Jul 27, 2017 Walt Wojciechowski
The gig economy is in full swing as people move to jobs sourced through mobile app platforms like Uber, TaskRabbit or PostMates. With these nontraditional jobs becoming more prevalent, it's important that companies providing credit or consumer lending have the tools at their disposal to adequately analyze the risks associated with gig workers' ability to pay rent.
While the individuals working these new types of jobs maintain electronic records of work on their phone, the nature of the work, with its set-your-own-hours scheduling, can make it difficult for applicants to provide sufficient and adequate information for work history.
However, the number of people using these apps as a source of income continues to rise. As more people join the gig economy, consumer lenders need the tools to accurately collect credit data on these individuals.
How many people are working in the gig economy?
The last time the U.S. Bureau of Labor Statistics collected data on the gig economy was 2005. At the time, the contingent labor force represented approximately 2-4 percent of all workers. While the BLS recently gathered more information regarding these occupations in May 2017, the data has not yet been fully analyzed or published.
While official sources vary on the true size of the gig workforce, a recent study from the McKinsey Global Institute found 27 percent of the U.S. labor force, approximately 54-68 million people, were independent workers. That's a sizable portion of the population that will need to rent apartments, apply for retail credit and other short-term loans.
Not only are ride-hail services and on-demand delivery roles on the rise, so too are freelancing gigs for:
- Artists and designers.
- Computer and information technology technicians.
- Construction and extraction positions.
- Media and communications professionals.
As more individuals continue to take part in the gig economy as freelancers, contract workers or with partially employed jobs, it will be difficult for these people to compile a credit history necessary to meet the requirements of traditional consumer lenders.
What the gig economy means for businesses
Since workers in the gig economy might not have enough of a credit history necessary to build a robust credit report, consumer lenders and other businesses, such as property managers, need access to alternative credit reports to accurately judge their ability to repay loans or make monthly payments.
For instance, a building owner renting to new tenants needs to know if an applicant has a consistent history of paying bills. Without the information adequately conveyed in a traditional credit report, the landlord has no idea if a potential tenant has a solid history of paying rent.
Fortunately, a Microbilt PRBC Consumer Report provides more in-depth information regarding a potential applicant's payment history. Using a host of factors, such as personally identifying information, the report digs into bank inquiries and other sources to determine if the person has ever filed for a bankruptcy or been subjected to liens, evictions and more. The Consumer Report provides businesses and lenders with a detailed financial background that allows them to make an informed decision on someone working in the gig economy.
Click here to learn more about the Microbilt Consumer Report.