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Illustration: Aïda Amer/Axios

Online shopping and the gig economy haven't just disrupted traditional brick-and-mortar business, they're disrupting the way U.S. job growth, wage data and inflation are tracked, asserts a new paper from the Dallas Federal Reserve.

What it means: There has been an increase in the number of workers in the gig economy who are either working as contractors or are self-employed, but report themselves as employed. These workers often have less bargaining power and lower wages than full-time employees.

Details: "Essentially, firms are able to hire contract or self-employed workers, who are not on their payrolls and not counted among the unemployed when not on the job," John V. Duca, a vice president in the research department at the Dallas Fed, says in the report. "As a result, the headline measure of unemployment may understate labor slack."

  • In essence, unemployment should be higher than it is because most gig economy workers should be counted as unemployed or underemployed, according to traditional metrics, but aren't. They also make less money, pushing down wage numbers. That is leading to unusually low readings in the data.

The big picture: Economists have long argued about just how much impact the gig economy has had on the persistently low wages in the U.S. and the change in the relationship between unemployment and inflation. Typically as unemployment falls, inflation rises, but that trend has been undermined in recent years, leading many to question the long-held economic principle of the Phillips Curve.

  • Last year, Anat Bracha and Mary A. Burke, senior research economists at the Boston Fed, found recent year-over-year wage growth had fallen short of predicted values by 0.5–1 percentage point.
  • They concluded that the gig economy had "an economically significant" impact on those lower wages.

Yes, but: "These shopping and employment behavior changes are still new enough that the data are insufficient for full statistical analysis," Duca says in the Dallas Fed report.

Go deeper:

Go deeper

55 mins ago - Politics & Policy

Group of 20 bipartisan senators back $1.2T infrastructure framework

U.S. Senate Majority Leader Chuck Schumer (D-NY) arrives for a meeting with Senate Budget Committee Democrats in the Mansfield Room at the U.S. Capitol building on June 16, 2021 in Washington, DC. The Majority Leader and Democrats on the Senate Budget Committee are meeting to discuss how to move forward with the Biden Administrations budget proposal. Photo: Samuel Corum / Getty Images

A group of 10 Democratic and 10 Republican senators (the "G20") tasked with negotiating an infrastructure deal with the White House has released a statement in support of a $1.2 trillion framework.

Why it matters: Details regarding the plan have not yet been released, but getting 10 Republicans on board means the bill could get the necessary 60 votes to pass.

DOJ drops criminal probe, civil lawsuit against John Bolton over Trump book

Photo: Jabin Botsford/The Washington Post via Getty Images)

The Justice Department has closed its criminal investigation into whether President Trump's former national security adviser John Bolton disclosed classified information with his tell-all memoir, “The Room Where it Happened," according to a source with direct knowledge.

Why it matters: The move comes a year after the Trump administration tried to silence Bolton by suing him in federal court, claiming he breached his contract by failing to complete a pre-publication review for classified information. Prosecutors indicated they had reached a settlement with Bolton to drop the lawsuit in a filing on Wednesday.

Fed may raise rates sooner, as inflation is higher than expected

Feb chair Jerome Powell. Photo: Susan Walsh/Getty Images

The Federal Reserve kept rates unchanged at its latest policy meeting, but a shift in sentiment emerged as to how soon it should begin raising rates.

Why it matters: The Fed's rock-bottom rates policy and monthly asset purchases helped the U.S. markets avoid a meltdown during the COVID-19 crisis last year. But as the economy recovers, a chorus is growing for the Fed to at least consider a timeline for pulling back its support before things get overheated.