Contingent work goes well beyond the stereotypes. And we found one group of on-demand entrepreneurs who do far better than others when it comes to pay and opportunities.
The gig economy typically evokes images of app-based workers who ferry food, packages, or people to their destinations, or skilled freelancers who deliver one-off services to an online customer base.
These on-demand entrepreneurs are liberated from traditional 9-to-5 constraints and have a level of autonomy many people would envy. They work for themselves and set their own hours, even as they power profits for popular digital platforms.
Or so the story goes. Our research found that the gig economy is much broader and more diverse than it’s typically portrayed. It comprises a sweeping range of professions and skill levels with wildly different pay levels and work experiences.
Building on the anonymous and aggregated ADP payroll data of more than 1.1 million employers, we distinguished between two key segments of the gig, or contingent, workforce based on how they’re categorized by the U.S. Internal Revenue Service: short-term W-2 employees, also known as temporary workers, and independent contractors who file 1099 tax forms.
We found a vast population of contingent workers. Individuals who received a short-term W-2 or a 1099 accounted for 27 percent of all jobs held in 2024. Only 1 in 10 workers were part of the gig economy in a typical month, but by year’s end, fully 1 in 4 had engaged in some sort of gig work during the previous 12 months.
When we examined this large cohort, we identified some disparate trends.
- Uneven pay: Median pay for the U.S. working population is $23. Independent contractors earn more ($25 an hour) and temporary employees earn less ($15 an hour). Gig workers as a whole, however, have been losing ground on pay relative to traditional W-2 employees.
- Irregular opportunities: Gig workers account for a modest share of labor costs, as low as 0.4 percent in the case of independent contractors. Even in sectors that are heavily dependent on temporary labor, the share of their wages on company payrolls rarely exceeds 9 percent.
- Fewer hours: Temp employees and independent contractors work about 20 hours a week, about half what a traditional W-2 employee puts in.
- Diverging job creation: Demand for independent contractors has grown while short-term W-2 work has been tapering off since the pandemic.
- Differing demographics: Independent contractors are older, more likely to be men, and more commonly found working in finance and business services. Temporary workers are younger than the working population as a whole and are overrepresented in front-line leisure, hospitality, and administrative jobs.
In short, gig work isn’t a single experience, but rather a spectrum. Some gig workers benefit from autonomy and lucrative compensation, while others face precarious conditions and lower pay.
An understanding of these distinctions is crucial for policymakers, businesses, and researchers aiming to engage with the future of work.
In this report, we deliver a comprehensive, data-driven analysis of who gig workers truly are, what they do, what they earn, and how they navigate today’s labor market.
A brief history of gig work
Gig work might seem like a modern invention, the product of smartphone apps and digital platforms. In reality, it has deep historical roots.
Informal, task-based, and short-term labor agreements have long existed in the U.S. economy. Seasonal agriculture workers, substitute teachers, and day laborers, for example, have always worked outside of continuing, long-term employment. Well before internet platforms came along, freelance writers delivered projects, and skilled laborers sold their services by the hour. Kitty Felton is credited with launching the country’s first staffing agency after the San Francisco earthquake of 1906, and the temp industry took off during World War II as U.S. businesses faced acute labor shortages.
What we call the gig economy is essentially a modern twist on a longstanding practice: people selling their time and skills outside the bounds of traditional, permanent employment.
What’s new is the technology that has drawn more people into the game and allowed gig work to scale. Apps and algorithms have streamlined the process of connecting millions of workers to millions of people who want their products or skills, cutting out the employer middleman.
How we did this research
A significant challenge in any discussion on the modern gig workforce is the absence of a clear definition. While there’s broad consensus that gig work involves short-term jobs, alternative work arrangements, or independent contractor status, the boundaries are blurry. A freelance graphic designer probably qualifies as much as a rideshare driver. But then there are part-time adjunct professors and knowledge workers hired to deliver projects over a set period of time.
No universally accepted method exists for identifying and analyzing this large and varied workforce. To capture its complexity, we developed a framework that distinguishes between two key segments of the contingent workforce based on how they’re treated by the U.S. Internal Revenue Service:
- Short-term W-2 employees. Also known as temps, these workers are classified legally as employees. They’re paid hourly by a traditional employer, but for only brief periods of time, typically less than six months. This group includes temporary hires, seasonal staff, and other people with episodic employment.
- Individuals who file 1099 tax forms. Typically classified as independent contractors, these workers operate with a high degree of autonomy and often engage in platform-based or freelance work. Members of this group are not subject to payroll withholding. They don’t receive health or retirement benefits and lack legal protections associated with traditional employment. This category can include freelancers, delivery drivers, and platform-based workers.
To track this fragmented workforce, we leveraged a unique resource: ADP’s high-resolution payroll dataset, which captures data from1.1 million U.S. companies and 26 million employees. This large-scale, continuously updated data provides an unparalleled view into earning patterns, job durations, and employment types. Its scale and granularity allow us to draw a realistic picture of the gig economy, one that goes beyond anecdotes to reveal structural patterns and how gig work is performed and compensated.1To reduce the influence of extreme outliers on the analysis of the wages, we applied a trimming procedure at the 95th percentile. Specifically, all individuals with estimated hourly earnings above $250 were excluded from the sample. Such high hourly rates might be driven by irregular or under-reported hours, which could affect the results presented.
From this data set, we analyzed the anonymous and aggregated payroll data of more than 24 million people, which allowed us to observe workforce dynamics at high frequency and with considerable detail. Each individual worker was associated with both a unique and anonymized individual identifier and an establishment identifier.
We examined worker demographics, pay frequency, compensation, time on the job, and employer characteristics. In addition to the short-term W-2 and 1099 workers described above, we looked at traditional long-term W-2 employees for comparison and context.
We also differentiated between jobs and workers to account for people who hold multiple gigs simultaneously or sequentially at different employers.
Given the fluid and often temporary nature of gig work, point-in-time measurements are difficult to interpret. To quantify gig work’s contribution to the economy, we took a twofold approach.
To estimate the monthly contribution of gig work to total employment, we calculated average monthly job counts for short-term W-2 and 1099 workers in 2024, then expressed these counts as a share of all filled jobs observed in that month.
In our data set of 24 million workers, short-term W-2 employees held 8 percent of all filled jobs in 2024, while 1099 contractors held 1.8 percent, yielding a combined footprint of nearly 10 percent.
We then estimated the reach of gig workers by counting how many uniquely anonymized individuals were paid at any point during 2024. This approach captures the cumulative participation of these workers over the course of the year, accounting for the fact that temp workers frequently enter and exit employment for brief periods. Using this measure, short-term W-2 employees represented 21.8 percent of all workers who were paid during 2024. The corresponding share of 1099 contractors was 2.5 percent.2Our sample set captured more than 31 million unique person-company combinations and 29 million unique workers.
While our dataset provides complete visibility into paychecks and the companies issuing them across the full sample, information on worker demographics and industry sectors isn’t universally available.
Analyses using these variables—such as breakdowns by age, gender, or employment sector—were conducted on adjusted subsamples with complete data. These subsamples are clearly defined, and any coverage limitations did not materially affect the results.3Identifying characteristics such as gender and age aren’t always captured in our underlying data. This missing demographic information affects between 5 percent and 20 percent of our sample.
FINDINGS
PAY
A big divide
Hourly wage data reveals a sharp divide within the gig economy. Median pay for independent contractors is $25 an hour; for temporary employees it’s $15. For comparison, median pay for all U.S. workers is $23.
Looking at averages, the pay gap widens. Independent contractors earned more—nearly $39 per hour—reflecting the specialized, highly skilled roles many of them hold in health care and professional and business services. Temp workers sat at the other end of the spectrum, with average pay of just $19 an hour. Traditional W-2 employees in our sample earned a mean $34 per hour.
This pay spread illustrates that gig work isn’t a uniform experience but a spectrum, from highly-paid, autonomous specialists to lower-paid, less-secure roles.
The distribution of wages reinforces this split. Nearly 7 percent of independent contractors earn more than $100 per hour, compared with 4.5 percent of traditional W-2 employees. These top earners—consultants, legal professionals, software developers, and technical experts—command premium rates for specialized project-based work.
In contrast, the wage distribution for temporary workers mimics that of traditional W-2 employees but shifts lower, with fewer high-wage earners. More than 90 percent of temps earn less than the independent contractor average of $39 per hour, reflecting the prevalence of cooks, servers, cashiers, and housekeepers—occupations that offer limited bargaining power.
HOURS
More flexibility, less time on the job
When looking at total monthly compensation, both groups of gig workers earn less than traditional W-2 employees. But hours worked play a big role in this pay differential.
Earnings average around $860 a month for temp workers and about $1,620 for independent contractors, less than the $2,620 average of full-time W-2 employees.
But even highly paid work can manifest as lower total income for gig workers because, as a group, they put in far fewer hours.
A hallmark of gig work is its freedom from the fixed schedules of traditional full-time jobs. Flexibility is both its biggest perk and its biggest gamble—workers choose when, how much, and in some cases where they work.
Our data confirms that gig workers put in far fewer hours than their full-time counterparts.
Independent contractors average 85 hours per month, short-term W-2 workers 88 hours, and traditional W-2 employees 155, in line with the 150 to 175 hours typical of full-time roles.
This distribution also shows clear peaks at or near 80 and 165 hours a month, the equivalents of half-time and full-time work.
About 15 percent of temps work 150 to 180 hours a month, suggesting that some of them are taking on full-time schedules during high seasonal demand. These patterns reflect the hybrid nature of temporary labor: some people work casually while others match traditional employee schedules, but without safety nets such as unemployment benefits.
One in 4 temp workers clock fewer than 40 hours in a given month, underscoring the part-time and intermittent nature of most gig work, whether by choice or necessity.
Independent contractor hours are slightly more skewed toward very short engagements. In this group, 28 percent are paid for fewer than 40 hours a month; more than half work fewer than 90 hours. Still, nearly 14 percent work more than 180 hours, making their gig work a full time or even overtime commitment.
We also found connections between age and work patterns. Among independent contractors, hours were fairly steady across most ages, with a notable exception: Workers 70 and older averaged 110 hours a month.
Temp workers showed an age-sensitive curve. Hours climbed into a worker’s 40s and 50s, then fell, perhaps due to health, caregiving, or withdrawal from the labor force.
JOB CREATION
Competing growth curves
Since January 2021, the U.S. economy has seen steady growth in independent contractors. The share of lower-paid temp employees, however, has been shrinking since 2023.
Independent contractors
In 2019, our monthly sample contained an average of some 300,000 independent contractors. By the end of 2024, the sample size had grown to more than 450,000, a 50 percent increase. The independent contractor share of total employment rose from 1.4 percent to 1.8 percent.
This growth accelerated in the second half of 2020 and first half of 2021, driven by pandemic-driven labor shifts, remote work, and the expansion of online platform-based services.
We also found that contractor employment follows a predictable seasonal pattern. The December surge, most pronounced in administrative and waste services, reflects end-of-year demand. Job counts rise faster than worker counts during this period, suggesting that some contractors take multiple assignments. In January, employment drops.
Temporary employees
Short-term temporary employment follows a different trajectory. Beginning in mid-2020, the number of temp jobs rose sharply and continued climbing throughout 2021 amid pandemic-related labor market turbulence. This growth stemmed likely from both greater turnover, as captured by our definition of employment spells of less than six months, and a broader shift toward temporary staffing.
Since 2023, temp hiring has slowed gradually, suggesting either a normalization of hiring practices or renewed preference on the part of workers for more stable forms of employment.
Seasonality also differs. While independent contracting peaks at year-end, temporary employment rises in the summer, driven by leisure, hospitality, and retail hiring. These sectors experience seasonal surges from tourism, events, and increased consumer activity, prompting employers to rely on short-term hires.
Together, these patterns underscore the dual role of gig work. Independent contracting shows steady structural growth paired with calendar-driven peaks and valleys, while temp work expands during economic shocks and seasonal demand, then contracts when demand subsides.
Spotlight on
DEMOGRAPHICS: From students to semi-retirees, but mostly men
Age. Public perception of gig workers typically is limited to a narrow set of stereotypes – young urbanites delivering food by bike, freelance creatives working from cafes, or rideshare drivers earning extra income.
These images fail to capture the full demographic diversity of the gig workforce. ADP payroll data shows that independent contractors and temp workers have markedly different profiles.
Among independent contractors, 7.2 percent were 70 and older, compared to 3.8 percent of the overall workforce. This overrepresentation probably reflects the prevalence of semi-retired professionals in advisory, managerial, and consulting roles, where reputation, decades of experience, and established networks facilitate contracting work. Further, the lower onboarding requirements of 1099 work enable older workers to remain active, supplement retirement income, and maintain flexible schedules.
Temp workers skew younger. More than 43 percent were younger than 30 in 2024. Short-term W-2 arrangements include seasonal, on-call, or temporary assignments, roles that commonly serve as entry points to the labor market for people who are still in school, exploring career options, or simply seeking an income with no long-term commitment. Temp workers tend to have less experience and less job stability.4One factor contributing to the large share of young adults among contingent workers might be the high rate of job turnover typically observed for this age group. Given our definition of short-term W-2 work—employment spells lasting less than six months—frequent job changes can lead to a greater representation of younger workers.
Gender. In 2024, 71 percent of independent contractors in were men. This gender distribution likely reflects the occupational mix commonly associated with 1099 tax status, fields in which independent contracting is both prevalent and historically male-dominated. Examples include machine operators in transportation and construction, security personnel, manufacturing managers, freelance software developers, attorneys, and architects.
When it comes to hours, a gender gap persists across all work types, with the widest found among temporary W-2 employees. In 2024, men in this group worked an average of 96 hours per month, women just 82, a 17 percent gap. The gender gap was 12 percent among traditional W-2 employees and 11 percent among independent contractors.
These gender differences might stem from differences in job type, availability, or caregiving demands, which tend to hit short-term work the hardest.
A gender pay gap also persists among gig workers but is narrower than that of the overall workforce. Among traditional W-2 employees, women earn 22.5 percent less per hour than men, according to ADP payroll data. The gap is 11.4 percent among temporary workers and only 4.5 percent among independent contractors, ADP payroll data shows. These disparities should be interpreted with caution, however, as women are underrepresented in independent contracting. A small group can sway the average.
Spotlight on
EMPLOYERS: Mapping the gig worker footprint
Gig work spans a wide range of sectors and employers, from knowledge-based professional services to frontline roles in logistics, retail, and hospitality. And gig workers are found at organizations of all sizes, from large corporations with complex staffing needs to small employers and startups that rely on flexible labor to scale operations.
From a business perspective, gig workers account for a modest share of total labor costs, which we calculate as the sum of gross wages paid. Temp workers perform about 8 percent of all jobs but account for only 3.2 percent of total wages, a function of fewer hours and lower pay. Independent contractors account for 1.8 percent of workers but just 0.4 percent of total pay.
Even in sectors heavily dependent on temporary labor—leisure and hospitality and administrative services—the share of temp wages on company payrolls rarely exceeds 9 percent.
Independent contractors
While independent contractors represent a small share of the total workforce, they’re concentrated in certain industries. One notable example is administrative and waste services, which includes a wide range of essential support roles with a significant concentration of 1099 workers, including customer care, administrative assistance, and managerial or coordinator roles.
Independent contractors also are prominent in sectors that require advanced skills or specialized knowledge, such as professional and business services, and health care, and education. Contractor roles in these fields include independent advisors, HR administrators, software engineers, physicians, nurses, home care aids, teachers, and educators.
Many of these positions require college degrees, certifications, or specialized expertise, and they’re commonly structured around modular client-based or project-based work. Employers that engage contractors in these roles obtain access to expertise without a long-term commitment, making these sectors important hubs for high-wage gig work.
Temporary workers
Leisure and hospitality has the largest share of short-term W-2 employment relative to the sector’s total workforce (16%). Employment at restaurants, hotels, entertainment venues, and parks is characterized by strong seasonality and variable demand, creating a structural need for flexible labor.
Employers in this sector turn to short-term or on-call hires to fill roles that scale up or down rapidly. Common temp roles include cooks, servers, bartenders, cashiers, housekeepers, drivers, and hosts, all of which require quick onboarding and adaptable schedules. While accessible and flexible, these roles are marked by lower wages, particularly for younger, less-experienced workers.
Temp workers also are concentrated in administrative and waste services, where they work as administrative assistants, drivers, janitors, cleaners, and housekeepers. These roles, which typically are lower-paid than independent contractor roles in the same sector, align with short-term, task-based work.
Employer size
Independent contractors are more prevalent in small and mid-sized employers, particularly those with between 10 and 1,000 workers, where they provide specialized skills that might not be available in house or needed year-round. These arrangements offer cost-effective flexibility.
Temp workers are found more frequently at organizations with more than 1,000 employees, where they might be used to manage operational surges, fill rotational or seasonal positions, or address scheduling gaps.
In short, employers deploy gig work strategically. Smaller businesses leverage gig hires for agility and specialization, while larger enterprises employ them to maintain workforce flexibility and scale.
The takeaway
The data paints a vivid picture: The gig economy is far from monolithic.
Independent contractors typically occupy high-skill, high-autonomy roles and earn premium pay, while temporary workers are concentrated in lower-wage, high-turnover positions. Both groups trade job stability for flexibility, but their economic outcomes diverge sharply.
Short-term or on-demand jobs can offer workers opportunity, whether as a lucrative professional niche or an entry point into the labor market. For employers, these workers are a tool for agility, scalability, and targeted expertise.
Gig work is not a temporary phenomenon. It’s a permanent feature of the modern labor market. But the modest hours and persistent pay gaps suggest that it remains a supplemental, not primary, component of work for most people and employers.
