Thriving in the Gig Economy
Learn more about my upcoming book, Thriving in the Gig Economy
Learn more about my upcoming book, Thriving in the Gig Economy
Here are some of my favorite links.
I am doing research for my book. If you are an independent consultant, click "Surveys in the Gig Economy" to go to my survey
Here s a great video of our ReSurge Gala last month. It was a tremendous success and honor to be in a room filled with so many people passionate about our mission to transform the lives of the poor around the world by not just providing reconstructive surgical care, but more importantly, training the next generation of plastic surgeons in the developing world. It is our Global Training Program that makes us unique. It is our commitment to advocating the need for Global Surgery, a need that the WHO and the Lancet Commission is now recognizing. Our partners, plastic surgeons, anesthesiologists, pediatricians, nurses, translators and donors, share the satisfaction of knowing we are not just helping people now, but we are building a solution for the future. Please enjoy this wonderful opportunity for us to celebrate our work.
As I work on my book, Thriving in the Gig Economy , I have had the opportunity to talk to many experts, from CEOs to futurists about the future of work. I was thrilled last week when one of them shared my pet peeve, one that is all the more acute in an election year -- the fact that so many Americans equate work and jobs. Work is so much more than a job, or more precisely a "regular full-time job". work encompasses all sorts of pursuits, from part-time work, to self-employment to gigs to volunteering.
If you look at the definition, http://www.merriam-webster.com/dictionary/work, it is "an activity in which one exerts strength or faculties to do or perform something:" In fact in all 11 definitions cited, the word "employment" never appears.
None the less, we constantly hear our politicians talking about how important it is to create jobs.Yes that is important, but as the world is changing with technology and new work models. What is unfortunate about this focus on jobs and not work is the attachment of social infrastructure to employment. Employer provided health and retirement benefits are great for current employees, but leave all of the other workers, from part-timers to gig workers potentially at a disadvantage. Moreover, the employment oriented fringes may constrain an individual's entrepreneurial path; it will be tougher to become an independent consultant if the Affordable Care Act is repealed.
That said, the government has a vested interest in bolstering traditional employment structures, and that interest is not in benefits but in taxes. It is a lot easier to collect employment taxes from companies than from a myriad of individuals. As such, the argument that we need to revise our vision of employment, can fall on deaf ears.
Charles Handy, an Irish economist and expert in the world of work, said in his new book, The Second Curve, writes, “The strange truth is, if you have a so-called proper full-time job today, you are in the minority. The world has changed and few have noticed.” We need to take notice and enable opportunity accordingly.
Albert Einstein once said, "If we knew what we were doing we wouldn't call it research." How fitting in this case. Yet another report came out this week estimating the size of the gig economy. Pymnts.com released their research http://www.pymnts.com/gig-economy/2016/gig-economy-growing/ done in conjunction with Hyperwallet, which attempts to define the the size of the independent work marketplace.
This is on the heels of the recent McKinsey Global Institute (MGI) study, "Independent Work: Choice Necessity and the Gig Economy."http://www.mckinsey.com/global-themes/employment-and-growth/independent-work-choice-necessity-and-the-gig-economy. In that comprehensive report, the authors had a significant disclaimer about the problem of data collection in this area. The annual contingent labor study done by the Department of Labor was discontinued in 2005, so thee are no government statistics about participation. Various entities,including companies in the space, academics and think tanks, have launched efforts to explore the subject. So there is no dearth of data about the gig economy, the problem is each study has been done with a slightly different approach. In fact the MGI study even included a great graph comparing the size estimates emerging from these disparate research projects. It tried to isolate the specific industry segment which was being addressed by the researchers. For example, it listed 5 different studies, including their own, that sized the independent workforce in the US as a percentage of the working population. The results were broad ranging, from as little as 16% to as high as 27%
So given that the numbers don't quite jive, who is right? Since I am working on my new book, Thriving in the Gig Economy, I have been wrestling with this issue quite a bit. I have decided that potentially they are all right; you just need to be cognizant of how they have framed the question. MBO Partners, for example , provides the best ( and only) historical perspective, having issued its report on the State of Independence in America for each of the last 6 years. https://www.mbopartners.com/state-of-independence/mbo-partners-state-of-independence-in-america-2016 They focus on independent consultants in the professional services space and estimate the market size at just south of 40 million participants. They define 3 primary categories of independents: full time, part time and occasional. MGI, on the other hand, has a higher size estimate based on four categories of workers, including two groups, who are working in this way out of financial pressure rather than personal choice. They include some categories of workers, like doctors and therapists, who may or may not be captured in the MBO Partners data.
One area that has very limited data available is the use of digital talent platforms by gig workers. The new PYMNTS report is targeted specifically at this. In fact, they specifically don't include the group of "freelancers" who may get their work from intermediaries, like M Squared Consulting http://www.msquared.com or Business Talent Group. https://businesstalentgroup.com/business-strategy-consulting-google/?gclid=CLLwv-vy-c8CFUKTfgod6t8HGA. Given the exclusion of this key population, the graph which showed the type of professional services procured through the digital talent marketplaces was telling. The professional service in the highest demand was photography. The senior level independent consultants do not appear to be represented. I have yet to comprehensively go through this report, so I can't speak to conclusions the authors may have reached. Perhaps there will be more to come on this in the future. At the very least, there may be more to come in my book.
As a San Francisco Giant fan, I am sad to say that the baseball season is over for me. (And of course, as a Giants fan, I must now root for the Cubs against the Dodgers, But I digress...) But none the less it is October, when the baseball season reaches its inevitable climax. So as I work on my book about the gig economy, I thought it was fitting to do a shout out to Curt Flood, a man who changed baseball and the world of work in a major league way, pardon the pun.
Curtis Charles Flood played 15 years in major league baseball from 1956-1971, playing for the Cincinnati Reds ( or Redlegs, as they were known at the time) the St. Louis Cardinals and the Washington Senators. He had a solid career, with three all star
team appearances and seven golden glove awards. He won two different hitting titles and still today is ranked third behind Willie Mays ( a Giant , of course) and Richie Ashburn for most games played in center field. However, his impact is not what he did on the field., rather it was what he refused to do off the field, namely accept employment terms that no longer seemed appropriate to him.
Before 1969, players were bound by the reserve clause in baseball, which made players beholden to the first team with whom they signed. The had no say about their futures once the contracts were signed. Team management could make the decision to trade or release a player without so much as a "how do you do" to the athlete.
When the team wanted to trade him after 12 years to Philadelphia, Flood refused, saying,"I do not regard myself as a piece of property to be bought or sold."
Floods case went all the way to the Supreme Court, and due to the fact that Justice Powell had to recuse himself because of his ties to the Busch family, the owners of the Cardinals, he did not win. However his action and the attention it garnered paved the way for change and ultimately led to free agency in baseball.
So what does this have to do with the gig economy?
What Flood wanted was control over his professional life. After all that time in the league, he felt he was owed that. Various studies have shown that when professionals decide to start consulting independently it is for that same motive -- control over their life. MBO Partners 2016 State of Independence in America Report says that over 60% of consultants cited control of their time as a key factor in going out on their own. Similarly, the McKinsey Global Institute's recent report entitled Independent Work: Choice Necessity and the Gig Economy noted that the independent workforce is larger than previously thought and that most participants choose independent work for its flexibility and autonomy.
What Flood did, by challenging the reserve clause, was to create a new notion of how employment relationships can work, a mental model that could be extrapolated to other businesses. Many people may only think about the free agency in sports, but it has its analogues in all sorts of other professional fields now as well. In fact, in the aforementioned McKinsey report, they cite different categories of gig workers, and the high end consultants who pursue the independent work option by choice are dubbed in the study as free agents. So thank you Curtis Flood for making your stand so that you could get the gig you wanted. The gig economy is in your debt.
Since I am working on my book, Thriving in the Gig Economy, I have been paying particular attention to the various Uber employment lawsuits. Even though I am focusing on the high end of the gig economy where independent consultants sell their services and intellectual capital, the commodity end of Uber drivers can't be ignored, since it seems to garner all of the headlines.
This week a rather important ruling occurred that seemed to receive very little attention, which is surprising, since it suggests Uber's independent contractor lawsuits may lose class action status.
Last week, a Ninth Circuit panel effectively reversed a decision from 2015 . A year ago, a judge had said that that the arbitration agreement in Uber's contract with its drivers was unenforceable. The contract was designed to say if you have any dispute with us, Uber, you need to resolve it through arbitration rather than through the courts. In this particular case, three drivers had sued Uber for saying they violated the Fair Credit Reporting Act (FCRA) when the company ran background checks on their driving records. The FCRA, as all recruiting managers know, is the law that requires candidates for employment authorize any background checks. The decision said that Uber's arbitration clauses were fair, valid and enforceable.
By asserting that the arbitration clauses are valid in this case will have implications in the attempts of some drivers to create a class action. As an outside observer, I applaud this. Since I have the gig economy on the brain and am an avid Uber customer, I have taken to quizzing all of my drivers about there thoughts on the lawsuit. I wish I had thought to jot down the results, since my sample size is now in statistically valid territory. That said, my recollections of the results are these:
My very unscientific conclusion then is that it is a very diverse driver pool. A key attribute of a class action lawsuit is that the participants in the class are largely similar. I don't know that this is the case. It is time for the independent contractor laws to be brought into the current century in a time when the gig economy of indepndent workers of all sorts is growing. Potentially these lawsuits facing Uber will help make that happen. .
Since I am working on a new book, Thriving in the Gig Economy, I am reading every scholarly item I can find on new alternative marketplaces. As such, I was thrilled when The Future of Work Podcast (1) recently included an interview with Arun Sundararajan, the author of The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism. I had read Sundararajan's book already so was eager to hear him discuss it.
I appreciated the fact that he recognized that the advent of digital platforms is really an extension of age-old marketplaces. The fact that they now happen to be powered by technology rather than a central urban location was somewhat incidental. Technology was able to become the purveyor of these markets in part due to the increase in trust that the medium affords. Millenials, interestingly enough, have grown up in an era where trust in institutions and society is at its lowest level. (which does not bode well for the upcoming election) . Conversely, though, they are the most likely to trust a digital platform; since they grew up in a digital age, technology can provide a layer for legitimacy and trust to this cohort, more so than it does to Gen Y or boomers.
What did not resonate with me though was the way sometimes, the gig economy was used as a proxy for the sharing economy. With all due respect to Professor Sunderararajan, I do not see it quite the same way. To me, although the sharing economy term is often used interchangeably with the gig economy, it is not the same. The sharing economy refers to the economic activity generated from the sharing of physical assets on a peer-to-peer level. The poster child for the sharing economy is AirBnB, the home sharing service. It enables individuals to rent their property or a portion of it to people in need of a vacation rental. Although the host may need to prepare the house for the guest, that is not the service that is being purchased. The product is the temporary housing. By extension, the preparation of the host is not a gig, but rather his/her role to get the financial benefit from the short-term rental of physical assets.
Other assets can be involved as well. There are several peer-to-peer lending platforms, like Lending Club, where individuals can pool financial assets and make loans to individuals or enterprises in need of funds. Share a Mortgage is a London-based start-up that allows individuals to pool resources for the purchase of real property. E Bay, of course, is also a sharing platform, allowing individuals to sell handicrafts or grandma’s antique dining room set.
There is some intersection with the gig economy when the asset being shared is in part intangible. SofaConcerts in Hamburg, Germany for example, allows people to host musicians in their home. The home is being shared, but the experience, the performance, is also shared. Similarly, EatWith in San Francisco, allows hosts to open their homes to put on a dinner party. The home and meal are shared, but the host has done the work to prepare the meal. The host could be an expert chef, so in that sense expertise is being purchased.
That said, the key distinction between the sharing and gig economy is that the former involves the purchase of a service or experience that involves a physical asset. At the high value end of the gig economy, the transaction can include an intangible asset in terms of the intellectual property that is developed on the gig, but a physical asset isn’t involved.
Despite our difference in perspective on this, I heartily recommend "The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism"; it is a good read.
I welcome your thoughts.
The Entrepreneur’s Organization, (EO) had a celebration last week to celebrate the start
of its San Francisco chapter 25 years ago. I was one of the intrepid founding members of what was then called the Young Entrepreneur;s Organization, or YEO.
(As an aside, I was 7 months pregnant when I joined EO. I remember the other mostly single young members being shocked when they politely asked me if it was my first child, and I replied, “no, it is my third.”)
Back in 1991, you had to have sales of $1mil before you were 35,and you were kicked out of the organization at 40. Many members went on the the Young President’s Organization, (YPO), once they hit their 40s. As one of my kids once said, who would want to be in the Old Entrepreneur’s Organization?
About 10 years ago, they got rid of the Young in the title and just branded the association as the Entrepreneur’s Organization (EO). As one of those folks who made the transition to YPO, I have to say that EO was different YPO remains a wonderful organization for me and I am proud to be an active member, but it was not the same as EO. In YPO, you could have members who were hired guns, presidents recruited to grow, turn around or manage an existing enterprise. Similarly, there was the “lucky sperm” cohort, of those presidents who stepped in to a family business.
In EO, everyone was a founder. Everyone had that experience of having that kernel of an idea in your mind. You kick it around, you nourish it, and ultimately you get it growing. As a female entrepreneur, I liken it to being pregnant.For awhile when you are pregnant, only you know what is happening inside your body Chances are, your husband doesn’t even know for a few days anyway . But slowly it becomes apparent to others. At some point, i.e. the birth, to continue the metaphor, you let some others into the tent. Still, you are very careful how it grows. Over time more people become involved, but you remain the one most involved with shaping the future of this enterprise.
As the business grows, your entrepreneurial role is akin to parenting. Gradually, other people begin to influence the development of the company. At some point, you realize you are no longer in total control, and then there is the moment when the company is growing in ways that you had never envisioned. Hopefully you imbued it with the right core values to ensure that this maturation is true to your original vision.
EO was a great support while making this journey. Sharing concerns, opportunities and problems with a like minded group of peers was a tremendous learning experience. I grew in ways in those years that I did not appreciate at the time. Along with MIT and Inc. Magazine, EO put on the Birthing of Giants Program. This was an amazing program for a cohort of 40 young entrepreneurs. We would spend a week together each spring for 3 years. In the intervening years, many things would happen to the fortunes of these young firms and their founders. Companies, went public and bankrupt, firms were merged, rolled up or sold. And through it all, we learned lessons from each other that would stay with us through the years.
So I was grateful to be able to attend the wonderful 25 year celebration at the Palace of the Legion of Honor last week. The EO chapter put on a terrific program with 4 different speakers, all of whom were inspiring and provocative. One lesson EO taught me is we can never stop learning, so it was wonderful to continue my education at this event. Thanks EO.
As the politicians debate the implications of the gig economy, they typically just talk about jobs. They lament that so many gig workers don't have benefits and are being taken advantage of by those running the powerful digital platforms. As I have said here often, they seldom mention the professional gig economy workers, 91% of whom have self selected this career path. But perhaps the bigger oversight is that they fail to recognize the jobs that are being created serving the new needs of the gig economy and its workers.
Take a recent press release from ShiftPixy. http://www.shiftpixy.com This app is a way for
companies in need of shift workers to recruit contingent gig workers to fill their scheduling gaps. This means that a small business can use this app, rather than trying their luck at all the digital sites. what Kayak did for travel, it is doing for low-end contingent labor.
Moreover, the Shift Pixy guys have paid attention to the employment law issues that have bedeviled some of the large talent platforms like Uber and Handy. ShiftPixy employs the gig workers on behalf of its clients. By employing them, it enables them to accrue enough part-time hours from various clients to qualify for benefits typically only accorded to full-time employees.
In case you are wondering, I don't have an investment in Shiftpixy so this is not a commercial. It is recognition that someone has solved not just one but two key problem with the gig economy. First they just bit the bullet and made the employment call. Since the laws are murky ( another favorite subject of mine) they built an employment infrastructure that is easily accessible via an app that takes the employment risk away from their clients. "You want a shift worker to bag groceries, great, they would have to be an employee. Since you don't want them to be your employee, we will handle that. " Most of the digital platforms put the onus on the buyer to figure out the employment law issues, so ShftPixy took that off the table, making it safe for any size company to engage a gig worker. In the spirit of full disclosure I think that is especially brilliant idea, since I did the same thing 15 years ago, when I started Collabrus, a company designed to employ consultants when they need to be employed by nature of the work or as a risk management strategy.
ShiftPixy is solving another more intractable problem though, by creating a structure that consolidates part-time hours to enable benefits eligibility. It sounds straightforward, but it is actually a pretty complicated business model.
In the end, Shift Pixy is a small start-up with a little staff, but none the less, they are themselves a job creator. They have their own employees, but they will also be creating opportunities for various part-time workers to get additional shifts in a way that suits their lifestyle and financial needs.
So as the politicians lament the loss of traditional jobs, I say lets applaud the innovators who are creating the economic infrastructure to strengthen the new world of work.
On my way to Rotterdam to see my daughter compete in the World Rowing Championships, (Go USA! Sorry I digress...) I finished the book, "Matchmakers, The New Economics of Multi-sided Platforms" by David Evans and Richard Smallensee. Although I wished they had spent a bit more time on talent marketplaces in the gig economy, they provided wonderful examples of successes and failures in the new world of two-sided digital platforms. One point in their conclusion I particularly appreciated was this:
"2. A lot of what the new market darlings do is old stuff. They just use technology to improve on things that other matchmakers have done for many years. "
How right they are!
In my research for "Thriving in the Gig Economy", I have met many talent platform entrepreneurs. I think many of them have been surprised at how facile I am with the issues they face as they grow their business. I have been out of my firm for several years now, and my firm was. It a technology platform. But we were - and it is today - matchmakers. As such the challenges a digital platform may encounter when recruiting talent, finding consultants or establishing contract terms are not dissimilar from those I faced over the years.
They conclude with the fact that passed on the long history of matchmakers, dating back to the Greeks and the agora, the current crop of digital platform firms will not be the only ones to disrupt economies. In fact another quote I liked is this
"With all due respect to the brilliant entrepreneurs behind today’s unicorns and yesterday’s huge IPOs, the telegraph was a far more important multisided platform in terms of its impact on the global economy than anything the Internet has yet spawned."
They got that right too. On the whole, I solidly endorse this book. I welcome your thoughts on it and the gig economy.
So the work continues on my upcoming new book, Thriving in the Gig Economy. It has been an interesting adventure in the word of publishing; editors seem intrigued, but some editors say my subject is too narrow, while others say it is too broad. I guess it just goes to show you can please some of the people some of the time…
What is interesting to me though is the reaction I get when I discuss my work thus far with just about anyone. In two words, the response is, “at last.” The managing partner of one of the biggest professional services firms in town seemed relieved that someone would finally make sense of this world for her. Some of my Alliance of CEOs cohort working deep in various on-line spaces were thrilled to hear about the digital talent marketplace for data scientists. I , of course wondered, since they are the perfect target for the service, why was it I had to be the one to tell them…
Even some of the players aren’t always aware of new developments in the space. I was happy to introduce a new platform for consultants to secure professional liability insurance to several firms who had no idea such a web site existed. Similarly, one digital platform US sales manager was delighted to hear about an industry conference coming up in the fall.
I am not saying I know everything about the gig economy world. Although I am fairly certain, no one has a total handle on it. In fact, I welcome any insights you may have or suggestions of avenues to pursue as I continue my exploration of the wonderful world of the professional end of the gig economy.