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
I listen to podcasts while I walk the dog and recently heard two different comments about retirement, not the concept but the word itself. The podcast was the Ted Radio Hour show on Aging. One commentator, Dan Buettner, was describing his research into parts of the world where people live longer on average then the rest of the population. These pockets of longevity included Okinawa. The researcher notes that in the Okinawan language there is no word for retirement as Americans think of it. The closest they come is a term, eekeegai ( I apologize for my spelling…it is radio after all…) that describes “the reason for which you wake up in the morning”. Retirement in that sense is the ultimate reason for being.
A later segment in that same show featured the wonderful Chilean American novelist, Isabelle Allende. she says that in her native tongue the word for retirement is “jubilation” related to the american term of the same name. Retirement, her argument went, is something joyous. It is the time when one has paid his/her debts to society and can therefore enjoy life; it is a time to be celebrated.
When you think of the English term, it does not quite convey the same import or celebration. Consider the Wikiword definition of retire. The first entry is the one traditionally associated with work, “to stop working on a regular basis.” The subsequent definitions are a bit more off putting. They include to withdraw, to remove from circulation ( e.g. old bank note are retired) , to retreat ( e.g. to retire the regiment), and to draw back or away — to be aloof. ( he retired to the library.) Then there is my personal favorite, to make a play in baseball which results in the batter being out. This may be the only one that conveys any joy, although the joy would be for the defensive team only.
In the spirit of creative solutions, perhaps we need a better term to describe the period after “one stops working on a regular basis. ” The encore career notion is gaining traction in some areas, but many people are unfamiliar with it. We seem to be stuck with retirement. Maybe that is why so many (including myself) are flunking retirement.
I love to be right. A few months back I blogged about my amusing experience applying to join the Hourly Nerd digital talent platform. I asked the question, "$22 million in funding and they couldn't come up with a better name?" This week they announced a new name -- "Catalant".
I have been involved as a client in several corporate naming exercises. With only good thoughts for my old friends at Landor Associates, I just love the whole explanation about why a certain combination of letters will be a good new name. Now that owning the URL is paramount, most existing English language words are taken, as are well-known Latin or foreign terms. (My son who was a Classics major could be a source of some good ancient Greek phrases though...)
So Catalant is a combination of catalyst, talent and brilliant, or so they say. The name change theoretically ushers in a new future for the well-funded digital talent platform where they tout the new world where " companies can instantly access the precise talent they need when they need it." The video is lovely, despite its obvious overstatement.
The world they describe is not that new. I am fairly sure I had virtually that same verbiage in the marketing materials of my company, M Squared, 25 years ago. Similarly, other firms that have been around a while, like The Business Talent Group (BTG) and Cerius Executives are demonstrating how companies are using on demand expertise. Maybe this model is new for Catalant, but it is not so new for the world.
In an article in BostInno, the founders mention that the original intention was to go after small businesses but now they see that big companies can use them as a source of flexible talent. Their algorithms are key to that value to large companies. Their platform can index all skills and find the right person. That may be so. For me, it is all about trust.
My former company - and BTG and Cerius for that matter - provide our big company clients more than algorithms; we provide trust and judgement. If I told a client he really should talk to Harry for a sensitive, strategic project even though Harry may not seem on point, they did it because they trusted me and my understanding of the consultants, the gig and their environment. Perhaps algorithms may get there, but as someone in the Hourly Nerd, excuse me, Catalant network, I have yet to be matched with a project appropriate to my skills. As such, I am still a bit of a skeptic about the perfection of the algorithm.
And by the way, I learned from the Bostinno article, Hourly Nerd isn't going away entirely. It will be the product offering to the small business marketplace So big companies get brilliant talent and little companies get nerds...go figure...
This week World Wrestling Entertainment (WWE) was sued on behalf of dozens for former wrestlers who claim the company hid the adverse neurological effects of repeated poundings received in the wrestling ring. This misrepresentation and concealment of the potential injuries faced was compounded by the fact that the wrestlers are not employees, but independent contractors who are not covered by insurance .
In the spirit of full disclosure, I must first say I have never understood why wrestling is considered a sport. ( Similarly I never understood why boxing is in the Olympics either. )
The truth of the matter is WWE is not a sport, but rather entertainment. They are not legitimate contests, but rather scripted promotions, with specially choreographed moves designed to titillate the audience. These intentional moves are part of the reason the plaintiffs are seeking to be seen as employees; they were required to do these moves , hence WWE exerted direction and control, ergo there is an employment relationship.
Of course, it is not that simple. This claim has been made several times over the years , yet the issue has never been resolved. The claims were not dismissed, but settled which means the body of law governing the relationship has never been addressed. In other words, WWE has successfully avoided the legal determination of the employment status of the wrestlers.
As a rational and fairly non violent person, it is hard for me to believe that any entertainer engaged in body slamming and head bashing moves would be unaware of the inherent physical and neurological risks involved. Given the litigious nature of America, entertainment and sports, it is also hard to believe that the contracts committing the talent were silent on this subject. None the less, it does appear this suit could have merit.
In response to an earlier lawsuit in 2007, the WWE replied that its talent were independent contractors because they could negotiate their own contracts and had no corporate duties. They were much like the talent on soap operas, the company argued. However, the argument is specious on several counts. First, employees can also negotiate their agreements, so that is not a differentiation. Second, they have duties in terms of dress code and appearance requirements. And although a comparison could be made to soap opera talent, that talent is unionized. Jess Ventura tried and failed to unionize the WWE talent, but perhaps that is another option.
Various legal experts have chimed in on the independent contractor issue. Since independent contractor is an undefined term in the law, it is typically governed by the IRS 20 points. These 20 conditions need not all be true to make one an independent contractor, which adds to the ambiguity. According to a recent University of Louisville Law Review study, the consensus seems to be that WWE wrestlers meet the employee criteria in 16 of the 20 points. Most legal experts seem to see it the plaintiffs way.
Many of the wrestling cognoscenti have lamented the fact that few wrestlers wanted to challenge their employment status in the courts. Well that day has now come. I can’t help but wonder if all the focus on uber drivers and independent contractor status didn’t prompt some additional discussions. WWE says the suit will be quickly dismissed. I am interested to wait and see.
In the spirit of full disclosure, I live in San Francisco and I am a Warrior fan. That said, even though I watch all the games, I am not so knowledgeable about the NBA and the rules — that’s what husbands and kids are for…Finally, as I get out all the disclaimers for this blog post, I am a fan of Draymond Green. I know he can be a bully, but I also know he has been a true stand up guy to his community and alma mater in Michigan. Philanthropy is near and dear to my heart, so I love to see the generosity of athletes when it is done is such a deliberate and authentic way.
Like many others I found the NBA’s actions suspending Green to be inappropriate, because it goes against all of the rules of discipline. For 7 years I taught HR to seniors at the University of San Francisco School ff Management. Discipline in organizations is both an art and a science. Most progressive discipline structures on built upon the framework of ethical principles and have three key elements: Interactional Justice, Procedural Justice and Outcomes Fairness.
Interactional Justice refers to the notion that the discipline takes into account the feelings of the individual involved . Based on the news coverage, it appeared LeBron’s feelings were highly considered. Draymond’s feelings of disrespect, which were later echoed by commentator Charles Barkley, were not given as much weight in the calculus.
Procedural Justice is that the methods used to determine the discipline were fair and that the process is agnostic about the individuals involved. The fact that this decision was arrived at, not during game 4 , but behind closed doors afterwards does not support a good process. Similarly, had this kerfuffle been between LeBron and any one else other than Draymond, a different conclusion would have been reached.
Finally, Outcomes Fairness refers to consistent fairness, knowledge of potential outcomes and penalties in proportion to behavior. Draymond did know that he was approaching the thresh hold for suspension due to his accumulated fouls. That said, the fact that the flagrant was not assessed during the game but after the fact, makes the outcome seem less objective. Some commentators have suggested that the suspension is a “make up call” stemming from the failure of the officials to call a flagrant during the prior series with Oklahoma, when Green kicked Steven Adams. That “make-up foul” rationale is the antithesis of outcome fairness, since it occurred in a totally different play off cycle. The officials’ failure to appropriately call the game should not come back to haunt a player two weeks later.
So I think the NBA should clean up its act. I also think the Warriors may just win this one for Draymond, and wouldn’t that be fitting.
Journalism today is not what it used to be. Gig economy pundit that I am, I get my daily google alerts on anything to with this new economic dynamic. More often than not, the article is not quite on point, and or has more to do with the sharing economy than the gig economy -- they are related but not synonymous.
Today's headline was from a piece by CBS Boston and was entitled "The Millennial Mindset and the Gig Economy". It opened with Gallup Poll data on the priority the younger generation puts on career advancement. The challenge though, is the interview , since many employers want 4 -5 years of experience. A recent graduate laments that he just does not have the requisite background to be considered. The piece then jumps to the fact that the gig economy has changed the social contract and it is not clear how it will all settle out.
Really??? I wouldn't blame the gig economy for the fact that may jobs require some level of work experience. That has nothing to do with any type of social contract, eroded or not, between employee and employer. It has more to do with the level of expertise and or training required to successfully perform the tasks associated with the role.
Maybe the author of the piece should get a new gig that doesn't involve writing about the gig economy...
So I am working on a new book, "Thriving in the Gig Economy", a subject I happen to know a lot about from my experience at M Squared Consulting. That said, though, there are many new players since the days when I ran M Squared. As fodder for my book, I am walking the talk and exploring new platforms and using gig economy resources along the way.
I have registered as an expert at a number of sites. The most remarkable experience was with Hourly Nerd. (Really, they thought that was a good name, but I digress.) The Hourly Nerd pitch is that the consultants or "nerds" on their platform come from only select business schools. To underscore this, they ask that all potential consultants sign up using their business school email.
Now there is the rub. When I went to business school, email had not yet been invented. I know I date myself, but that doesn't make me any less qualified as a consultant. I must say, to Hourly Nerd's credit, they responded immediately when I pointed out that I did not have a Haas Business School email since that would have been impossible in 1985, and since I knew that they were not intending to discriminate against older MBAs, there had to be another way for me to apply. Needless to say I was vetted rather quickly after that.
In my 3 weeks of being in the nerd ranks, I have received 2 inquiries, neither of which was really appropriate for me. Since I chair a not for profit humanitarian NGO, I received a request to do research for another non-profit in a totally different field. Clearly they need to work out the difference between functional expertise and industry expertise in their algorithm. The second was a bit more on point, looking at employee utilization in consulting firms. However, since the consulting firm I ran was a hybrid firm, providing independent consultants, gig folks or nerds in their parlance , to projects my expertise was not quite on point. As they say, three is a charm, so I wonder what might come next...
In the meantime, I am securing some programming talent in this gig economy as well as research time from some other platforms. I am intrigued to experience the customer side...I will keep you posted.
Last month, Uber settled the class action lawsuit involving its drivers in Mass and CA. The court papers reveal that the settlement was $84 million, while some estimates put actual damages, had they lost as trial at anywhere from $750 million to $4.1billion. Is anyone surprised they settled?
Part of me hoped that the case would continue to the courts, since such a case might have brought some needed clarity to the mess that is independent contractor versus employee regulations.
In 1993, I started a firm, Collabrus, because of this very ambiguity. Collabrus acted as an employer for consultants during a project when the nature of the work or the client’s risk profile warranted that structure. It offered health insurance as well as specialized benefits designed for consultants, like low cost errors and omissions insurance. In setting up and running that business I learned more about independent contractor compliance than I ever cared to know, hence my interest in the Uber case.
I thought, had it continued, the Uber case could go either way. One of the reasons that this is such an ambiguous area is because “independent contractor” is an undefined term in the law. Much of our employment law is derived from British master servant laws which date back to the 14th century. In fact, they were developed following the massive carnage of the bubonic plague; since so many had died, laws were needed to define who of the remainder were the masters and who were the servants. Back then independent contractors (ICs) were not part of the picture.
Since there is no legal definition of an IC, though some states have done so, tests have been developed that take into account agency law constructs as well as other factors. The IRS has put the most widely used framework together in its “20 Points” that define an independent contractor. These include things like having their own tools, being able to experience a financial loss, and receiving no training. Unfortunately, not all of the conditions need to be met, and some are more important than others. This makes for a very murky picture of who may be an IC and who may be an employee. In the last 20 years, the two key things that businesses have drawn from the “20 Points” are that the most important considerations are direction and control. If you direct and/or control the work of someone, they are likely your employee.
So lets consider the Uber driver. One thing Uber has going for them is that they don’t train their drivers; drivers come to them knowing how to operate a vehicle. Uber may certify that the driving record be clean, but this wouldn’t be considered training or direction. The fact that drivers can set their own schedule is also a plus for Uber, since it reduces that sense of control. The fact that so many drivers are very part-time, i.e. less than 10 hours, is also a plus for them. Technology, though, muddies the picture. Drivers are given an iPhone by Uber to be able to hook up to their ride-haling platform. As such, Uber is providing the tools to some extent. Perhaps the biggest issue, and the one that an Administrative Law Judge highlighted in a ruling in 2015 where he deemed a Southern California driver an employee, is that Uber sets the pricing of all rides. As such, this is preeminent control over the driver.
Given my interest in the subject and being a very regular customer of Uber, I quiz every driver about their thoughts on the lawsuit. I have yet to encounter a driver who wants to be an employee. Most are teachers or students or retirees, who want the flexibility of time. The one suggestion I did get was that Uber could have done a better job helping the driver prepare for the tax implications of being an IC; as one teacher said, he'd always been a W2 employee, so it never occurred to him that he needed to save all of his receipts. So maybe Uber just needs a wonderful flyer, brochure or even app, entitled"Making the Most Money with Uber - How to Manage your Business Expenses." That seems like it would be a lot cheaper than another court case.
My good friend and former board member is about to come out with a great book, Make your own Waves, The Surfers Rules for Innovators and Entrepreneurs. I knew Louis was a great baseball player – he has two World Series rings as part of the United States Masters team, which is the best an amateur can get – but I had no idea he surfed. He does surf, but he isn’t great at it, he says with self deprecation. But his lack of expertise may be precisely why he was able to glean such insight from the sport; experts don’t always question, because they just know, so the outsider can sometimes be the better observer of nuance.
Writing a book is like launching a specialized business; there is an entrepreneurial element that I did not appreciate when I wrote my first book. As I work on this one, I am cognizant of those surfing lessons, and many of the surfer’s rules have resonated for me. I already knew how to swim, but rule #2, “just get wet”, may be my mantra these days. At some level, when you are writing based on your own insight, whether a report, a speech or a book, flow happens. When research is added to the mix, the flow changes, since more elements are being added. Especially when every interview turns up new insights, there is a natural tendency to keep investigating. New insights turn into new avenues to explore, which can delay the ultimate writing process, since I do want to be comprehensive and provocative. But I am also impatient, so I decided to parallel process and write while I research, because the truth of the matter is I just need to get wet, to decide to get into the water and ride the waves. I just need to write and take it from there. Surf’s up…thanks Louis…
A recent article in Forbes, http://ww.forbes.com/sites/parmyolson/2016/03/21/gig-economy-app-blue-collar-job-on-demand/#51a7380f74e2, illustrates a problem with the media's focus on the gig economy. The article, entitled "This App for Blue Collar Workers Offer a Twist on the Gig Economy" describes a well-funded start-up in Spain called Job Today which has launched an app to place workers in hospitality jobs that have "the Old School idea of a job where you are an employee." I am sorry, Forbes, but being recruited into a job as an employee is by definition, not a gig.
Indeed Job Today is excited about the number of people it puts into jobs, not gigs. It is a staffing segment that does not even represent white space in the staffing industry; there have been companies servicing the hospitality industry with servers, bartenders and maids for decades. Granted, the founders wanted to do a bit of disrupting, since so many people find jobs in hospitality by walking into a bar and offering up a paper resume. This was a market inefficiency that technology could potentially address.
Using technology differently in the space is where the confusion, probably arose. Job Today has a Tinder Like app, where the user swipes to see different candidates. (The old HR Professor in me, sees some inherent potential discrimination issues in that, but hey... they are in Spain...) Just because there is a cool app, doesn't make a staffing firm a gig economy player. Yes, sophisticated platforms for matching talent has enabled the freelance economy to be targeted and engaged more precisely, but this is sophisticated technology designed to help people get regular jobs. That said, they do handle some temporary ones, for vacancies or seasonal work, but their bread and butter is in the full-time regular hires.
So just to be clear, for any journalists or bloggers who might not understand my nuance here. Regular employment where people are hired as employees are not gig economy jobs even if a cool app is involved. As McKinsey defines it, the gig economy is "contingent work that is transacted on a digital marketplace." Job Today has the second condition, but its goal is not the first.
The headline in the Wall Street Journal yesterday read, "Goldman buys Retirement Startup". The story went on to report how the purchase of Honest Dollar, an Austin, Texas-based financial technology firm focused on retirement plans comprised of low-cost exchange traded funds targeted at small and mid-sized companies was a purchase designed to broaden Goldman's business into less exclusive services. It was also a play into a new distribution channel, where the emphasis is on technology. The inference was that by purchasing this innovative financial technology company Goldman was buying entry into a hot new marketplace.
Although I can't speak to the technology, I can speak to the innovation because Honest Dollar is one of the few financial service providers targeting gig economy clients. Some coverage of the transaction did mention that Lyft, the on demand car hailing service, was a client. What was not mentioned was that they were a client not just for employees but for 1099 contractors.
One aspect of working on a 1099, independent contractor (IC), basis is that you are responsible for paying your own state and federal taxes (FICA, FUTA and income) and managing your own benefits. The latter includes saving for retirement. Whereas traditional employees have these payments deducted from their pay, ICs need to make the effort to coordinate it all. Many pundits have suggested that this lack of access to benefits traditionally offered to employees is reason to eliminate IC status, unionize or at least slow the increasing presence of gig economy workers.
Honest Dollar saw this marketplace complexity as an opportunity. Providing retirement plans to 1099 workers represented a whole new target that was not underserved but unserved . William Hurley, co-founder of Honest Dollar says "It's the first retirement plan for the modern world." 1099 contractors who work for Honest Dollar clients can have retirement savings deducted from their fee payments. Contractors can even set it up on a smartphone.
Now with the backing of Goldman Sachs, Honest Dollar is bound to expand its offerings, the safety net for the gig economy may be improving.