In the fourth quarter of 2015, the Federal Reserve Board conducted a nationally representative survey of adults 18 and older to track online and offline income-generating activities as well as their employment status during the six months prior to the surveys. The Enterprising and Informal Work Activity (EIWA) survey explores why individuals undertake alternative work arrangements by asking questions that capture participant motives and attitudes towards informal offline and online paid work activities.
The results from the EIWA survey confirm that there exists a noteworthy segment (36 percent) of the adult U.S. population that participates in offline and online informal paid work activities (we refer to these respondents as: E&I qualified survey respondents). Survey results indicate a higher percentage of women (56%) than men (44%) participate in the informal paid workspace. The E&I qualified survey respondents were concentrated in the South and West and over 60 percent had attended college (30% had some college and 31% had a Bachelor’s degree or higher). The findings indicate that the main reason sixty-five percent of the E&I qualified survey respondents are engaged in online and offline informal paid work is to earn extra money for themselves either as their main income source (26%) or as a means to supplement current work and/or retirement income (29%) and to help their extended families (10%).
One of the main takeaways from our study is that to describe the full array of paid work activities and fee-for-tasks adult workers undertake requires comprehensive measurement approaches that traditional surveys may not fully capture. The ongoing debate among researchers about what is driving the change in the work ecosystem remains difficult to disentangle. These changes may include: (1) technological change with its rapidly evolving digital infrastructure, (2) a skilled yet aging labor force, (3) a muted and fragile recovery from the Great Recession, and/or (4) the rise of globalization (Katz and Krueger, 2016; Kenny and Zysman, 2016 and 2015; Cusumano, 2015; Karmarkar, 2015; Friedman, 2014 and Dwyer, 2013). To capture the impact of such varied changes, the EIWA survey queried E&I qualified respondents about how informal online and offline paid work had helped them offset negative effects of unemployment spells, loss of benefits, loss of working hours (scheduling variability), and frozen wages in the six months prior to the survey. Twenty-four percent of E&I qualified survey respondents reported that informal paid work activities had helped them navigate the changes “very much” and “somewhat.”
One aspect of the online and offline informal work that appears to provide a promising research agenda analyzes bank account income data by tracking variability in income inflows and outflows for depositors (Farrell and Grieg, 2016) by type of informal paid activity. Splitting the labor platforms (defined as labor services by paid task) and the capital platforms, (defined as selling and renting idle assets such as clothing, household items, renting cars and extra bedrooms, etc.) into separate components makes it possible to distinguish active income (labor based) versus passive income (asset based). Both platforms produce income that may supplement traditional work but may also be the major share of monthly income. Such a distinction allows us to ascertain the “remote” and passive mode of selling an item on eBay versus an active mode of being present and interacting with customers at a flea market while selling items.
Another area that requires thoughtful study is the digital literacy requirement that lowers the barriers to entry in new digital infrastructures while minimizing transactions costs (such as managing work schedules and tasks) and at the same time, maximizing convenience and time-at-task. As technology driven work modes become more commonplace, the divide between urban and rural/isolated locales as well as class/income inequality considerations may grow. Differences in digital channels and infrastructure affordability, access and quality variation across geographical regions require further study and policy prescriptions.
Finally, future research requires a deeper understanding of the structural factors affecting work ecosystems that have emerged from the aftermath of the Great Recession. For example, living arrangements (boomerang and sandwich generations) may be related to participation in online and offline informal paid activities. Studies on the differences in online or offline paid work activities for men and women as well as different age-cohorts would provide a richer understanding of life-cycle wage and income adaptation along with family care-giving responsibilities. Research considering differences in the levels of enterprising and informal work activity frequency and density by geographical regions and industry sectors would provide a blueprint to local economic sustainability.
The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.
References
Cusumano, M. A., (2015): “How traditional firms must compete in the sharing economy,” Communications of the ACM 58.1 32–34. Available at: http://m.cacm.acm.org/magazines/2015/1/181613-how-traditional-firms-must-compete-in-the-sharing-economy/abstract
Dwyer, R. E., (2013): “The care economy? Gender, economic restructuring, and job polarization in the US labor market,” American Sociological Review, 78(3), 390–416.
Farrell, D. and F.Greig, (February 2016): “Paychecks, Paydays and the Online Platform Economy,” JPMorgan Chase & Co. Institute, Available at: https://www.jpmorganchase.com/corporate/institute/report-paychecks-paydays-and-the-online-platform-economy.htm
Friedman, G., (2014): “Workers without employers: shadow corporations and the rise of the gig economy. Review of Keynesian Economics,” (2), 171–188.
Karmarkar, U., (2015): “OM Forum — The Service and Information Economy: Research Opportunities,” Manufacturing & Service Operations Management, 17(2), 136–141. Available at: http://pubsonline.informs.org/action/doSearch?AllField=karmarkar+OM+Forum;
Katz, L. F., and A. B. Krueger, (March 2016): “The Rise and Nature of Alternative Work Arrangements in the United States, 1995–2015,” Princeton University Working Paper. Available at: https://krueger.princeton.edu/sites/default/files/akrueger/files/katz_krueger_cws_-_march_29_20165.pdf
Kenny, M. and J. Zysman, (Spring 2016): “The Rise of the Platform Economy,” Issues in Science and Technology, Available at: http://issues.org/32-3/the-rise-of-the-platform-economy/
Kenny, M. and J. Zysman, (June, 2015): “Choosing a Future in the Platform Economy: The Implications and Consequences of Digital Platforms” Kauffman Foundation New Entrepreneurial Growth Conference, Amelia Island, FL Discussion Paper
Robles, Barbara, and Marysol McGee (2016). “Exploring Online and Offline Informal Work: Findings from the Enterprising and Informal Work Activities (EIWA) Survey,” Finance and Economics Discussion Series 2016–089. Washington: Board of Governors of the Federal Reserve System, https://doi.org/10.17016/FEDS.2016.089.
This article was originally published by the New York Fed on Medium.
The views expressed in this article are those of the contributing authors and do not necessarily reflect the position of the New York Fed or the Federal Reserve System.
