The larger labor force had asignificant portion of independent workers long before phone-appdisruptors became household names. (Photo: Shutterstock)

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America's labor force is unequivocally shifting to more of thegig economy.

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Or at least that's what could be reasonably inferred from theemergence of gig platforms such as Uber, Lyft, andTaskRabbit, and the countless headlines in the trade and mainstreammedia that suggest as much.

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But the reality is that the larger labor force had a significantportion of independent workers long before phone-app disruptorsbecame household names, says Alison Shelton, a senior officer onthe retirement savings team at Pew Charitable Trusts.

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Figure 1: Participation in aworkplace retirement plan (Image: Pew)

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In fact, "Uber et al" comprise only 1 to 2 percent of theindependent workforce, which the Bureau of Labor Statistics saysincludes 15.5 million workers. And the percentageof independent workers has dropped slightly since 2005, from 10.7percent to 10.1 percent of the total workforce, according to BLSdata released in 2018.

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Nevertheless, little is known about how pre-retirees among thoseindependent contractors are positioned for retirement, which is whyPew set out to better understand the savings situation ofindependent workers between ages 50 to 65.

"Solo" self-employed versus independent workers in firms of 2or more

Shelton and her team culled data from the University ofMichigan's Health and Retirement Study, parsing data on theself-employed nearing retirement into two groups: the "solo"self-employed, and those independents who workedin firms with two or more people.

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The savings of those two groups were compared to data on thosein traditional full-time employment situations.

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Figure 2: Assets in definedcontribution retirement plans. (Image: Pew CharitableTrusts)

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The unsurprising bottom line: The self-employed participated inworkplace retirement plans at considerably lower rates than thosein traditional jobs.

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Of the solo independent sample, only 13 percent participate in aworkplace plan. Of independents that work in multi-person firms,29.9 percent save in a workplace plan. Of the sample in traditionalemployment arrangements, 72.2 percent participate in a workplaceplan.

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To paint a deeper picture, Pew then looked to see if spouses inthose households had access to a workplace retirement plan.

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Of the self-employed in single firms that don't have coverage,58.2 percent had spouses that did have access to aworkplace retirement plan.

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Of the self-employed in multi-person firms without access to aplan, 42.5 percent had spouses who were covered.

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For those in traditional employment situations without coverage,55.9 percent had spouses who were covered.

Independent contractors in multi-person firms have highestaverage savings

For some in the so-called gig economy, independence has notmeant sacrificing retirement savings.

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When independents in multi-person firms do save, their averageaccount balance was $384,737, compared to $122,800 for those intraditional jobs, and $61,735 for solo independent contractors.

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Independent contractors in multi-person firms, who are moreoften highly educated doctors, lawyers, and engineers, had thehighest median household income, at $150,000.

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Median household income for the solo independent contractors was$86,804. For those in traditional jobs, median household income was$90,012.

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Nick Thornton

Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.