Economists have struggled to size up the gig economy, epitomized by companies like Uber and Airbnb, because official data is limited, and it’s hard to track independent contractors across multiple platforms and industries. But a data-dive from the Brookings Institution gives us our best insight yet.
The gig economy seems to be concentrated in large metro areas and to be taking off fastest in big western cities including San Jose, San Francisco, and Los Angeles, according to the new analysis.
Ian Hathaway and Mark Muro looked up Internal Revenue Service figures for “non-employer firms”–businesses with no employees that earn $1,000 or more per year–using the data as a proxy for the growth of workers in this sector over a four-year period. They found that across the U.S. as a whole there were only 2 million more such businesses in 2014 as in 2007 (24 million versus 22 million), but that growth was significant for ground transportation and lodging–Uber, Lyft, and Airbnb–within certain cities.
For example, in San Jose and San Francisco, non-employers in ground transportation grew by 140% between 2012 and 2014. That compares to a decline of more than 30% among payroll employees in the same places, presumably indicating how taxi drivers are becoming Uber drivers. San Francisco, L.A., Austin, San Diego, and Nashville also saw big increases. Four-fifths of the growth was concentrated in the 25 largest U.S. metros.
The numbers were less dramatic for accommodation, but Austin, San Francisco, Portland, New Orleans, and San Jose all saw 37%-plus growth over two years, suggesting that Airbnb may be having an impact in those places.
“Though imperfect, these data, we believe, point in the direction that common sense suggests: The platform economy for rides and rooms is now sizable and growing rapidly in many larger metro areas,” say the authors.