The technology-fueled rise of the "gig" economy may require the Federal Reserve to reassess how it interprets basic economic data and how it judges how close the economy is to maximum employment, a U.S. central banker said on Thursday.
Fed Governor Lael Brainard, a leading proponent of delaying interest rate hikes to further boost job growth, did not comment on the outlook for monetary policy or the U.S. economy in remarks prepared for delivery to a Federal Reserve Bank of New York conference on the evolution of work.
But her remarks on what she called the "sharp increase" in contingent work arrangements over the last decade gave a window into the Fed's thinking about potentially large changes in the U.S. labor market.
"For monetary policy, the growth of contingent work affects the way we assess maximum employment and the way we interpret important labor market outcomes, such as the level of part-time employment and aggregate hours worked," she said. "The effects on the labor market could be long lasting and significant."
Companies like Uber Technologies and Taskrabbit, which allow workers to easily book jobs by the hour or project, may boost employment and labor force participation, Brainard said. But they also have uncertain effects on job loss, stability, productivity and the behavior of consumers and savers that require further study.
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"Taking into account the potentially varied effects of the rising prevalence of gig work on household welfare, public policy should strive to maximize the benefits of the greater flexibility and lower entry barriers provided by advances in technology, while addressing the risks that currently accompany many forms of gig employment," she said.