September 24, 2018, (Washington, D.C.) – Today, the JPMorgan Chase Institute produced new research exploring the growth and evolution of the Online Platform Economy. Contrary to speculation that online platforms are replacing traditional employment or represent the "future of work," the data show that many workers use online platforms sporadically, and most of these workers are not generating enough income from platforms to replace traditional employment. Among the most notable findings is a 50 percent decline in driver wages since 2014, despite explosive growth in transportation sector participation.
The report is the most in-depth look to date at the size and growth of the Online Platform Economy, exploring where Americans are earning income and how earnings from platforms figure into family income. The report, "The Online Platform Economy in 2018: Drivers, Workers, Sellers and Lessors" finds that:
Additional key highlights from the latest Index release include:
- The Online Platform Economy has undergone significant transformation over the last five years.
- About 1.6 percent of families in the sample of 39 million account holders generated at least some platform earnings in the first quarter of 2018, up from 0.3 percent in the first quarter of 2013.
- The number of platforms in the Institute’s sample exploded from 42 in its 2016 release to 128 in the current report. Fifty-one of the 86 new platforms were in the non-transport work sector, which offer a growing variety of services including dog walking, home repair, telemedicine, and many others; an additional 23 were in the transport sector, and the remaining 12 were in the selling and leasing sectors. Despite this growth in quantity, those 86 new platforms accounted for just 5.3 percent of total transaction volume in 2017.
- The transportation sector is driving growth in the Online Platform Economy, dwarfing all other sectors and platforms.
- In 2012, the beginning of the report’s sample, selling platforms accounted for 67 percent of transaction volume and transportation platforms accounted for 7.5 percent.
- By March 2018, selling platforms accounted for 17 percent of transaction volume and transportation platforms accounted for 55 percent.
- Few Americans earn enough on platforms to replace traditional employment. Those who have assets available to lease see the greatest revenue potential on the Online Platform Economy.
- Among those who have participated in the Online Platform Economy at any point in a year, average platform earnings represent no more than 20 percent of total observed take home income in any month of that year.
- In the leasing sector, monthly earnings are almost double the other three sectors (selling, transportation and non-labor transport), and the top 10 percent of earners generate over $4500 in revenue per month. As of March 2018, median earnings in all but the leasing sector remain below $1000 per month.
- Average monthly earnings in the transportation sector fell by 53 percent between 2014 and 2018.
- Half of drivers in the first quarter of 2014 were earning $900 or more per month on transportation platforms, but the fraction of drivers earning that much in the first quarter of 2018 was less than 25 percent.
"The Online Platform Economy has become an important part of America’s economy, but it’s not necessarily the future of work, nor is it going to replace traditional employment any time soon," said Diana Farrell, President and CEO of the JPMorgan Chase Institute. "Even as new platforms force change in the way Americans find temporary or contingent work, the Online Platform Economy itself is undergoing radical transformation. This presents opportunities for individuals looking to earn additional income, but also presents unique challenges for policymakers looking to keep up with the pace of technology."
This report builds on the 2016 JPMorgan Chase Institute Online Platform Economy dataset to identify levels and trends in supply-side participation and earnings. The research is built on 38 million payments directed through 128 different online platforms to 2.3 million distinct account holders, out of a sample of 39 million, between October 2012 and March 2018.
To identify trends and differentiate the types of work taking place in the platform economy, the JPMorgan Chase Institute has identified four different platform sectors:
- The transportation sector, in which drivers transport people or goods;
- The non-transport work sector, in which workers offer a growing variety of services including dog walking, home repair, telemedicine, and many others;
- The selling sector, in which independent sellers of goods find buyers through online marketplaces; and
- The leasing sector, in which lessors find lessees to rent homes, parking spaces, and many other types of assets.
Further complicating efforts to understand how to address the role of the Online Platform Economy is that geography plays an important role in whether Americans participate in the Online Platform Economy and which sector they participate in.
- Out of 26 cities, San Francisco has the highest participation (2.9 percent of families), and Charleston, WV (0.6 percent of families) has the lowest. Among all states, West Virginia has the lowest participation across all platform sectors.
- Nevada has the highest participation on transportation platforms among the 23 states studied, with nearly 2.0 percent of families active. Las Vegas and San Francisco are the two cities with the highest participation on transportation platforms.
- The state of Utah, Salt Lake City and San Francisco have the highest participation on non-transport labor platforms. Washington State, with more than 1.0 percent participation, and Seattle have the highest participation on selling platforms. Colorado (0.3 percent), Denver and New Orleans see the highest participation on leasing platforms.
The report’s key findings are below. Read the full report.
- Finding 1: The Online Platform Economy has continued to grow. Between 2013 and 2018 transportation platforms have grown to dominate in terms of both the number of participants and total transaction volume.
- The fraction of our sample earning platform income increased from 0.3 percent of families in the first quarter of 2013 to 1.6 percent of families in the first quarter of 2018.
- Over those five years, transportation platforms have grown to dominate in terms of both the number of participants and total transaction volume. By March 2018, transportation platforms accounted for as many participants and as many dollars as the other three sectors combined.
- Total earnings on leasing platforms also grew over this period, though at a much slower pace
- Although the non-transportation labor sector includes 55 percent of the platforms we tracked, it never generated more than 4.5 percent of total transaction volume.
- Overall, the growth in participation on transportation platforms has grown steadily at a rate of about 0.3 percentage points per year in every one of the five years from the first quarter of 2013 to the first quarter of 2018.
- Finding 2: Most participants in the Online Platform Economy are active in just a few months out of the year.
- Among those who generated earnings through transportation platforms at any point in a year, 58 percent had earnings in just three or fewer months of that year.
- In the other sectors, engagement was even more sporadic.
- In each sector, less than 20 percent of participants generated earnings in more than half of the months of a year.
- The share of families in our sample generating earnings on transportation platforms in each month has been rising steadily. However, the fraction who have generated earnings over the period of a year is rising twice as fast. The fact that these two fractions diverge so sharply reflects the fact that many drivers cycle in and out of platform work over relatively short periods of time.
- Engagement in the transportation sector was more sustained than in the others, but even among drivers over half had earnings in three or fewer months, and a small minority generated earnings in more than 10 months.
- By the first quarter of 2018, the top 10 percent of sellers accounted for 80 percent of total earnings in that sector. The other sectors were less concentrated, but in each of them the top decile of earners accounted for at least half of total earnings.
- Finding 3: The growth in the supply of drivers has come alongside a 53 percent decline in average transportation earnings.
- Average monthly earnings in the transportation sector fell by 53 percent between 2014 and 2018.
- Average earnings in the other three sectors were volatile but showed no secular trend since 2014
- Overall average platform earnings grew at a rate of about 2 percent per month from the first quarter of 2013 to the first quarter of 2015, then leveled off before declining again starting in mid-2016.
- As of March 2018, median earnings in all but the leasing sector remain below $1000 per month. In the leasing sector, by contrast, monthly earnings are almost double the other three sectors, and the top 10 percent of earners generate over $4500 in revenue per month.
- Whereas half of drivers in the first quarter of 2014 were earning $900 or more per month on transportation platforms, the fraction earning that much in the first quarter of 2018 was less than 25 percent.
- Transportation platform earnings have fallen even among the highly engaged population, though by a smaller proportion (33 percent) than the overall average (53 percent).
- Even among those who drive most regularly, driving is becoming increasingly less likely to replace a full-time job.
- Finding 4: Platform earnings represent a major source of income for families during the months they participate but only 20 percent of income among those who participated at any point in the prior year.
- By March 2018, platform earnings represented 54 percent of total observed take home income among active participants.
- However, platforms are not replacing traditional sources of family income. Among those who have participated in the Online Platform Economy at any point in a year, average platform earnings represent 20 percent or less of total observed take home income in any month of that year.
- Overall, platform earnings among active participants have risen from about 40 percent of total take home income in the first quarter of 2013 to just over half in the first quarter of 2018.
- In the transportation sector, 60 percent of families were highly dependent on platform earnings in the first quarter of 2013, but that fraction had fallen below 45 percent by the last quarter of 2017.
- When we account for families cycling in and out of the market, platform earnings as a fraction of total take home income fall by half—from 56 percent to 26 percent—for transportation participants. By March 2013, platform earnings represented less than 15 percent in the other sectors.
- Finding 5: Participation rates in the Online Platform Economy varied significantly across the nation. (We measure participation rates on any platform in October 2017.)
- There was also important variation by employment status; we observed platform earnings for about 1.4 percent of families for whom we also observed non-platform labor earnings, whereas among the non-employed the participation rate was 1.9 percent.
- There is wide variation across our 23 states in overall participation, which ranges from a high of 2.8 percent of families in Nevada to just 0.6 percent in West Virginia.
- Utah has the highest participation on non-transport labor platforms; Washington has the highest participation on selling platforms with more than 1.0 percent of families active as independent sellers. Colorado has the highest participation on leasing platforms at 0.3 percent of families.
- Out of 26 cities, we observe the highest participation in San Francisco (2.9 percent of families) and the lowest in Charleston, WV (0.6 percent of families).
- In Seattle, participation on selling platforms is 1.3 percent of families which far exceeds all other cities, and in New Orleans, participation on leasing platforms is especially high.
- The non-employed are more likely to participate in the Online Platform Economy, but the gap in participation between the nonemployed and the employed is entirely driven by the transportation sector and hardly exists in other sectors.
- Younger people are more likely to participate in the Online Platform Economy.
- Men are more likely to participate in the Online Platform Economy (or share a bank account with someone who does), but this difference is restricted to the transportation sector.
About the JPMorgan Chase Institute
The JPMorgan Chase Institute is a global think tank dedicated to delivering data-rich analyses and expert insights for the public good. Its aim is to help decision makers – policymakers, businesses, and nonprofit leaders – appreciate the scale, granularity, diversity, and interconnectedness of the global economic system and use better facts, timely data, and thoughtful analysis to make smarter decisions to advance global prosperity. Drawing on JPMorgan Chase & Co.’s unique proprietary data, expertise, and market access, the Institute develops analyses and insights on the inner workings of the global economy, frames critical problems, and convenes stakeholders and leading thinkers. For more information visit: JPMorganChaseInstitute.com