Newswire: 5/29/20
- About 10% of the workforce was employed in a nontraditional work arrangement in 2017, including independent contractors and temp workers. A new report indicates that the nontraditional workforce is dominated by midlife and senior Americans (age 45 and older), and that their earnings and hours vary a lot more than those of traditional workers. (The Hamilton Project)
- NH: Estimates of how many Americans belong to the "nontraditional workforce" vary hugely depending on how you define the term. (See "The Gig Economy is Alive and Growing.") This Brookings study uses a moderately restrictive definition that includes only (1) independent contractors, (2) on-call workers, (3) temp agency workers, and (4) workers provided by a contract firm. Defined this way, nontraditional workers comprise about 10% of America's workforce. That share hasn't changed much over time. And about two-thirds of the total consists of independent contractors. See first chart below.
- On average, the nontraditionals' average hourly wage is slightly lower than the national average. But averages are deceiving. Nontraditional pay varies much more than traditional pay from high end to low end. While some professional contractors get paid at very high hourly rates, most temp workers get paid at very low hourly rates. Nontraditional weekly hours are also much more variable, mostly because few of these workers have much control over when they will be hired and paid.
- The biggest difference, however, is benefits and job security. Almost across the board, nontraditionals are less likely to be covered by health insurance or a retirement plan. And when they do have these benefits, they are likely to be less generous: very high deductibles for an individual health plan, for instance, or spotty contribution rates to personal DC account. Nontraditionals are also less likely to qualify for safety-net programs like Unemployment Insurance. Despite the "gig worker" provisions of the CARES Act, most nontraditionals are still having trouble qualifying for UI benefits during the pandemic lockdown.
- Who belongs to the nontraditional workforce? Men are certainly more likely than women. Otherwise, there really isn't much difference in education or race. Blacks are slightly less likely than whites to be nontraditionals.
- There is, however, a significant difference by age--and it's not in the direction most people would think. Contrary to stereotype, Millennials are actually less likely than older generations to hold nontraditional jobs. Between age 25 and 34, they comprise 23% of traditional jobs and only 17% of nontraditional jobs. Under age 25, the gap is even bigger--13% versus 7%.
- Why? Well, to begin with, Millennials avoid jobs in many "old economy" occupations--in farming, logging, fishing, energy, construction--still dominated by aging independent contractors. More importantly, risk-averse Millennials are avoiding startups (see "Are Millennials Killing the Entrepreneur?"). And they are deliberately transforming professions that used to be proprietorships into salaried careers. Think of doctors (see "Goodbye, Dr. Welby").
- If you want to find the age bracket most likely to be supporting a family on self-employed income, look at Xers in their late 40s and 50s. For most, this has proven to be a difficult life choice. (See "Xers Rely on Gig Work Income" and "What's Making Xer Workers Miserable.") Sure, there are plenty of Millennial gig workers and permatemps. But unlike Xers when they were young adults, few Millennials imagine that this is a lifestyle with a future. When Millennials think about a permanent career, they look for regular hours, security, benefits, and gradual advancement paths--and they are perfectly happy to forego the roller-coaster excitement of free agency to achieve these modest middle-class goals.
