Income from the Platform Economy in US – Increased 47-fold over three years

Americans experience tremendous income volatility, and that volatility is on the rise. Income volatility matters because it is hard to manage. The typical household faces a shortfall in the nancial bu er necessary to weather this volatility. Moreover, the decline in real wages since 2009 for all income groups except the top 5th percentile means that life is harder to a ord in general, but even more so when earnings dip below average. Rapidly growing online platforms, such as Uber and Airbnb, have created a new marketplace for work by unbundling a job into discrete tasks and directly connecting individual sellers with consumers. These exible, highly accessible opportunities to work have the potential to help people bu er against income and expense shocks. The “Online Platform Economy” offers fewer worker protections than traditional work arrangements, however, which has led some to claim that the Online Platform Economy represents a fundamental shift in the nature of work.

This study is the first of its kind to shed light on the Online Platform Economy using financial transactions, and provides an important foundation for the many policy and economic debates related to what some have termed the “future of work.” Over the three years of our study (October 2012 to September 2015), 4.2 percent of adults, an estimated 10.3 million people—more than the total population of New York City—earned income on the platform economy. This number increased 47-fold over the three years. We distinguish between labor platforms and capital platforms and nd that, although labor platforms grew more rapidly than capital platforms, participation on capital platforms was more than 60 percent higher than participation on labor platforms. Although the sheer number of people participating grew rapidly, platform earnings remained a secondary source of income, and reliance on platform earnings did not increase for individuals over time.

The Online Platform Economy adds an important new element to existing labor markets, however. Simply put, landing a platform job is easier and quicker. Individuals can, and do, generate additional income on labor platforms in a timely fashion when they experience a dip in regular earnings. This is a potentially far better option to mitigate or weather volatility, if the alternatives are to constrain spending or take on additional credit. Moreover, this option meets a target need. Participation in labor platforms is highest precisely among those who experience the highest levels of income volatility—the young, the poor, and individuals living in the West.

Income Volatility Among U.S. Individuals

The vast majority of people aged 18–24, people in the bottom income quintile, and people living in the West experienced on average more than a 30 percent month-to-month change in total income.

Capture d’écran 2016-02-20 à 08.48.57Median income individuals experienced nearly $500 in labor income uctuations across months, with spikes in earnings larger but less frequent than dips.

Capture d’écran 2016-02-20 à 08.49.34

Most of the month-to- month volatility in take- home pay (86 percent) came from variation in pay within distinct jobs.

Almost four in 10 individuals Four experienced a job transition in a given year, contributing 14 percent of the month-to-month volatility in labor income.

Capture d’écran 2016-02-20 à 08.49.41

The Online Platform Economy

Although 1 percent of adults earned income from the Online Platform Economy in a given month, more than 4 percent participated over the three-year period.

Capture d’écran 2016-02-20 à 08.58.15

The Online Platform Economy was a secondary source of income, and participants did not increase their reliance on platform earnings over time.

Capture d’écran 2016-02-20 à 08.59.51

Earnings from labor platforms o set dips in non-platform income, but earnings from capital platforms supplemented non-platform income.

Capture d’écran 2016-02-20 à 09.00.00

Chosen excerpts by Job Market Monitor. Read the whole story at  Paychecks, Paydays, and the Online Platform Economy – Big Data on Income Volatility



  1. Pingback: Gig Labor Market – The Case of Uber | Job Market Monitor - August 22, 2017

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