SIPP data also allowed supplemental demographic data on independent contractors and the on-demand platform workforce.

The 2014 data indicated that independent contractors earned approximately $204.1 billion in income in that year, while on-demand workers earned approximately $36.0 billion.

Researchers estimate that at least 3.1 million independent contractors underreported self-employment income in 2014.

This underreporting would result in approximately $4.8 billion in SE tax that should have been paid, with approximately $3.9 billion constituting non-payment of Social Security contributions.

And for on-demand workers in 2014, the estimates are $2.5 billion in SE tax that was not reported or underreported, translating to $2.0 billion that was not paid into Social Security.

The report also found that independent contractors were likely boomers (age 55 and older), more likely women than men, and more often white than another ethnicity, while on-demand workers were more often GenXers (ages 35–54), more likely women and most frequently white.

This magnitude of noncompliance threatens Social Security, say researchers, writing, “The on-demand economy has grown substantially since 2014 and added millions of workers in the last four years, who may not have been captured by our SIPP data. In addition, our estimates for underpayment of SE tax of independent contractors are based on averages of underpayment of SE tax and do not account for the likely nonpayment of tax by this population altogether.” (Many in the gig economy do not realize they are obligated to pay quarterly estimated taxes, the report adds.)

Modernized information reporting and additional tax guidance, among other steps, need to be put in place by lawmakers, says the report, “to help address these issues and further support the solvency of Social Security.”