A new report from the Bank of America Institute suggests that the gig economy is losing its appeal to workers who are now more interested in returning to traditional jobs. According to the report, one reason behind this shift is the recent wage growth in industries such as restaurants and retail stores, making conventional jobs more attractive. The report highlights how the gig economy isn't as popular as it was during the pandemic, when people turned to delivery apps to get their food, leading to a surge in demand for gig workers. Some workers doing gig work on social commerce marketplace platforms may have also lost interest due to weaker demand for goods.
The report points out that gig workers who also hold traditional jobs are typically in sectors like restaurants and retail, which have seen especially high wage growth. This could be the reason why higher wage growth is attracting some people back into the traditional labor market. At the same time, younger people between 16 and 24 are seeing a very notable increase in their labor force participation and a steep drop in their gig activities.
While the share of gig workers doing delivery or social commerce has dropped, the analysis shows that the share for ride-hailing has mainly been trending upward. However, the report suggests that the gig economy may have peaked, given that the trend has been going on for more than a few months. The share of Bank of America customers who had gig income is still elevated versus where it started in 2019, early 2020. According to the report, the share has dropped from the 3.3% peak in March 2022 to 2.7% in February 2023, after rising threefold during the pandemic.
Overall, the report indicates that gig workers may be rotating into the traditional job market because of attractive wage growth in these sectors. The decline in monthly income from gig platforms could come from a mix of lower pay rates per hour or gig and workers taking on fewer gigs. The trend may stick around for the near future, but the report suggests that the gig economy may have reached its peak.