What the 'Gig Economy' Looks Like in Cities

"The rise of the internet and digital technology has disrupted industry after industry, from the way we shop, bank, and consume media to the way we make restaurant reservations, hail rides, and find places to stay when we travel. But now it appears that digital technologies are disrupting and reshaping our cities and metropolitan areas, too.

A big part of this has been the ongoing transformation of traditional jobs into essentially freelance “gigs.” Companies like Uber, Lyft and Airbnb, among others, have created online marketplaces to transform traditional jobs, like driving taxis or working in hotels, into independent work. The “gig economy” refers to the growing share of employment and the economy that is made up of this independent work, where apps and digital technology essentially match freelance workers to customers and service providers.

These changes have led to a heated debate on whether the gig economy is a good or bad thing for workers or the economy. The optimistic perspective believes that the gig economy is leading to new forms of work and more efficient service delivery.  The more pessimistic take is that the gig economy is essentially replacing higher-paying, more secure traditional jobs with more contingent and precarious work.

We all have an intuitive sense of these issues, as the gig economy is growing and becoming large. But, up until now, we’ve lacked comparable and systematic data on its true scope and extent.

A new report by Ian Hathaway and Mark Muro of the Brookings Institution’s Metropolitan Policy Program pulls data from the Census bureau on “nonemployer firms,” which tracks the activities of business establishments that make $1,000 a year or more in gross revenues but employ no workers. The report uses that data to estimate both the extent and reach of the gig economy, and the geographic shape it is taking on across America’s 50 largest metro areas. While they are cautious to stress the limitations of these data, their research generates a couple of big takeaways.

The ‘gig economy’ is larger than we think, and growing rapidly

The economy writ large has added nearly 10 million gig-economy firms over the past decade and a half, growing from 15 million non-employer businesses in 1997 to 24 million in 2014, a 60 percent increase. For comparison’s sake, payroll jobs grew from 129 million to 145 million over this same period, an increase of 12.4 percent. Another way of putting it is that today’s gig economy firms are roughly equivalent to roughly 16.6 percent of payroll employment..."