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December 11, 2015 at 11:28 AM
(Bloomberg View) — There are a lot of names for it: the “sharing economy,” the “gig economy” and the “on-demand economy” seem to be the three most popular. But the most precise description of the new labor relationships being enabled by digital technology may actually be, in the U.S. at least, the “1099 economy.”
The 1099-MISC is the form that businesses, nonprofits and government agencies have to fill out when they pay someone $600 or more a year in nonemployee compensation. As the Internal Revenue Service instructs:
Include fees, commissions, prizes and awards for services performed as a nonemployee, other forms of compensation for services performed for your trade or business by an individual who is not your employee, and fish purchases for cash.
There are actually two whole paragraphs about fish purchases in the 1099-MISC instructions (1). According to the IRS:
“Fish” means all fish and other forms of aquatic life. “Cash” means U.S. and foreign coin and currency and a cashier’s check, bank draft, traveler’s check, or money order.
But that’s probably not what people are talking about when they talk about the 1099 economy. They mainly mean people who get app-development assignments via Upwork, dogsitting jobs via DogVacay, car passengers via Uber or consulting work via the Business Talent Group — to name just a few of these new intermediaries. Although there is a company that wants to be the Uber of fishing guides…
Signs of the purported explosion of such work have been hard to find in the standard employment data compiled by the Bureau of Labor Statistics. According to BLS numbers, there has been no rise in self-employment or in the number of people working multiple jobs.
A much-cited April estimate by the Government Accountability Office put the share of U.S. workers in “contingent” work arrangements at 40.4 percent but, as I have written again and again and again, that accounting:
1. Used an expansive definition of contingent work that included all part-time workers.
2. Relied on a survey conducted in 2010, when part-time work was still near its cyclical high after an especially deep recession.
3. Did not seem to be indicative of any big secular shift to contingent work. Surveys from both before and after 2010 show that the percentage has been relatively stable for decades.
Still, if we’re talking about the 1099 economy, maybe we ought to be looking at the 1099s. All of that BLS and GAO data are based on surveys in which interviewers ask a sample of Americans about their work. As Eli Dourado and Christopher Koopman of the Mercatus Center at George Mason University write in a new report:
A weakness in using survey data to explore the changing nature of work is that survey answers can change along with respondents’ understanding of the nature of work. Do full-time Uber drivers understand themselves to be “self-employed” or employed by Uber? It is plausible that they might answer either way. Is being an Airbnb host “working a second job?” It is unlikely that the hosts themselves see it that way.
So Dourado and Koopman asked the IRS for data on the number of 1099-MISCs and W-2s (the compensation disclosure form for employees) issued since 1994. Here’s what they found out:
