Gig workers do not have the bargaining power of payroll employees, so they may also account for slowing wage growth
The Federal Reserve Bank of Dallas — one of 12 regional reserve banks that make up the centralized Fed — found that although unemployment is low, wage growth has not increased. One reason could be the rise of gig workers: The report found that the number of workers who pay self-employment taxes has risen steadily over the last 35 years.
The increase in independent contractors may skew unemployment figures because firms can hire contractors without adding them to payroll. That way, independent contractors are not counted as"unemployed," despite the fact they don't work consistent schedules.
Another reason why headline unemployment may not account for gig workers is due to the use of survey data. Contractors may mistakenly report their status as"employed" when asked in surveys, the study says, despite not being on payroll or working consistent schedules. That's why the Federal Reserve Bank of Dallas instead measured the number of gig workers by those paying self-employment taxes.
At the same time, the increase in gig workers may account for"subdued" wage growth, because independent contractors have less bargaining power:"New technologies that encourage contingent or just-in-time labor lower the bargaining power of workers," the report states."This, in turn, lowers the natural rate of unemployment and real equilibrium wages."
The fact that worker wage growth has not increased at the pace of the economy is a cause for concern, according to a recent report from
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