Informal Work and Official Employment Statistics: What’s Missing? 
Official employment statistics, including those based on the Current Population Survey (CPS), may not fully capture informal, or “gig,” work, and if such work is captured, it might be mischaracterized as payroll employment. In either case, the statistics would distort the level of employment. Using eight consecutive waves of their Survey of Informal Work Participation (SIWP) spanning 2015 through 2022, this paper’s authors investigate gig work participation in the United States and its implications for the measurement of employment.
Key Findings
- The SIWP data suggest that the CPS employment rates were consistently understated from 2015 through 2022 due to the misclassification of gig workers as either unemployed or not in the labor force.
- Under conservative estimates, the employment-to-population ratio would have been 0.25 to 1.1 percentage points higher over the 2015–2022 period, and it would have been as much as 5.1 percentage points higher under more generous estimates.
- In 2019 and 2021, aggregate hours of work in the CPS data would have been 1.4 percent and 1.1 percent higher, respectively, if informal work hours had been fully captured.
- Informal hours represented a relatively stable share of CPS-observed work hours from 2015 through 2022; that is, informal work hours increased with total work hours.
- Gig workers who are classified in the CPS as either unemployed or not in the labor force despite having engaged in gig work recently tend to be older, in many cases describing themselves as retired, and have an elevated disability rate. They are also more likely to report engaging in gig work as a hobby rather than as a means of earning extra income.
Implications
The authors’ findings might suggest that the labor market was tighter than previously thought in recent years. However, the characteristics and preferences of gig workers in the SIWP suggest that much gig work represents labor market slack and therefore that the full employment benchmark for the observed period should be revised upward. Given the high rates of participation that the authors observe in their survey, failing to monitor gig work activity likely results in an incomplete picture of the labor market.
Abstract
Using eight consecutive waves of the Survey of Informal Work Participation (SIWP) spanning 2015 through 2022, we investigate informal “gig” work participation in the United States—broadly defined to include online and offline activities—and its implications for the measurement of employment. Our results suggest that employment rates among US household heads were consistently understated in the Current Population Survey (CPS). Under conservative estimates, we find that the employment-to-population ratio would have been 0.25 to 1.1 percentage points higher over the 2015–2022 period and as much as 5.1 percentage points higher under more generous estimates. Along the intensive margin, we find evidence that a significant number of informal work hours are missing from official employment surveys, partly because employed individuals do not fully report their informal hours. Comparing informal workers who are classified as employed by the CPS with those who are arguably misclassified as nonemployed, we find that the latter are, on average, older, less educated, and less likely to cite income as a motivation for gig work, and an elevated share are disabled. The data also indicate that certain types of income-earning activities, such as renting and selling, are less likely to be perceived as “work.” These results suggest ways to improve official surveys to better capture those employed in gig work and obtain a fuller picture of the labor market.