We've spoken more than once in these pages about the danger posed by automation to the traditional job market, most recently earlier this month. Now the Telegraph notes that more and more people in the UK are classified - or classifying themselves - as 'self-employed', so much so that they're expected to overtake employment in the public sector before long.
For most of the industrial era, there were really only two big blocs in the workforce: public [i.e. government] and private sector employees. There were a few self-employed people – a few company directors, some builders and the odd taxi driver. But the numbers were not huge.
Since the crash of 2008, that has all started to change dramatically. If you go back all the way to 1975, only 8.7pc of the workforce [in the UK] worked for themselves. By 2008, that had risen to about 12pc. Ever since, it has started to accelerate rapidly, growing to close on 16pc of the workforce now. The total grew as much in seven years as it did in the three decades before that. But here is the really interesting point: The self-employed may soon overtake the public sector ... It could happen by the end of this year, or perhaps next. At the very least, it looks inevitable that it will have happened before the end of the decade.
Indeed, the rate at which the gap is closing may well start to accelerate. The “sharing” economy, pioneered by the likes of Uber and Airbnb, is opening up vast new opportunities for working for yourself; so is the spread of broadband, and well-funded start-ups – all those “unicorns”, the billion-plus dollar start-ups – love to take on lots of freelancers and don’t object to paying them pretty well. At first the rise in self-employment could be dismissed as largely the result of the recession of 2008/9. Lots of laid-off workers were “freelancing” for a while as they looked for a new permanent job. But the labour market is incredibly buoyant, with jobs being created in record numbers. That tells us that most of them are deliberately choosing self-employment.
Meanwhile, little by little, but admittedly not fast enough, the public sector is getting smaller.
. . .
The rise of the “gig economy” will prove to be a powerful social trend, both in the UK and in most of the developed work. It shows no sign of slowing down – and it is going to impact the economy and the political system far more than most people yet realise.
There's more at the link.
I don't know whether there are any comparable statistical studies of the US workforce. We read a great deal about the seemingly vast numbers 'not in the labor force', as CNS News reported earlier this month.
The number of Americans not in the labor force last month totaled 94,103,000 ... In December, according to the Labor Department's Bureau of Labor Statistics, the nation’s civilian noninstitutional population, consisting of all people 16 or older who were not in the military or an institution, reached 251,936,000. Of those, 157,833,000 participated in the labor force by either holding a job or actively seeking one.
. . .
Ahead of this month's unemployment numbers, the Labor Department released an article examining why people who are not in the labor force are not working.
It found that in 2014, 87.4 million people 16 years and older neither worked nor looked for work at any time during that year.
Of this group, 38.5 million people reported retirement as the main reason for not working. About 16.3 million people were ill or had a disability, and 16.0 million were attending school. Another 13.5 million people cited home responsibilities as the main reason for not working in 2014, and 3.1 million individuals gave “other reasons.”
Again, more at the link.
One wonders how many of those 95-million-odd people 'not in the labor force' were being 'economical with the truth' and simply not reporting their self-employed status and/or self-employment-derived income. Is this why the IRS is constantly seeking more information from potential employers, sales outlets, etc. about ways in which individuals might be making money without declaring it as income? I know eBay sellers have come under greatly increased scrutiny, and transactions using services such as PayPal and Western Union are under the microscope too. However, it's more difficult to do that in the 'black economy', where cash is king. I know of several building contractors, lawn and yard maintenance operators, etc. who have no business premises at all. They operate over the phone and out of pickup trucks and trailers, arriving to do a job, accepting only cash in payment, and heading off to the next job as soon as they finish yours. I daresay few of them pay tax on all of their income. Considering the perennial and monumental waste of money by our government, I can't pretend to be too upset at the thought.
(This is probably what's behind some of the calls to do away with cash altogether, forcing all transactions into electronic form through one or more bank accounts. If every transaction can be traced, the 'black economy' would be strangled. As far as I'm concerned, long live cash! We don't need an even bigger Big Brother, thank you very much!)