Harvard economist: All net U.S. job growth since 2005 has been in contracting gigs

In July, I learned from Harvard economist Lawrence Katz that official measurements of workers in alternative labor arrangements, like anyone driving for Uber, were probably being heavily undercounted.

This week, Katz told me his research with Princeton economist Alan Krueger (who previously surveyed Uber drivers on behalf of Uber) has revealed that all net employment growth in the U.S. economy since 2005 appears to have occurred in alternative work arrangements.

The pair defined “alternative” as any type of temporary, gig, or contract work, including Uber drivers. Overall employment for all jobs, as measured by the Census, increased by 9.1 million (6.5%) from 140.4 million in February 2005 to 149.4 million in November 2015. As measured by Katz and Krueger, the share of workers in alternative work arrangements climbed from 10.1% in 2005 to 15.8% in 2015. This implies that the number of workers employed in alternative arrangements increased by 9.4 million (66.5%) from 14.2 million in February 2005 to 23.6 million in November 2015.

“Thus, employment in traditional jobs (standard employment arrangements) actually slightly declined by 0.4 million (0.3%) from 126.2 million in February 2005 to 125.8 million in November 2015,” they write. “The implied conclusion is that all U.S. net employment growth (for main jobs) has occurred in nonstandard work arrangement over the last decade. As of late 2015, we had not yet quite fully recovered from the huge loss of traditional jobs from the Great Recession.”

Here’s a chart illustrating their measurements.

Katz said examples of the fastest-growing class of alt-worker (in orange above), contracted workers, would include janitors, cafeteria workers, and security guards, who could work directly for a private company but who are increasingly contracted out to outside firms. He also said increasing numbers of IT and even transportation occupations are being farmed out in this way.

As for online “gig” work, like Uber driving, it’s been growing at a tremendous clip in recent years. In fact, if you worked in the online gig economy, you almost certainly worked for Uber: according to their data, Uber drivers now represent up to two-thirds of all such work. But online gig worker numbers remain “swamped” by “offline” workers who find side gigs through more traditional means, they found.

Alternative work may provide more flexible arrangements for many to enhance work-life balance, the pair say. But there are real worries as well: Growth in alternative work arrangements can put downward pressure on wages and labor standards. The question, they write, is how to extend the social compact between workers and companies to nonstandard employment settings.

You can view the complete slide deck of the paper’s main findings here. The actual paper is still in draft form, Katz said.

Rob covers business, economics and the environment for Fusion. He previously worked at Business Insider. He grew up in Chicago.