Making Ends Meet: The Role of Informal Work in Supplementing Americans’ Income

Katharine G. Abraham, University of Maryland and NBER
Susan N. Houseman, W.E. Upjohn Institute

Abstract

We present new evidence on the role of informal work as a source of income for U.S. households. Data from the Survey of Household Economics and Decisionmaking imply that, over the course of a month, about a quarter of adults engage in some informal work activity outside a main job. About two-thirds of those doing informal work say it is to earn money, and about one-third say that informal work is an important source of household income. Informal work plays a particularly important role in the household finances of minorities, the less educated, those who report financial hardship, those who work part-time involuntarily, independent contractors, and the unemployed. Although aggregate earnings from informal work may be modest, informal work appears to be important in helping many households make ends meet. It cannot, however, compensate for the lack of benefits commonly associated with part-time and contractor work.