Decoding millennials in the gig economy - Deloitte US · 2020-05-10 · Decoding millennials in the...

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Introduction

A growing body of research points to the growth of the alternative workforce—particularly as it re-lates to many millennials “opting out” of the tradi-tional workforce. A recent 2017 study reports that overall self-employment is likely to triple to 42 million workers by 2020, with millennials leading the way. The study predicts that 42 percent of all

self-employed individuals in the United States are likely to be millennials by 2020.1 As people consider new forms of employment, many organizations are turning toward the growing alternative workforce segment and seeking to hire more workers off their balance sheets as part of a workforce ecosystem.

How well do we understand what millennial al-ternative workers generally look like, do, and want? As more organizations begin to leverage this supply

Decoding millennials in the gig economySix trends to watch in alternative work

By Kelly Monahan, Jeff Schwartz, and Tiffany Schleeter

of talent, what story does the data tell about mil-lennials working in the alternative workforce? In this article, we examine over a decade of data and research collected on millennials entering and exit-ing the alternative workforce to identify potentially notable or statistically significant trends over the years. The data appears to point to six emerging and notable trends that should be on the radar of any leader seeking to leverage the millennial alternative workforce:1. The proportion of women in the millennial alter-

native workforce is shrinking, possibly because more millennial women than men are going back to school.

2. The proportion of household income millennials receive from alternative work is increasing.

3. Most alternative millennial workers make less than their traditional full-time employed counterparts.

4. Millennial alternative workers are often sup-ported by someone else in their household.

5. Alternative millennial workers are more like-ly to find jobs in the arts, maintenance, and administrative professions.

6. Alternative millennial workers appear to be more likely to break the rules, have emotional agility, and work hard.

METHODOLOGY AND ALTERNATIVE WORKFORCE SAMPLEIn 1997, the US Bureau of Labor Statistics (BLS) began conducting interviews with individuals living in the United States who were born between 1980 and 1984 (as of 2013, their average age was 31). The study continued to gather detailed information on these individuals through 17 subsequent rounds. We examined data from these interviews beginning in 2003, when the subjects were between ages 19 and 23 (around the time they were most likely to enter the workforce) and ending in 2015, the last round for which data has been released.

The data includes information regarding a person’s household and geography; parents, family, and childhood; dating, marriage, and children; health, pregnancy, and fertility; crime and substance use; education, training, and achievement; employment, income, and assets; and attitudes and expectations. In total, more than 70,000 data points have been collected.

The most powerful aspect of this information is its longitudinal nature. In the first round, 8,984 millennial individuals were interviewed, and nearly 80 percent of the sample (7,103 people) were also interviewed in round 17.

For purposes of this article, we defined the millennial alternative worker as someone who received a portion of their income reported on US Form 1099 at the end of the year. These workers could have participated in the gig economy or may have started their own small businesses. Approximately 9 percent of the sample reported alternative work income, with alternative workers representing between 8.1 and 10.8 percent of the sample in various years.

Decoding millennials in the gig economy: Six trends to watch in alternative work

2

The decreasing percentage of women

in the millennial alternative workforce

may be because millennial women

are more likely than millennial men to pursue secondary

education.


Trend 1: The proportion of women in the millennial alternative workforce is shrinking, possibly because more millennial women than men are going back to school.

The BLS data shows that there is a slightly higher proportion of men than women in the mil-lennial alternative workforce, with the difference in gender representation widening over time. In 2003, the millennial alternative workforce consisted of 52 percent men and 48 percent women; by 2015, that proportion had shifted to 60 percent men and only 40 percent women.

The decreasing percentage of women in the mil-lennial alternative workforce may be because mil-lennial women are more likely than millennial men to pursue secondary education, with some leaving the workforce (alternative or traditional) entirely to do so. Among the general millennial population, more millennial women are entering colleges than millennial men, and the women are completing their degrees faster than men.2 This trend could also explain our finding that among the millennial

alternative workforce, women are more likely to hold a bachelor’s degree than men (figure 1).

With nearly 55 percent of the millennial alterna-tive workforce in our study having yet to complete any postsecondary education—a similar proportion as in the overall millennial population—it is evident that, as some millennials make trade-off decisions related to college debt, many are forgoing the com-pletion of additional education after high school and jumping into the labor market. However, when one looks at the trend line (see figure 2), it is also clear that many millennials are completing second-ary education at their own pace, with millennial alternative workers doing so slightly later than the general millennial population.

Deloitte Insights | deloitte.com/insightsSource: Deloitte analysis from NLYS97 data.

Figure 1. Millennial alternative worker education completion by gender

Associate’sdegree

Bachelor’sdegree

Bachelor’sdegree

Associate’s degree

No degreeGraduate degree

Graduate degreeNo degree

61%

45%13%

34%

8%

8%

21%

11%

3

While alternative millennial workforce participation may be slightly decreasing,

the amount of overall income received from alternative

work is increasing.



Figure 2. Millennials go back to school

0%

10%

20%

30%

40%

50%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

General millennial population Alternative millennial population

The gender difference in the likelihood of pur-suing a college degree, however, is unlikely to be the only reason why there are fewer women than men in the millennial alternative workforce. Some studies indicate that women may be facing higher barriers to entry into the alternative workforce related to a lack of access to networks, financial capital, and underrepresentation at incubators.3 As more millennials seek out alternative forms of work, ensuring there is broad access to financial capital and networks could be key to ensuring a di-verse alternative workforce.

Trend 2: The proportion of individual income millennials receive from alternative work is increasing.

Alternative workforce participation increased sharply in 2007 and 2008, before dipping slightly in later years. One reason for this may be that the recession resulted in millennials facing high barri-ers to entry into the regular job market; nearly 14 percent of the millennial generational cohort was

unemployed during 2007–2008.4 Another expla-nation could be the declining number of women millennials reporting income from alternative work. While alternative millennial workforce par-ticipation may be slightly decreasing, the amount of overall income received from alternative work is increasing, meaning more participants seem to be going all in when they do participate in alternative worker arrangements (see figure 3).

4

Organizational leaders seeking high quality work from the alternative workforce

may be better positioned to recruit

contract workers based on fair market pay.



Figure 3. Percentage of individual income received from alternative work

2003

20072008

2013

2015

72%

72%

64%

63%

57%

Trend 3: Most alternative millennial workers make less than their traditional full-time employed counterparts.

In general, the alternative millennial worker has consistently lagged behind peers in regards to indi-vidual income earned (figure 4). There may, howev-er, be a silver lining: In 2015, the millennial alterna-

tive worker reported a big jump in earnings moving from median income of $30,720 in 2013 to $38,000 (see figure 4). While the general millennial popula-tion also showed a big earnings jump during this pe-riod, in percentage terms, it was not as significant as that of those who reported alternative income.

Organizational leaders seeking high quality work from the alternative workforce may be better positioned to recruit contract workers based on fair market pay. A recent study by the Bureau of Labor Statistics found that organizations can save up to 30 percent of labor costs by opting for a contract work-er over a full-time one.5 It may be no surprise then that another study found 43 percent of all alterna-tive workers citing insufficient pay as their reason for leaving the gig economy.6

Too often it seems the alternative workforce is seen as a way for organizations to cut costs, rather than create greater value and leverage within their operations. No wonder then that many organiza-tions feel they do not get the same quality of work output from the alternative workforce. Not only does seeing alternative work as a cost-cutting exer-cise potentially diminish the quality and value work-ers offer back to the organization, it can also make these workers feel at a disadvantage if they are not

5

With age, the general millennial population has trended toward greater household

contributions than the alternative worker.



Figure 4. Median individual income reported by the alternative worker

2003 2004 2005 2006 2007 2008 2010 2011 2013 2015$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000


paid fair market wages, as they are not receiving the typical longer-term incentives, such as health ben-efits, and retirement savings programs that tradi-tional full-time employees receive. We suggest that organizational leaders who leverage the alternative workforce as a creative way to capture untapped value would be better positioned against competi-tors who leverage alternative workers as a way to cut costs. Doing so will require creative ways to engage the alternative worker in the organization’s culture and ensuring fair market pay.7

Trend 4: Millennial gig workers are often supported by someone else in their household.

As many millennial alternative workers reported lower earnings compared to the general millennial population, it is no surprise that many are likely to have a household member helping offset daily ex-penses. Figure 5 shows the percentage of income millennials in the sample contribute to their over-all household. For example, the data shows that at

21, millennials in both the general and alternative workforce were contributing approximately 20 per-cent of the overall household earnings. With age, the general millennial population has trended to-ward greater household contributions than the al-ternative worker. In the most recent data collection, at 33, the general millennial population contributed approximately 57 percent to the overall household earnings, while the alternative worker lagged be-hind at 51 percent.

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Figure 5. Millennial general and alternative worker income as a percentage of household total earnings


0%

10%

20%

30%

40%

50%

60%

Age 28Age 27

Age 21

Age 33


Figure 6. Millennial alternative worker household status

Lives with nonnuclear family member (i.e.,

roommate)

Lives with spouseor partner

Lives with parents Lives alone (or with children, no adults)


7%10%

62%65%

11%8%

20%17%


This trend caused us to dig deeper to determine who most alternative workers were likely to live with (figure 6). Data shows that the alternative worker is less likely than the traditional full-time employee to live alone or with a parent. Rather, most of the

millennial gig workers live with a spouse or opt for other living arrangements such as a roommate. Most alternative workers are likely to seek support as they build their businesses and may rely on oth-ers in their household for doing so.

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Trend 5: Alternative millennial workers are more likely to find jobs in the arts, maintenance, and administrative professions.

Analyzing the data, we found that most alter-native workers were finding their work in three distinct categories, in the arts, maintenance, and construction fields as well as administrative roles, and across two sectors, professional services and manufacturing (see figure 7). Likewise, alternative work is declining in administrative support roles, such as receptionists, mail carriers, data entry, and tellers. This is likely explained by the increased use of technology in such areas. The finance, insurance, and real estate industries also saw decreased mil-lennial alternative workers in roles such as bank-ing, insurance, and real estate agents. Alternative

workers are likely to continue to hone their craft and become specialized in their chosen field, be it in the arts, manufacturing, or professional services. Organizations should seek to further develop and provide project-based opportunities for these work-ers to gain greater expertise in their chosen skill.

Trend 6: Millennial gig workers appear more likely to break the rules, have emotional agility, and work hard.

The last trend we explored within the data was possible distinctive personality test traits that emerged as more statistically different than the gen-eral millennial population. These traits were derived from the NLYS97 database through the personality questionnaires collected throughout the years that measured millennials’ attitudes, expectations, and


Note: These are a selected representation of the occupations that are coded to these boarder categories reported in the database. To access the entire occupational list, please visit: https://www.nlsinfo.org/content/cohorts/nlsy97/topical-guide/employment/industry-occupation-tables.

Figure 7. Occupations that alternative workers seek to find employment

General operations • management v

Property managers •HR managers •

IT managers •Construction •

managers v

Administration inprofessional services

• Lawn service• Housekeeping• Installers &

repairers• Electricians• Construction

laborers

Maintenancein construction& manufacturing

• Editors• Writers• PR specialists• Photographers• Designers• Artists

Arts inprofessionalservices

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beliefs. Within our analyses we found that millen-nial gig workers are more likely to score higher on the emotional agility, hard worker, and breaking the rules questions than traditional full-time millen-nial workers.8 For example, millennial gig workers are more likely than the general millennial popu-lation to rate themselves as dependable and self-disciplined, extraverted and enthusiastic, and being open to new experiences. They were also more likely to score higher on questions such as “I do not intend to follow every little rule.” As a result, entrepreneur-ial jobs may have appeared attractive to the millen-nial alternative worker.

Conclusion

The alternative workforce is likely to only con-tinue to grow each year as organizations seek to ex-pand the reach of their workforce, and individuals, especially millennials, carve out different modes of

working.9 As a result, organizational leaders should look beyond traditional resumes and enterprise em-ployment models to find talent. For example, when considering the alternative workforce, limiting cri-teria to a college degree could overlook talented workers who are specialized in a particular skill, trade, or experience. Another concern for millenni-als may be that of income for alternative workers. As mentioned in previous reports, it may take aligning individuals, organizations, and societies in a com-mon direction to help fulfill the changing needs of the worker and workplace.10 In addition, organiza-tions seeking to not only attract but retrain alterna-tive workers may be wise to take a close look at the fi-nancial and learning and development mechanisms that alternative workers may be actively seeking as they continue to grow and expand their businesses.

To learn more, read our research about extend-ing your organization’s culture beyond your campus and balance sheets.

9

https://www2.deloitte.com/content/dam/insights/us/articles/3965_Beyond-office-walls-and-balance-sheets/DUP_Beyond-office-walls-reprint.pdf



1. Amy Wang, “The number of Americans working for themselves could triple by 2020,” Quartz at Work, February 21, 2018.

2. Wendy Wang and Kim Parker, By the numbers: Gender, race and education, Pew Research Center, August 17, 2011.

3. Susan Coleman and Alicia Robb, “Empowering equality: 5 challenges faced by women entrepreneurs,” Third Way, April 26, 2017.

4. Meghan Foley, “This is what the recession did to millennials,” the Cheat Sheet, May 13, 2015.

5. Karla Walter and Kate Bahn, Raising pay and providing benefits for workers in a disruptive economy, Center for American Progress, October 13, 2017.

6. Kevin Roose, “The hidden anxieties of the on-demand start-up worker,” Splinter, May 20, 2015.

7. For a discussion and framework for engaging the alternative workforce into your company’s culture, see “Beyond office walls and balance sheets: Culture and the alternative workforce,” Deloitte Review issue 21, July 31, 2017.

8. See sidebar Methodology and alternative workforce sample for more information on the NYLS97, and for further explanation on the personality traits variables collected within the study, please visit https://www.nlsinfo.org/content/cohorts/nlsy97/topical-guide/attitudes.

9. Wang, “The number of Americans working for themselves could triple by 2020.”

10. For further discussion on aligning individuals, organizations, and societies, see “Navigating the future of work: Can we point business, workers, and social institutions in the same direction?,” Deloitte Review issue 21, July 31, 2017.

ENDNOTES


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DR. KELLY MONAHAN

Dr. Kelly Monahan, Deloitte Services LP, is a manager and subject matter specialist at Deloitte’s Center for Integrated Research. Her research focuses on the intersections of behavioral economics and talent issues within organizations. Prior to joining Deloitte, Monahan was an HR business partner supporting the CFO of Hartford Funds. She holds her PhD in organizational leadership with an emphasis in human resource development.

JEFF SCHWARTZ

Jeff Schwartz, a principal with Deloitte Consulting LLP, is Deloitte’s global leader for Human Capital Mar-keting, Eminence, and Brand and the US leader for the Future of Work. He is the US leader of the Innova-tion Tech Terminal (ITT), linking the Israeli start-up ecosystem with global clients. Schwartz is an advisor to senior business leaders at global companies, focusing on business transformation, organization, HR, talent, and leadership. He has lived and worked in the United States, Russia, Belgium, Kenya, Nepal, Sri Lanka, and India, and was based in Delhi and Mumbai from 2011 to 2016. He launched Deloitte’s Global Human Capital Trends research in 2011. Schwartz has an MBA from the Yale School of Management and an MPA from Princeton’s Woodrow Wilson School of Public and International Affairs.

TIFFANY SCHLEETER

Tiffany Schleeter, PhD, is a member of the US Data Science team. Schleeter is the principal investigator on the Deloitte Patent Universe project and is best known for statistical advising, data management, and analytical project designing. Schleeter has extensive experience with network theory analysis and quan-titative statistics techniques. Schleeter holds her PhD in statistics from Florida State University.

ABOUT THE AUTHORS


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CONTACTS

Jeff SchwartzPrincipal, Deloitte Consulting LLPUS leader, Future of WorkHuman Capital, Global Leader, Marketing, Eminence, and BrandLeader, Innovation Tech Terminal (ITT) US Israel Innovation Collaboration+ 1 202 257 [email protected]

The authors would like to thank Manu Choubey, Daniel Byler, Anne-Claire Roesch, Junko Kaji, and Ramani Moses for their help in preparing this report.

Deloitte’s Center for Integrated Research focuses on developing fresh perspectives on critical business issues that cut across industry and function, from the rapid change of emerging technologies to the con-sistent factor of human behavior. We uncover deep, rigorously justified insights and look at transforma-tive topics in new ways, delivering new thinking in a variety of formats, such as research articles, short videos, or in-person workshops.

ACKNOWLEDGEMENTS

CENTER FOR INTEGRATED RESEARCH


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