July was another solid jobs month for the U.S. The economy added another 157,000 jobs and the unemployment rate fell slightly to 3.9%.
As the chart below from the Washington Post shows, U.S. employment has grown consistently since 2013. And if this chart went back further, it would show 94 straight months of job gains.
Economic growth has led to a jobs recovery for even the hardest hit segment of workers, those with less than a high school education.
The chart below, from the New York Times article Workers Hardest Hit by Recession Are Joining in Recovery, shows this group's unemployment rate is down to 5.1%
But wage growth continues to be stagnant after adjusting for inflation.
The chart below, from the Los Angeles Times article Job growth remains solid, but workers are still waiting for a real jump in wages, shows real wage growth (adjusted for inflation) has hovered near zero since 2017.
Key quote from the article:
... while average hourly earnings are growing at an annual rate of 2.7%, the consumer price index for the 12 months that ended June 30 was up 2.9%. That means the purchasing power of Americans went down during that period.
These trends have several major impacts on independent work:
Independent workers who would prefer a traditional job can get one. Simply put, the strong job market is pulling independent workers who didn't choose or don't like independent work back to traditional jobs.
This is especially true for lower earning, less educated independent workers who, on average, are less satisfied with independent work than higher earning independents. Until recently this segment has not benefited as much from the economic recovery as others. But tight labor markets are leading to more opportunities for workers in this segment to secure traditional employment.
This is excellent news for these workers, but challenging to gig companies and marketplaces who look to less educated workers to provide labor supply.
Continued wage stagnation means more people are becoming part-time and occasional independent workers. With real wage growth near zero more people are turning to part-time gig work to make ends meet.
The strong economy makes independent work more attractive for those with in-demand skills. Due to worker shortages and the "war for talent", the strong economy means more opportunities for independent workers with in-demand skills. This is leading to more highly skilled workers going independent.
All of these impacts and changes are covered in more detail in the 2018 MBO Partners State of Independence report, which we work with MBO Partners on.
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