Business & Economy

How the gig economy has grown in Southern California

A car outfitted with the Sidecar, Uber and Lyft identifying symbols.
A car outfitted with the Sidecar, Uber and Lyft identifying symbols.
Flickr user TheTruthAbout/Creative Commons

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Employment in Southern California's so-called "gig economy" – workers who drive for Uber or Lyft, or run errands for the app Task Rabbit, for example – more than doubled between 2012 and 2014.

That's according to new research from the Brookings Institution developed using data from the Census Bureaus' American Community Survey. Researchers at Brookings looked at the number of people employed by traditional payroll jobs and those working independently. They found that the Los Angeles metropolitan area had one of the biggest jumps in independent employment in the country – 136 percent. Nationally, independent employment rose by 48 percent.

The increase was not completely surprising, since companies like Uber, Lyft and Task Rabbit have grown substantially in the years that were studied. Those companies mostly use independent contractors. The biggest gains in gig employment came from the LA metro area (including Long Beach and Anaheim), and the San Francisco and San Jose areas.

"It's fascinating to see Los Angeles and the California coastal (metropolitan areas) again playing their role as early adopters," said Mark Muro, senior fellow and the director of policy at the Metropolitan Policy Program at Brookings.

The research showed that in L.A., stable payroll jobs also grew between 2012 and 2014, albeit only by 13 percent. That led Muro to believe that gig employment had not yet begun to replace traditional jobs in SoCal, but he cautioned it could be challenge in the future.

He said gig employment has already eroded payroll employment in the San Jose area. The research found that gig employment rose 145 percent there, while payroll employment dropped 31 percent. Sacramento saw a 92 percent increase in gig employment and a 22 percent drop in payroll employment over the same time.

That trend is concerning to many economists because gig jobs don’t have the compensation, stability or benefits that a traditional payroll job provides.

A McKinsey & Company survey released this month of 8,000 workers in the gig economy in the United States and European Union found 14 percent of them make their primary living from independent work but would prefer traditional jobs.