word collage about gig jobsTwenty percent of gig workers are over 55, and for independentcontractors, it's even higher, at 30 percent. (Photo:Shutterstock)

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The gig economy continues to grow, both for highly skilled,mostly older independent contractors and younger, less-skilledseasonal workers, according to the report, "Illuminating the Shadow Workforce: Insights intothe Gig Workforce in Businesses," by the ADP ResearchInstitute.

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For both types, one in six workers at any given company is agig worker–and for about 40 percent ofcompanies, that ratio increases to one in four workers, the studyfound. Use of gig work is growing: from 2010 to 2019, the share ofgig workers at companies has increased from 14.2 percent to 16.4percent, a 2.2 percentage point increase, or 15 percent. Bothgroups of gig workers, short-term W-2 employees as well as1099-MISC independent contractors, contributed equally in thisgrowth.

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Related: Side gigs make up growing share of Americans' worklives

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"Every indication is that gig work will only continue to grow,and with an already tight talent market, businesses will need tofully understand the dynamics of the contingent workforce — tooptimize talent management, workforce strategy and the company'sbottom line," the authors write.

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The two types of gig workers have distinctly differentdemographic profiles: 1099-MISC independent contractors aretypically older, highly educated and more likely to have a higherincome, while short-term W-2 employees are typically younger, lesseducated and have a lower income.

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"Companies often leverage 1099-MISC contractors for theirspecialized skills on a project basis — for periods when regularstaff cannot manage the workload without training or onshort-notice, or for commission-based work," the authors write."Short-term W-2 employees…are typically seasonal or on-call hires.The disparity of income indicates the two groups are performingtasks that require very different skill sets."

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Twenty percent of gig workers are over 55, and for independentcontractors, it's even higher, at 30 percent, according to thestudy. Nearly half of older gig workers have retired from anothercareer.

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"This group does not appear to be working out of financialnecessity alone – 'Doing what I enjoy' is of primary importance,which is far more important than to younger workers," the authorswrite. "1099-MISC workers in this age group are unlikely to believethey have interesting alternatives to contract work — onlyone-third of those 55+ say they can find a traditional W-2 job asgood as their current 1099-MISC work, compared to two-thirds of1099-MISC workers under 35, who say they can."

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Most of the gig workers under the age of 34 actually considerthemselves "traditional employees," reflecting an expansion of thatterm for millennials and Gen Zers.

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"For 1099-MISC workers in this age group, they are more likelyto be married and have children under 18, and more likely to behighly educated — with one in four possessing an advanced degree,"the authors write. "Interestingly, while more than 50 percent of1099-MISC workers under 35 say they would prefer to be a W-2employee, the prospect of health insurance does not appear tochange their job behavior. In fact, 74 percent say they would keepworking as a 1099-MISC worker, even if they lost their currenthealth insurance."

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Other key findings include:

  • More than half of the 1099-M contractors work for the samecompany for 12 consecutive months just like any traditional W-2employee. The average income for employees working for 12consecutive months is similar, regardless of being a 1099-M workeror a traditional W-2 employee.
  • More than half of 1099-MISC contractors are engaged 12 monthswith the same company, while 23 percent of the traditional W-2employees engage with a company for less than 12 months. Theaverage 1099-MISC contractor is paid nine out of 12 months by thesame company, compared to the average W-2 worker who is paid 11 of12 months by their employer. The difference in average monthlyincome is also minimal — with 1099-MISC workers earning only about$330 more.
  • Recreation, construction and business services are the topthree industries utilizing the gig workforce. In nearly allsectors, 1099-MISC workers earn more than the W-2 employees.However, gig workers do not fare as well in the education andinformation sector, which includes media, broadcasting,telecommunications, printing and research-related businesses thatattract many low-paid freelancers.
  • About 90 percent of gig workers have health insurance. For1099-MISC workers specifically, less than one-third purchase theirown individual insurance, and most indicate that health insurancedoes not affect their decision to work as an independentcontractor.

"Anecdotally, employers interviewed believe that many 1099-MISCworkers have made an economic decision with their spouse — whereone spouse works without benefits for higher pay and the otherreceives lower pay with benefits — resulting in a higher totalincome and health benefits for the household," the authorswrite.

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The ADP Research Institute analyzed the anonymous and aggregatedpayroll data of more than 75,000 large companies, and supplementedit with a survey of more than 16,000 workers and interviews with 21company executives.

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Katie Kuehner-Hebert

Katie Kuehner-Hebert is a freelance writer based in Running Springs, Calif. She has more than three decades of journalism experience, with particular expertise in employee benefits and other human resource topics.