The number of workers joining the gig economy has slowed dramatically, says study
Growth in the number of workers joining the gig economy has slowed and wages for these jobs have declined in the last two years, according to a new study from the JPMorgan Chase Institute.
Slowing growth is happening both at companies that let people sell or lease assets — like eBay and Airbnb — as well as ones that connect workers with part-time jobs — like Uber, Lyft or TaskRabbit — the study found. For the average worker, dwindling paychecks are the new reality.
"More and more people are coming in but the earnings levels are not growing. It just raises these questions about whether this is really a sustainable marketplace for people," said Laura Greig, director of consumer research at the institute.
The study looked at deposits made into the checking accounts of more than 240,000 anonymized customers who made money from online platforms between October 2012 and June 2016. Its findings reinforced those of a report released in February.
In 2014, monthly participation in online labor platforms was growing by more than 300 percent year over year. In June 2016, it grew by just 103 percent on an annualized basis, the study found.
For most of 2014, growth in participation on other online platforms — those that let people making money by renting or selling things — was more than 100 percent year over year, but flatlined starting in the middle of 2015, said Greig.
Overall, in June, less than 1 percent of the customers studied earned money through any sort of online platform company.
The study also found huge turnover in this part of the economy: 1 in 6 participants is new every month, on average, and more than half of the people who sign up quit within a year.
"There's a ton of churn," said Greig.
By comparison, the median length of employment in a traditional job was more than four years in January 2016, according to the Bureau of Labor Statistics. Lower levels of attrition may be attributable to things like benefits and career development opportunities associated with traditional jobs, the study noted.
People getting work on these platforms are also getting less money. Average monthly earnings for workers on labor platforms have decreased 6 percent since June 2014. This coincided with cuts by some companies, as they dropped prices to compete for customers and passed along some of those losses to workers. It may also reflect the fact that, on average, workers clocked fewer hours.
Earnings varied greatly from city to city, the study found. For example, in June, the average labor platform worker at the top end in New York was $2,447 per month, while in Miami the average monthly worker made just $585 per month.
At the same time, fewer new participants are signing up. New workers' earnings dropped from 29 percent in July 2014 to 16 percent in June 2016. New people renting or selling assets dropped from 59 percent to 16 percent over the same period.
As the overall job market has improved, the pool of people likely to use online platforms to make money has narrowed, the study found. Unemployed people use these platforms less than employed people, and are more likely to stick at it for over a year.