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Gig work significantly misclassified in labor data, Fed report suggests

With the “gig economy” driving an increase in nonstandard and informal work arrangements in recent years, federal labor data may fail to accurately capture the contributions of a growing segment of workers, according to a recent report from the Federal Reserve Bank of Boston.

A ‘significant share’ not counted

About 37 percent of people over the age of 21 participate in “paid informal work,” according to the report, which uses data from 2015.

While not all gig work goes unaccounted for, a “significant share of those who engage in informal work” are classified by the Bureau of Labor Statistics as not being in the labor force, the report says.

The study finds that if all gig workers were classified as employed, the employment-to-population ratio would be 2.5 percentage points higher. Similarly, the labor force participation rate would be just more than 2 points higher.

The total amount of work performed by people the BLS classifies as part-time employed is actually equal to 403,174 full-time job equivalents.

Skewed projections

The upshot of all this? The quality of BLS wage and price projections may be compromised, according to the report.

“Such adjustments could have important implications for forecasts of wage and price inflation,” the report says, “because these forecasts depend in part on estimates of labor market slack.”

Full-time security vs. part-time wages

Among gig laborers who lost a job or experienced other economic loss during the Great Recession, 40 percent reported that they had taken up gig work out of economic necessity, and 8.5 percent said that they would like to have a formal job.

However, about 70 percent of gig work hours offer wages that are the same as or better than the wage the same worker earns for formal work, according to the report.

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