The Gig Economy is Weakening the Monetary Policy Transmission Mechanism

Apollo Chief Economist

During the pandemic, more people earned income doing TikToks, selling things online, and, more recently, driving Uber, and the growth of the gig economy over the past decade has been very significant. 

Data from the Fed shows that 27% of US adults earned some money from gigs, and 8% were regular gig workers, in that they spent 20 or more hours in the prior month on gigs. The Fed survey also shows that gig work frequently supplements earnings from a traditional job, nearly half of gig workers also have full-time jobs, while 22% have part-time jobs.

This gradual shift towards more and more gig workers is complicating the Fed’s efforts at cooling down the economy. The more flexibility workers have with alternative work arrangements, the harder it is for the Fed to slow down aggregate demand because having a job is no longer a binary decision, which is a problem when the FOMC is trying to quickly slow down growth and income in the economy.

Source: Fed: Economic Well-Being of U.S. Households. Apollo Chief Economist, Note: Among all adults. Respondents could select multiple answers.

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