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Earning income on the side is a large and growing slice of American life

December 25, 2019
Opinion

By Jonathan Rothwell

Even after a long economic expansion, America is still the land of the side hustle.

New evidence suggests that nontraditional work arrangements with multiple income sources are more common — involving around a quarter of workers — and more complex than commonly thought.

About one-third of people with several jobs say they do them out of financial necessity. At least two comparable nations, Canada and France, are not experiencing these trends, perhaps because of a stronger social safety net and less inequality.

On the other hand, some legislators and presidential candidates who have taken aim at regulating the gig economy may want to consider another data point: About half of those with multiple jobs do it to earn extra money (48%) or for some other reason that suggests it is their preference.

Because measurements depend on how a job is defined, it’s not easy for policymakers to get a clear portrait of the American workforce. The stereotype is a person performing one job for one employer. But that describes only about two-thirds of workers. Increasingly, people are drawing income from self-employment, as independent contractors, freelancers, drivers, among other gigs — on top of what their employer pays them. And many are in multiple jobs, whether as an employee or not.

Altogether in 2017, 17% of tax filers submitted a form to the IRS indicating receipt of self-employment income, the highest share since data became available in 1957 and up substantially from 10% in 1981.

While these nontraditional relationships raise concerns about job quality and access to benefits, the evidence suggests such jobs are in many cases supplementing traditional employment, not replacing it. Just over half of these self-employed workers (55%) also receive a W-2 from an employer, a share that has not changed since 2000. The vast majority of tax filers (92%) continue to receive W-2 income as employees, and that also has held steady in recent years, according to research from IRS economists.

The IRS data on the level and trend in self-employment contradicts information from the Bureau of Labor Statistics. The bureau has shown a slight decline in the share of workers who are self-employed and estimates it at now around 10%. The discrepancy arises because both the labor statistics bureau’s Current Population Survey and the Census Bureau’s American Community Survey identify people as self-employed based only on the job in which they spend the most time working.

Jonathan Rothwell, the principal economist at Gallup, is the author of “A Republic of Equals: A Manifesto for a Just Society.” This piece originally appeared in the New York Times.

Source:

SF Gate