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Are We All Going to End Up Self- Employed? William M. Rodgers III Rutgers, The State University of New Jersey November 2015 1
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What Do We Mean by Self-Employment? U.S. Bureau of Labor Statistics (Over 135m in the labor force) – Contingent Workforce (1.8 to 4.1% of employment) No expectation that job will last ; view that job is temporary Self employment is one aspect – Alternative Work Arrangements Independent Contractors (10.3m (7.0% of employed) in 2005) – (Share Economy Workers are here) On-Call Workers Temporary Help Agency Workers Workers provided by contract firms General Accountability Office (GAO) – 5 to 33 percent of the U.S. labor force – “Core” Contingent Workers - 7.9% Source: http://www.bls.gov/news.release/conemp.nr0.htm 2
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Has Contingent Work Increased? What’s the Future? GAO Reports: – Suggest little change since 2005. U.S. BLS Forecasts: – Today, approximately 6.0 percent of Americans are self- employed. – 9.3 million Americans will work as self-employed in 2022, for an increase of 527,700 from 2012. – The increase corresponds to a drop from 6.3 percent of the workforce in 2002 to 5.8 percent of the workforce in 2022. http://www.bls.gov/news.release/ecopro.t03.htm 3
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Sources of Contingent Employment’s Growth Employer Behavior – ICT – Cost Cutting – Internal reorganization Institutions – Erosion in Enforcement & “Safety Nets” – Union decline Worker Preferences – Flexibility is associated with less job stability – “Free Agency” The Macroeconomy – Cyclical: “Great Recession”, “Pot Hole Recovery”, Jobless Recoveries – Structural: 3-4 decades of growing income inequality 4
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Concerns about the Contingent Economy Measurement: – How many? Are they employees? – 10 yrs. since BLS Contingent Worker Survey – Budget Proposal to conduct Survey in odd years Compensation: – Lower Wages Non payment, Late payment and Reduced payment – Fewer Benefits Health, Disability, and Unemployment Insurance Retirement Savings plans Maternity and paternity benefits Worker’s compensation for job related injuries Paid time off and Vacation Less Security: – Job instability and unfavorable employment arrangements 5
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Implications of the Concerns Contingent relationships may have long-term adverse outcomes For example, suppose contingent workers do not: – Late payment, reduced payment by client – Receive work-provided health or retirement benefits – Qualify for workers’ compensation or Unemployment Insurance Workers might have lower job satisfaction and turn to needs-based programs Medicaid Supplemental Nutritional Assistance Program Costs Shifting: employers/employees to public assistance programs Who pays? Ideally or hopefully, the taxpayer!!!! 6
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7 NJ Voices Guest Blogger/For NJ.com. The Star-Ledger on August 19, 2012 at 8:15 AM The umbrella will further recede. Poor climate for investing in social safety nets. The number on Uncle Sam’s hat will increase.
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Prediction: Growth in the “a la carte” society America’s “a la carte” society will grow – More Americans will face greater risks from shocks Natural Disasters Unemployment – Weaker ability to purchase once provided “public” goods Quality Education Safe Communities Health If we don’t invest and update our social safety nets Continued erosion in job quality and growth in contingent work 8
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U.S. labor share will continue its downward trend. 9 Source: Bureau of Labor Statistics. Labor share is the share of output accounted for by employees' compensation. Start of Great Recession Start of Recovery
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The growth in the share of household income going to the top 20% that started in the 1980s will continue. (Cumulative Growth by Quintile) 10 Notes: Author’s calculations of U.S. Census Bureau data.
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HOW DO WE STEM THE TIDE? 11
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Contingent Economy Policy Framework Policy can’t be uniform – No single “reality” in the contingent worker experience – Part-time vs. Independent Contractor What’s our focus? – Short Job Duration Disposable or unstable job Low and lumpy income streams – Erosion in flexibility and employer-provided benefits Unpredictable shifts or hours Lack of access to employer-provided benefits Who creates and oversees: Government or new entity? 12
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APPENDIX CHARTS 13
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Pillars of the Framework Stability and flexibility is good for workers, business and society Portable vehicle for worker protections and benefits – Independent – Flexible and pro-rated – Portable – Universal – Supportive of employer innovation in safety net development Questions for Conversation – Who should contribute financially (and how much)? – What type of organization(s) should administer these benefits and protections? – Type of legislative or regulatory action? – How do we promote experimentation and flexibility? 14
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Session Questions Is there evidence of an increase in self- employment in recent years? Are careers becoming shorter? Are they driven by technology or by institutional factors? Is one job over a lifetime really over? What are the policy consequences to the new work arrangements? 15
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Broad Questions Will the sharing economy and crowdsourcing lead to an increased share of freelance workers? What are the working conditions of crowdsourced workers? Do we need to adapt our definitions of labor to fit these new challenges? Is their a blurring of the border between work and leisure in the shared economy? 16
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