The “Gig Economy” May Be Over-Hyped in DC

The rise of on-demand companies like Uber, Postmates, and TaskRabbit—in which individual freelancers scramble for one-off jobs to string together their income—has given rise to talk about the emergence of a so-called “gig economy.” The thinking goes that people are increasingly making their livings from freelance work and self-employment ventures, rather than holding down a traditional full-time job. But findings published today by the office of DC’s chief financial officer present a possible counterpoint to the idea, indicating that “gig” work may be less pronounced than advertised—especially in DC.

The most compelling find comes from the share of the self-employed population over age 16. The American Community Survey found that the share of DC residents who identify as self-employed is actually declining, from nearly four percent in 2004 to 2.4 percent in 2014. That compares to the national average of 3.5 percent last year, which fell about one percentage point from a decade earlier.

Chart via Office of the Chief Financial Officer.

But tax data, on the other hand, reveal that the number of DC taxpayers paying self-employment taxes has risen from 35,000 in 2006 to nearly 50,000 in 2014—a 36 percent increase. Most of the increase occurred before 2010, during a recession, and a much of it was the direct result of an increasingly generous Earned Income Tax Credit offered to low-income and single-parent households.

The overall tax data do indicate a rise in “gigs,” but tax filings aren’t the best way to draw conclusive insights about self-employment, because paying self-employment taxes is different from being altogether self-employed—you can have a day job and moonlight gig here and there.

Another possibility is that the data are not capturing the “gig economy” in the District at all, because it may comprise workers who don’t live here, like Uber drivers who live in Maryland or Virginia.

While there are certainly more gigs available, there’s little evidence that the “gig economy”—at least the one that’s been popularized—has resulted in any widespread change in the way we work in DC.

Philip Garrity