The Reality behind Obama's Jobs Miracle (or Why Trump Won)

December 23, 2016

In Blog News

Almost all the US jobs created since 2005 are temporary

The conventional full-time job is disappearing.

Survey research conducted by economists Lawrence Katz of Harvard University and Alan Krueger at Princeton University shows that from 2005 to 2015, the proportion of Americans workers engaged in what they refer to as “alternative work” jumped from 10.7% to 15.8%. Alternative work is characterized by being temporary or unsteady—such as work as an independent contractor or through a temporary help agency.

“We find that 94% of net job growth in the past decade was in the alternative work category,” said Krueger. “And over 60% was due to the [the rise] of independent contractors, freelancers and contract company workers.” In other words, nearly all of the 10 million jobs created between 2005 and 2015 were not traditional nine-to-five employment.

Krueger, a former chairman of the White House Council of Economic Advisers, was surprised by the finding. The survey’s original goal was to quantify the size of the gig economy (0.5% and growing). The researchers were caught off guard by the tremendous growth of alternative work. There had been almost no change from 1995 to 2005.

Katz and Krueger found that each of the common types of alternative work increased from 2005 to 2015—with the largest changes in the number of independent contractors and workers provided by contract firms, such as janitors that work full-time at a particular office, but are paid by a janitorial services firm.

The decline of conventional full-time work has impacted every demographic. Whether this change is good or bad depends on what kinds of jobs people want. “Workers seeking full-time, steady work have lost,” said Krueger. “While many of those who value flexibility and have a spouse with a steady job have probably gained.”

For graphic designers and lawyers who hate going to an office, new technology and Obamacare has made it more appealing to become an independent contractor. But for those seeking a steady administrative assistant office job, the market is grim.

Women experienced an unusually large increase in the share of alternative work. They were three percentage points less likely than men to engage in alternative work in 2005, but two percentage points more likely in 2015. This is in large part because the sectors that saw the largest move towards alternative work arrangements—like education and medicine—have a high proportion of women.

The American work environment is rapidly changing. For better or worse, the days of the conventional full-time job may be numbered.

The Rise and Nature of Alternative Work Arrangements in the United States, 1995-2015