The ADP study, “Illuminating the Shadow Workforce: Insights into the Gig Workforce in Businesses”, confirms what many believe—gig work is growing. From 2010 to 2019, the percent of gig workers grew by 15 percent with short-term W-2 and 1099-M workers contributing equally to the trend.
The study drew upon anonymized payroll data of 18 million workers from 75,000 companies, along with 16,800 direct survey responses from traditional employees and gig workers, and 21 C-level executive interviews. It found one out of six workers is a gig employee and in 40 percent of the organizations that figure was one in four workers. The total was divided evenly between 1099-M contractors and short-term W-2 employees.
Perhaps the most surprising finding was that most 1099-M workers say having health insurance is not critical to their choices with 74 percent saying they would continue to work in this environment even if they lost current health insurance, although 50 percent of 1099-M workers under 35 years old say they would prefer to be W-2 employees. The study also found a trend in which with couples one partner will take a lower paying job with health insurance while the other one works in a higher-paying gig job without coverage.
Not only do many individuals choose gig work, they are not overwhelmingly young. Thirty percent of 1099-M gig workers are aged 55 or older, sometimes following this path as supplemental income to retirement savings.
The two groups include 1099-M contractors are often hired for their skillset on a project basis, and are skilled, tenured workers, who tend to be older, highly educated and choose to work on what they enjoy. Short-term W-2 employees are often younger, less educated, with lower income, and typically work on a seasonal or on-call hire basis.
Generally, 1099-M employees in more of 14 industry categories surveyed earned two to three times the monthly amount of short-term W-2 employees and more than traditional employee in eight categories. Exceptions were information technology where traditional employees earned more than four times as much as 1099-M workers; finance where traditional employees earned 74 percent more; and retail where traditional workers were paid 20 percent more than the 1099-Ms. In education, the monthly pay for 1099-M and short-term W-2 employees was essentially the same while traditional employees earned more than 2.5 times the 1099-M workers. In manufacturing, 1099M-workers earned 8.2 percent more than traditional workers. Traditional and 1099-M construction workers made virtually the same