Gig economy takes off in Nashville, Brookings report says

The gig economy is taking off in metropolitan areas nationwide, and Nashville is at the forefront, according to new research from the Brookings Institution.

Nashville is among the U.S. cities in which freelance activity in the ground transportation industry doubled between 2012 and 2014. San Jose and San Francisco had the highest growth, with Los Angeles, Austin, San Diego and Nashville in the next tier of cities.

The gig economy, driven by companies including Uber, Lyft, Postmates and others, allows workers to pick up jobs according to their chosen hours. They are contract workers, connected to customers often through mobile apps.

“This is a fast-growing, new way to organize the world of work, and it has really big implications,” said Mark Muro, a senior fellow and policy director at the Brookings Institution. “Nashville looks like one of the early adopters, and I don't see any limit yet to the growth. What we are seeing is that the earliest adopters are growing the fastest."

The Brookings report tracked the growth of gig workers through U.S. Census Bureau data related to “non-employer firms” which tracks mostly self-employed workers. There were 24 million non-employer firms in 2014, up from 15 million in 1997 and 22 million in 2007.

In 2014, non-employer firm growth rate in ridesharing was 34 percent, compared with 4 percent for payroll employment in the same sector. Between 2010 and 2014, the annualized growth rate was 69 percent for non-employer firm growth in ridesharing, higher than the 17 percent growth of the industry.

Muro emphasized the data only captures the early phases of the gig economy. In Nashville, for example, ridesharing companies Uber and Lyft did not emerge until late 2013. Given the city’s draw for young people and a growing business community, the gig economy has flourished since 2014, the last year data is available.

“You are having huge growth in millennial workers, millennial migrants coming to the city,” Muro said. “They like living in cities, they don’t care so much about cars and they just really relate to Uber and Lyft, for instance, or the sharing economy in Airbnb.”

Working side jobs while trying to break into the music business has long been a Nashville cliché. The gig economy allows those and other workers to find more flexibility through ridesharing, food delivery and other apps than they had in past decades.

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Lyft and Uber have faced resistance in several metropolitan areas, and the Nashville taxi industry was opposed to their presence in the local market. The city was receptive to the companies, passing an ordinance that validated their businesses. Months later, the Tennessee General Assembly passed legislation that standardized regulation of the companies statewide, a move cheered by the ride-hailing companies. That Lyft decided to build its second office in Nashville is also significant, Muro said.

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For all of the flexibility the jobs offer, Muro acknowledges that building an income exclusively through the gig economy has its drawbacks. Those driving cars or renting out their house for earnings often don’t have access to 401k or health insurance benefits that employees enjoy.

“There is a real issue there,” Muro said. “As a country, states and cities, we are going to have to figure out whether there ought to be some kind of social provision."

The Brookings report also found that the ride-hailing companies and Airbnb do not yet appear to be eroding the workforce at mainstay businesses in the same sector. As of 2014, growth continued among hotel workers and taxi drivers.

“For now, this is mostly serving unmet demand or creating new demand,” Muro said. “I think it's inevitable though there will be a cannibalization of some jobs and replacement of some payroll jobs with these gig arrangements.”

The data also doesn’t take into account the proliferation of apps that go beyond ridesharing and homesharing. In Nashville, apps for grocery delivery, restaurant delivery, home repairs, fuel delivery, salon services and others have joined the marketplace in recent years, indicating further growth in the workforce niche.

“We are still at the shallow end of the pool on this particular kind of dynamic,” Muro said. “I don’t think we are going to see Nashville slow down for a while."

Reach Jamie McGee at 615-259-8071 and on Twitter @JamieMcGee_.