Economics: Flex Time

With all the buzz about Uber, TaskRabbit, and others in the so-called gig economy, you’d think there has been a mass exodus from the 9 a.m.-to-5 p.m. milieu. But how prevalent are nontraditional work schedules? And do workers actually like them? In a pair of working papers, Princeton economists Alan Krueger and Alexandre Mas seek answers.

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Alan Krueger

Sameer A. Khan

“Most of our [public policies] are geared toward traditional employment relationships,” says Krueger. “So if there is a growth in the number of freelancers, that is hugely relevant.” Due to lack of funding, however, the federal Bureau of Labor Statistics hasn’t done a survey of alternative work arrangements for a decade.

In “The Rise and Nature of Alternative Work Arrangements in the United States, 1995–2015,” Krueger and Harvard economist Lawrence Katz found that alternative work arrangements are responsible for 94 percent of the total growth in jobs in the U.S. economy over the past decade. During the same time, the share of workers with nontraditional work arrangements, including independent contractors, on-call workers, and workers with part-time and flexible schedules, has risen from 10 to 16 percent of the U.S. workforce. “If growth continues at this rate,” says Krueger, “it will be over 20 percent in another decade.”

The gig economy, comprising workers who use online platforms to take jobs on their own schedules, accounts for a measly 0.5 percent of workers. The majority of nontraditional workers are independent contractors and those working for staffing firms that contract out services. Staffing companies, once known for services such as janitorial and secretarial work, now include higher-income workers such as legal and medical staff. While 80 percent of professional freelancers were happy with the arrangement, workers in firms that provide short-term medical staffing in particular don’t seem happy with their situations, says Krueger.

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Alexandre Mas

Denise Applewhite/Office of Communications

Mas’ study suggests some explanations. “Valuing Alternative Work Arrangements,” written with Harvard’s Amanda Pallais, elaborates on how much temporary workers value their jobs. By posting a job for a call center, they randomly allowed applicants to choose from 9-to-5 office work and alternative options including flexible hours, working from home, and schedules that change weekly at the employer’s discretion. Offering different hourly wages for each, they judged how much workers valued each arrangement by how much of a pay cut they would take.

They were surprised to see that workers mostly chose the traditional schedule, placing little value on flexibility. Though about a quarter of the applicants were willing to take a 10 percent pay cut to get more flexibility, the majority were not willing to take even a 2 percent cut for it, according to the study. “Despite all the talk about the new economy, the traditional job is what most people want,” says Mas.

There were a few exceptions — the average worker valued working from home, willing to take an 8 percent pay cut. And overall, women with children under 13 were slightly more interested in alternative arrangements, presumably because of child-care coordination. Most of the resistance to flexible schedules seemed to result from an aversion to working nights and weekends, says Mas. The average worker was willing to take a 20 percent pay cut to avoid that possibility.

As the number of alternative work arrangements increases, says Mas, it’s worth asking how governmental policies can adapt — for example, by requiring higher pay not just for traditional overtime, but also for working outside of 9 to 5. Other policies might encourage working from home.