Dallas alluded to the rise in the number of self-employed workers, thanks largely to the boom in the gig economy, as evidence that more effective methods needed to be introduced to assess a person’s ability to repay a loan.
According to the International Labor Organization, some 55 million people in the US were gig workers in 2017, representing up to 34% of the workforce, although this was expected to rise to 43% last year.
More recent data from Statista placed the number of people doing freelance work in the US at 59 million in 2020. The importance of the sector to the US economy was made clear earlier this year when Marty Walsh, the labor secretary, said that gig workers should be classified as employees.
Dallas said the 43% DTI ratio limit – the method lenders use to measure a person’s ability to repay their mortgage – “does not make sense” because debt to income ratios “have never been correlative to default”.