay surveys.  

A simple step to assess BLS data would be to develop a comparative database. Government, as with every employer, needs to be competitive for essential talent. BLS data cannot address that core question.

For years BLS has functioned in its ivory tower while the country’s labor markets and people management practices have undergone significant change. It’s no longer 1990. Now the rapid expansion of the gig economy means BLS cannot claim their data are representative of workers’ pay and benefits across the United States. That’s a problem. 



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The Gig Economy Gets It Together

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Anyone who’s ever done gig work – from rideshare drivers to freelance writers – experiences moments of doubt. At those times, it’s easy to believe that no one is thinking about your value as a worker, or how to protect you in the most basic ways that full-timers might take for granted.

Rest easy, gigsters: Someone is thinking about you, starting with governments around the world that suddenly seem aware of how big of a deal gig work has become in the past 10 years. The February 2020 Gig Economy Tracker, powered by Tipalti, analyzes recent trends and headlines in the mushrooming gig belt, which will comprise some 75 million Americans by the end of this year. Put another way, that’s closing in on half the U.S. workforce. It’s also revising long-held definitions of “workday” and “payday” as gig work (and gig workers) proliferate.

Another thing freelancers know about are all the ways payments can go wrong. They’re experts on the many snags that prevent gig folk from getting paid in time to make rent. But that situation is giving way to more enlightened and humane ways of getting freelancers their money, as industry and government finally face gig economics they’ve been ignoring.

As Manish Vrishaketu, COO at payment services provider Tipalti, notes in this latest Tracker, “Gig and marketplace partner payments are integral to the business model and require careful consideration. Ineffective payments can literally hurt the business, because the supply chain is so closely tied to performance and success. An unhappy provider – who likely is customer-facing — may taint your reputation with customers. Gig payments are mission-critical.”

Who Am I?

Much of the gig economy talk these days has to do with California’s Assembly Bill 5 – known simply as AB5 – which is essentially forcing large gig economy players like Uber to start treating their gig workers more like team members and less like expendable cogs in a machine.

California’s legislation set off a wildfire of sorts, with U.S. cities and states – as well as nations including India – announcing laws similar to AB5, at least in spirit. Some actually go quite a bit further into fairly draconian territory as governments set things right for gig workers – whether gig workers want the help or not.

Many are unhappy with how the new laws are written, and how they recategorize freelancers. U.S. legal maneuvering over gig work is far from over, as New Jersey Governor Phil Murphy signed legislation that reclassifies certain freelancers. And the wrangling has just begun.

Legal standing hasn’t stopped companies from snapping up gig workers, though. Package delivery service Amazon Flex debuted in Australia in January, and could be coming to a city near you soon.

The Gig Grows Up

India has proposed one of the more interesting takes on this. The country’s Department for Promotion of Industry and Internal Trade wants only licensed professional freelancers to do gig work. They would be issued a kind of vendor ID number under the plan – but it’s not a done deal.

In fact, when it comes to the gig economy, very little has been settled, from regulation to the legal status of “workers” to who’s responsible for what under these agreements. It promises to be a rollicking year as these laws (and their court challengers) zero in on what “gig” means.

——————————–

Exclusive PYMNTS Study: 

The Future Of Unattended Retail Report: Vending As The New Contextual Commerce, a PYMNTS and USA Technologies collaboration, details the findings from a survey of 2,325 U.S. consumers about their experiences with shopping via unattended retail channels and their interest in using them going forward.



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GiG platform to power new lottery business

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After securing a license from the Malta Gaming Authority (MGA), lottery newcomer, Megalotto, has gone live across multiple markets in its effort to “redefine” the online lottery experience of its customers.

Backed by venture capital company Optimizer Invest, the new online lottery and gaming business will launch its mobile-first lottery product on the Gaming Innovation Group (GiG) (GIG:Oslo) platform.

Megalotto will give millions of players access to lotteries on a global scale in a mobile-first environment.

According to a recent press release

…the St. Julian’s-headquartered business will be a unique brand within the online lottery vertical as its product is a departure from traditional transactional lottery products while its interface is intuitive for ease of use.

In addition to offering the largest jackpots from top lotteries around the world, Megalotto will also have on offer scratchcards, slots and instant win content, from well-known third-party suppliers.

“We are delighted to be going live with our new venture and to get our product in front of customers, said Megatotto’s Chief Executive Officer, Grant Williams.

“Our vision from day one has been to design and build an innovative and disruptive lottery product, and we believe we are on track to do just that. We have recruited a high quality, experienced management team to lead the launch of this new Optimizer Invest backed product, matching the ambitious plans we have in place for the markets we will be targeting, added Williams.”

Also commenting on the recent tie-up, Chief Executive Officer for Optimizer Invest, Petter Moldenius, said…

“The innovative Megalotto product is the result of a successful partnership between two of our portfolio companies, bringing a world class, truly customer friendly experience. Megalotto will give millions of players access to lotteries on a global scale in a mobile-first environment that is pushing the envelope for innovation of iGaming experiences on-the-go.”

Betsson acquisition:

In related news…

…Swedish holding company, Betsson AB (BETSB:Stockholm), has reportedly acquired Gaming Innovation Group subsidiary Zecure Gaming Limited, which operates its inhouse brands in Sweden.

The approximately €31m (US$33.6 million) deal, which consists of a €22.3 million cash payment, plus a prepaid platform fee of €8.7 million, has seen the transfer of GiG brands – Guts, Kaboo, Rizk and Thrills – to the Stockholm-headquartered company. The brands operate under licenses held in Malta, UK, Sweden and Germany (Schleswig-Holstein).

According to the press release, the Rizk brand will be launching under licenses held in Croatia and Spain. In addition to gaining opportunities with other brands in the two European countries, Betsson plans to integrate its own payment platforms and proprietary sportsbook with the GiG platform. The move will allow the holding company to offer its advanced technologies to potential B2B clients of the platform.

Growth potential:

Commenting on the acquisition, Chief Executive Officer for Betsson AB and Group President, Pontus Lindwall, said…

“Betsson’s ambition is to outgrow the market in the long term, organically and through acquisitions. This acquisition confirms that Betsson is a driver of the consolidation of the market. We believe this deal offers a good opportunity for Betsson to consolidate, at good value, where we can create synergies and apply our core B2C skills and marketing insights to scale these assets to their true potential. The agreement with GiG further strengthens and expands Betsson’s outreach and growth potential for its proprietary sportsbook and payments platforms in the B2B market. As one of the largest European operators, Betsson is well positioned to continue building on its strategic position.”



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Gig Based Business Market Projected to Witness Vigorous Expansion by 2019-2025 – Jewish Market Reports

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In this report, the global Gig Based Business market is valued at USD XX million in 2019 and is projected to reach USD XX million by the end of 2025, growing at a CAGR of XX% during the period 2019 to 2025.

For top companies in United States, European Union and China, this report investigates and analyzes the production, value, price, market share and growth rate for the top manufacturers, key data from 2019 to 2025.

The Gig Based Business market report firstly introduced the basics: definitions, classifications, applications and market overview; product specifications; manufacturing processes; cost structures, raw materials and so on. Then it analyzed the world’s main region market conditions, including the product price, profit, capacity, production, supply, demand and market growth rate and forecast etc. In the end, the Gig Based Business market report introduced new project SWOT analysis, investment feasibility analysis, and investment return analysis.

Request Sample Report @ https://www.marketresearchhub.com/enquiry.php?type=S&repid=2577976&source=atm

The major players profiled in this Gig Based Business market report include:

The key players covered in this study
TaskRabbit
Guru
Rover
HopSkipDrive
Freelancer
Fiverr
Favor Delivery
Upwork
DoorDash
BellHops
Turo

Market segment by Type, the product can be split into
Website-Based
APP-Based

Market segment by Application, split into
Freelancer
Independent Contractor
Project Worker
Part-Time
Other

Market segment by Regions/Countries, this report covers
North America
Europe
China

The study objectives of this report

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The study objectives of Gig Based Business Market Report are:

To analyze and research the Gig Based Business market status and future forecast in United States, European Union and China, involving sales, value (revenue), growth rate (CAGR), market share, historical and forecast.

To present the Gig Based Business manufacturers, presenting the sales, revenue, market share, and recent development for key players.

To split the breakdown data by regions, type, companies and applications

To analyze the global and key regions Gig Based Business market potential and advantage, opportunity and challenge, restraints and risks.

To identify significant trends, drivers, influence factors in global and regions

To analyze competitive developments such as expansions, agreements, new product launches, and acquisitions in the keyword market.

Make An Enquiry About This Report @ https://www.marketresearchhub.com/enquiry.php?type=E&repid=2577976&source=atm 

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