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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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How are gig workers affected by the coronavirus?

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The economic consequences of COVID-19 are far-reaching as all companies take precautions with budget cuts and layoffs. One group that has been vastly affected by the coronavirus outbreak is gig workers, a growing global community of workers who are self-employed. Most gig workers are contractors, which means that they do not have access to employee rights such as paid leave, a right that proves essential in a pandemic.

AppJobs surveyed gig workers from 58 countries in March to analyze the shifts in demand within different job categories and to see how they are dealing with the crisis financially. Over 50% of gig workers that were questioned claimed that they lost their source of income in February and March. Only 30% of gig workers claimed that they have enough savings to live on. 

As uncertainty continues, gig workers can only hope that the situation will improve – and fast. Nikki, a gig worker from Philadelphia who had to stop driving with Uber and Lyft said that she lost over 95% of her income in a matter of days. Nikki had to give up driving because she didn’t want to put her daughter who has asthma under risk if she was to catch the virus. Nikki is not alone, gig workers that participated in AppJobs’ survey said that they are forced to make a decision between losing their source of income and risking infecting themselves and their families with the virus. Many gig workers cannot find new jobs to replace their gig jobs, so their only option is to continue working. The current state of the job market is of no help: as more industries shut down and people are being let go, gig workers are having difficulty finding alternative ways of making money. According to AppJobs Institute, due to self-isolation, the demand shifted to the delivery and online jobs

The situation might still get worse for gig workers like Nikki. The majority of gig workers face more financial uncertainty in the months to come, especially as quarantine measures tighten around the world. With fewer people that want to take rides and no pets to sit, no one knows what the near future withholds for gig workers across all industries. The survey results show that most gig workers are or had been employed in the restaurant, tourism, cleaning, customer service, rideshare and transportation industries, which are among the most negatively affected. The survey results also show that the majority of gig workers are far from satisfied with the support they have received from their companies so far. 

Gig workers are self-employed, which makes them an exposed group who very seldom have the right to support from the government or a company. We at AppJobs are working hard to help our members find new gig jobs, and new ways into the labor market, says the CEO of AppJobs, Alok Alström.  

75% of the gig workers AppJobs surveyed claim that the gig companies they work for have been of no help in this time of crisis. Gig workers need more help now than ever. They feel unprotected, vulnerable and overlooked. Many companies bulk-send hygiene tips to workers on their apps and recommend DIY measures to self-isolate while working, but this is not the support gig workers are looking for. Gig workers expect support from both gig companies and the government. They want financial help, paid sick days, insurance, tax reduction and stimulus checks so that they don’t have to expose themselves to the virus because they cannot afford to stop working. Gig workers like Nikki don’t want to have to choose between their jobs or their families’ health, and they shouldn’t have to.

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‘Gig economy’ workers fall on hard times in Singapore and Australia

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SINGAPORE — Nicholas Yeo did not expect such a rocky start to his first year as a full-time freelance photographer. The 26-year-old graduate of Singapore’s Nanyang Technological University counted it a blessing that his passion for taking pictures was also his livelihood.

Now he doesn’t feel so lucky. As the new coronavirus swept the globe, he saw more and more work dry up as events were canceled or postponed for health and safety reasons.

In all, Yeo said he has had six projects killed off, costing him the equivalent of around $4,200. “I can hemorrhage for another three months before I call it quits,” he told the Nikkei Asian Review, adding, “I know people up the chain who’ve been though worse.”

Yeo is among scores of workers in the “gig economy,” particularly in the creative industries, who have seen their incomes pared during the pandemic. These workers, who take up freelance jobs in lieu of permanent company positions, are some of the most exposed people in the labor force as economies go into hibernation.

“These workers are often the first ones to be cut during a downturn, and are viewed as more discretionary spending by many companies,” Carlos Castelan, managing director of the Navio Group business consultancy, told the Nikkei Asian Review.

At the same time, most have no safety net to fall back on.

“Unprotected workers, including self-employed, casual and gig workers, are the most critical groups as they do not have access to paid or sick leave mechanisms, and are less protected by conventional social protection mechanisms,” said Patuan Samosir, senior director at the International Trade Union Confederation – Asia Pacific.

With restrictions and lockdowns disrupting business activity across the region, participants in what had been a burgeoning gig economy are tallying up the costs, turning to each other for moral support, and looking to their governments for assistance.


A food delivery cyclist in Sydney: Despite expectations for a surge in online food orders, most gig workers are in a precarious economic position.

  © Getty Images

“I Lost My Gig,” a movement among freelancers that began in Australia and spread to Singapore, has set up an online forum for gig workers to record lost income due to the coronavirus. The combined losses reported by members from the two countries as of early April topped $215 million.

“There’s no opportunity for me to get any other work,” Rebecca Charles, a bartender, posted on the website. She said she has lost more than $1,200.

“Keep your heads high, my friends. We feel your pain. We are all in this together,” posted Mario Garza, a photographer who had work in Australia. He logged over $1,400 in lost income.

Other groups are stepping up as well. Singapore Unbound, which represents writers, created a relief fund to help members who are in dire straits as a result of canceled book events, plays and movie productions. The fund started out with $2,000 and offers grants of $200, using resources originally intended for writing fellowships.

“Singapore Unbound has decided to postpone this year’s writing fellowships to Southeast Asia, and to commit the funds instead to aid Singaporean writers badly affected by the shutdowns,” the group said on its website.

Labor statistics from Singapore showed that in 2018, close to one-tenth of all working residents in the city-state were self-employed. In Australia, a study of the gig economy by the state government of Victoria concluded that about one-twelfth of all employment in the country is gig work.

Not all gig workers are equal, however, and those who offer online services may fare better than freelancers with incomes tied to events, said Maria Figueroa, director of labor and policy research at Cornell University’s School of Industrial and Labor Relations.

“There’s likely to be a surge in demand for food delivery workers, too, as people are not patronizing restaurants as much,” Figueroa told the Nikkei Asian Review.

But Walter Theseira, an associate professor of economics at Singapore University of Social Sciences, believes even independent workers on food-delivery and ride-hailing platforms like Grab and Gojek are vulnerable.

“A lot of the platforms are able to sustain the wages that they do now because they’re sustained by cheap financing,” he said. “There is some concern about whether that financing is going to dry up.”


A nearly empty Siloso beach on the island of Sentosa, off Singapore, on April 4: As the economic goes into hibernation, self-employed workers stand to receive about $700 a month from the government for nine months.

  © Getty Images

While some companies may eliminate freelance jobs to cut costs, Emily Weisgrau, president of business consultancy Weiswood Strategies, warned this may be a double-edged sword, with those companies unable to lure back temporary workers when the situation returns to normal.

“Now is actually the time for businesses to retain freelancers, who can keep work moving without the additional financial burdens like health insurance and retirement benefits that employees expect,” Weisgrau said.

Governments across the region have rushed to deliver billions of dollars in aid to tide workers over during the coronavirus slowdown.

In Australia, the state of Victoria earmarked more than $300 million for displaced workers. In Singapore, self-employed workers stand to receive about $700 a month from the government for nine months.

Lower-to-middle-income residents in the city-state who face job or income losses can also apply to a temporary relief fund for help with living expenses. Those approved receive a one-time cash payment of about $350.

Freelancers like Yeo are hoping for an end to the pandemic and a return to normalcy. “Commercial gigs have been good, until the virus happened,” he said.

For now, he has applied for government assistance. “Never in my life would I have imagined I would want to queue to meet social services to beg for a handout,” Yeo said.

Additional reporting by Peter Guest.



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Why Keith Weed invested in ‘gig CX’ platform Limitless | Digital

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There’s no need to retrace the full story of Uber’s legal disputes with its drivers – they continue to be covered in many other publications – but suffice to say the gig economy has not always lived up to what it once promised: to liberate workers from the confines of conventional employment and allow them to deal directly with consumers on terms that suited them. And at a time in which almost everyone’s work is feeling insecure, the precarious nature of that kind of life perhaps looks less appealing than ever.

So why has Keith Weed (pictured, top) – the former Unilever marketing supremo now living the portfolio life as a WPP board director, charity non-exec and angel investor – decided to back Limitless, a company aiming to bring the gig economy to customer experience in major companies?

His arguments, though already well-grounded, have been given a surprising boost by one of the indirect consequences of the coronavirus pandemic: the surge in online shopping. Speaking to Campaign on a call with Roger Beadle, co-founder and chief executive of Limitless, Weed said: “The biggest impact this is going to have is [it will lead consumers] to expect brands to have a bigger ecommerce platform.”

The crucial behaviour change caused by the lockdown was to prompt huge numbers of people to try online shopping for the first time, Weed said: “We’ve basically probably got the next 15 years of people [set to come] online [to] have come online in the last 15 days.” In other words, the size of the consumer base has, almost overnight, reached a level observers wouldn’t have expected for another 15 years.

“That’s the reason you’re seeing all these problems in online grocery,” Weed said, adding that two of the giants of ecommerce, Amazon and eBay, were also experiencing problems due to overwhelming demand.

That, in turn, leads to a far greater demand for online customer service – which is where Limitless comes in. The company offers freelance customer service workers, dubbed “experts”, who work on a gig basis, meaning clients can bring them on for exactly the amount of work they need doing, helping them deal with sudden peaks in demand.

“Post-this [pandemic], the amount of online shopping will go down, but the amount of people who have now had an online experience will never go back,” Weed said. “So there will be a step change in the amount of ecommerce used – brands are going to have to think about how they engage with that.”

Beadle founded Limitless with Megan Neale in 2016, after a 25-year career in the contact centre industry, including founding and selling a successful company. Blue-chip clients of Limitless have included Microsoft and Unilever, where Weed first became involved as a customer.

One of Beadle’s deep regrets about the call-centre business was its low rates of pay. “The reason we founded the company [Limitless] is we were ashamed our industry pays people the minimum wage the world over,” he said. “It’s virtually impossible to break that economic model in the world of call centres, so we wanted to find a model that could strip a lot of the wasted cost away and pay people more.”

As a result, it pledges that its experts earn an amount equivalent to considerably above the living wage (the UK real living wage is currently £9.30 an hour or £10.75 in London). Beadle and Weed both set Limitless apart from the likes of Uber by stressing that it is not meant to provide full-time work to any of its experts – and that the work can be done during gaps in the day, such as while a parent is waiting to pick up their kids.

The idea is that the experts are worth paying more than call-centre employees, because unlike full-timers, they are chosen for their use and knowledge of the brand in question. Brands are able to invite their own customers (or even employees) to become experts – something that Beadle calls the “special sauce” of the operation, or perhaps one sauce of several.

“It’s not just a free for all,” Beadle said. “The very people that are helping you have native knowledge, use of the brands and the products, and are fans and advocates. You get a much richer, empathetic level of service.” The experts are provided with training and resources to support their existing knowledge.

There’s also another factor Beadle credited with ensuring high standards, and it’s a classic hit of the gig economy: a marketplace dynamic. “You’re only on the platform if you have a great rating and are helping consumers,” he said. With luck, the fact that both the brand and the consumer need to be happy with the expert’s work will protect this system from being manipulated.

There’s an obvious overlap between Limitless’ experts and the style of influencers offered by another company Weed has invested in, Tribe. It’s an interesting direction for a man who, while at Unilever, took a stand against bad practices in the influencer industry. “One thing I’ve learned is that authenticity is everything” when it comes to influencers, he said.

“The [influencers] that are less interesting are the big names that have clearly been bought to talk about brands,” Weed explained. “Consumers are very forgiving around stars in ads talking about brands – the difference [with influencers] is that people are looking for something more personal and real.” People were “genuinely interested in other people’s opinions”, he said, but “after that, what’s important” when it comes to influencers is: “Are these people real users of the products and are they really knowledgeable?”

On the broader impact on brands of the coronavirus crisis, Weed said: “I believe and hope we’ll see more brands thinking about society, and the roles of serving society, than we had before. Already, a lot of brands have had to rethink what sort of brand they are in a moment of crisis. Post-this, most brands will say we’ve got to think about a multi-stakeholder approach, how we influence the environment and society, and not just think about our P&L.”

And what role is Limitless trying to play in society? “We’re trying to think about how work is done in the future,” Weed said, echoing wording used by Beadle. “The exercise the world is going through right now in working remotely will change the way people think about how they work. We need to think through new models around how people are going to work to ensure brands don’t find themselves becoming irrelevant and left behind.”

The argument that great change is coming to the way we work is unanswerable. Whether or not Beadle and Weed have the right answers, they seem to be asking the right questions.

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