US jobs data may be miscounting millions of 'gig' workers, research
suggests
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[November 18, 2023] By
Howard Schneider
BOSTON (Reuters) - Millions of "gig" workers may get missed every month
in the U.S. government's employment report, a discrepancy with
implications for how Federal Reserve officials size up the job market
and any associated inflation risks.
Research prepared for a Boston Federal Reserve labor market conference
found that whether driving for Uber to make ends meet or taking
piecework jobs in retirement, casual contract workers sometimes don't
consider themselves "employed" or even a part of the labor force.
As a result, they answer government survey questions in a way that may
produce a significant undercount of those working, economists Anat
Bracha, an associate professor at the Hebrew University Business School
in Jerusalem, and senior Boston Fed economist Mary A. Burke concluded in
a research paper to be presented at the conference on Friday.
The number could be just a few hundred thousand under the most
constrained estimates or as many as 13 million, involving a swing of
perhaps 5 percentage points in the share of the adult population that is
working at least part-time, a figure the U.S. central bank watches
closely.
![](http://archives.lincolndailynews.com/2019/Sep/05/images/ads/current/stclara_lda_SPONSOR_090519.png)
Though that indicates the labor market at any time may be "tighter" than
thought, the researchers said they felt it means the economy actually
has more room to increase work and production without generating
inflation - a case for the Fed to give the job market more room to run.
Particularly in the years before the coronavirus pandemic "inflation was
not accelerating ... despite the substantial amount of hidden informal
work that we document," Bracha and Burke wrote. As a result, "the
benchmark for full employment could simply be adjusted upward."
The research involved reexamining the detailed responses to a New York
Fed survey of "informal work" from 2015 through 2022.
In comparing parts of that questionnaire covering work obtained via
online platforms or contract jobs with another section structured more
like the Labor Department's monthly survey of employment status, they
found the responses often didn't track. That left potentially millions
slipping through a statistical crack.
It is a significant data gap for economists who, over the last decade,
have debated, rehashed, challenged and revised the longstanding idea
that inflation is often driven by low unemployment and the rising wages
and spending that follow from it.
The jobless rate, as Bracha and Burke noted, continued falling
throughout the 2010s without higher inflation, a fact that prompted the
Fed to rethink its approach to monetary policy and not assume that
inflation would rise once the unemployment rate got too low. Lately,
inflation has been declining without a dramatic rise in the unemployment
rate.
![](http://archives.lincolndailynews.com/2023/Nov/18/images/ads/current/charrons_bch_2022.png)
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![](../images/111823PIX/busine65.jpg)
A driver helps a passenger into an Uber car on 6th Avenue in New
York City, New York, U.S., July 27, 2018. REUTERS/Mike Segar/File
Photo
![](http://archives.lincolndailynews.com/2015/May/02/images/ads/current/guzzardo_lda022609.png)
GREATER POTENTIAL
U.S. central bank officials, significantly including Fed Chair
Jerome Powell, still see a connection between the jobless rate and
inflation and feel there will need to be increased labor market
"slack" for inflation to remain under control.
But how much slack?
As of early 2013, the bulk of Fed officials thought the "longer-run"
unemployment rate, a proxy for the level of joblessness consistent
with the central bank's 2% inflation target, was between 5.0% and
6.0%. In projections issued in September, Fed officials saw it
between 3.5% and 4.3%, a dramatic shift.
The pandemic has kept that issue alive as the Fed tries to assess
whether the U.S. is likely to remain in a perpetual labor shortage,
absent some dramatic change in immigration policy, or enter an era
where work from home, new automation techniques and other job market
changes lead to more, and more productive, workers than anticipated.
After concern that the pandemic might permanently constrain women
from working, for example, the overall number of women working
surpassed the pre-pandemic peak of 74.9 million in January, and has
grown another 1 million since. The participation rate for
25-to-54-year-old women hit a record 77% this year.
Researchers at the Boston conference say women might contribute even
more to the nation's labor supply with stronger family and childcare
policies.
Other research looked at how job training and policies towards
employing those with a criminal record might help.
Bracha and Burke said gig workers might also have more to offer.
Their research found many gig workers want additional hours of
formal employment, suggesting more untapped labor supply.
"Our results indicate that potential hours - as well as potential
GDP - were probably higher in recent years compared with official
employment estimates," they wrote.
![](http://archives.lincolndailynews.com/2023/Nov/18/images/ads/current/burtonview_sda_FFARM_2023.png)
Boston Fed President Susan Collins, in opening remarks to the
two-day conference, said getting estimates of employment right were
central to the Fed's ability to meet its dual mandate of stable
inflation while maximizing employment.
If labor supply is higher than thought or likely to expand as the
job market tightens, "then higher levels of economic activity in
such times may not generate additional price pressures requiring
tighter monetary policy," Collins said. "And the higher levels of
activity and participation can benefit those brought into the labor
market, contributing to a vibrant economy that works for all."
(Reporting by Howard Schneider; Editing by Dan Burns and Paul Simao)
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