Tag Archives: employment laws

A Gig Economy Downside No one Mentions

I saw a blog post today from DCR Workforce announcing that there will finally be a "reckoning " of the gig economy.  http://blog.dcrworkforce.com/finally-official-reckoning-gig-economy Like most people who question the value of the gig economy, the author's concerns were about the  lack of a safety net for the workers.  There was also apparent relief that perhaps, in this reckoning, we would also "weed out cases where employees are being misclassified as independent contractors by businesses."  

I too think it would be valuable to have such an accounting  for what is becoming an ever-growing proportion of the labor force.   I too recognize that may of these workers are not doing gigs by choice but out of necessity.

That said,though, so many pundits and economists often overlook the fact that for so many the further maturation of this marketplace is not pernicious but empowering.  Many professionals have self selected into this gig economy labor force, because they can; they have the expertise that will command a market rate that will support their lifestyle.  And now, with the increasing sophistication of search algorithms, the ability to parlay that expertise to the market place is so much  more efficient.

It is not a free market, though, because legal obstacles especially in employment law around independent contractors and employees frustrate the free flow of talent. Yes, some players may inappropriately classify workers, but the flip side is true as well. Many companies are so worried about the employee independent contractor issue, that they refuse to engage anyone who is paid on a 1099, the tax form used to report non wage income.  It is not illegal to work on a 1099 basis, yet many consultants have been forced to change the way they do business to deal with this heightened risk profile. I should know, in 1992, I started a firm, Collabrus,  to employ consultants  for the duration of a consulting project, if  the nature of the work or a risk averse client required it. Similarly, many senior level consultants are forced to work through master vendor arrangements, where they become the employee of someone in order to complete a consulting project.

So the downside that many never seem to mention, for what is albeit the upper end of the gig economy labor pool,  are the marketplace inefficiencies  that institutionalize risk and increase costs to practitioners  who are forced to operate differently with  different clients.

So my question is this --  when the reckoning of the gig economy is done, will they also identify those workers who were misclassified as a temporary employee, when they could have operated as a 1099?  It seems only fair.

The “Gig Economy” and the employment data problem

A recent news item little noticed apart from gig economy wonks like me was the fact that  the government is planning to get data on how many workers actually populate the "gig economy."  Labor Secretary, Thomas Perez, announced at the end of January that the department would team up with the Census Bureau and  restore the Contingent Worker's Supplement  as part of the May 2017 Current Population Survey.

It is being restored because in 2005, in the infinite wisdom of governmental agencies, the decision was made to discontinue data collection in this area. The Supplement had only been published 5 times and in fairness, it had its share of critics.  A major failing, was the fact that  it aggregated all contingent work arrangements, from  senior management consultants to security guards to cab drivers.  As such, drawing conclusions about income trends, potential wage and hour infractions or economic security was difficult.  Similarly, no attempt was made to try reconcile the differences between the self employed - a broad category which  consultants, architects and dry cleaners - and 1099 tax filers.

Now that the gig economy appears to be fundamentally redesigning work and income structures in the US economy, the Labor Department  wants to try to get a handle on the phenomenon in large part to better inform policy decisions. They do acknowledge that it will be difficult, since just the definition of what qualifies as contingent work is controversial. Additionally, one would hope that they will make strides to refine the data to be able to draw more meaningful conclusions.    That said, we should not get too excited, since this  there won't be data until early 2018 at best.

What is ironic to me, as someone who has been involved in the  high-end of the contingent work force for nearly 30 years,especially now in this political season is the constant emphasis on jobs creation as a metric of economic success.  When you consider 53 million people, according to The Solo Project, have chosen to define  themselves as  independent consultants , free agents or free lancers, the magnitude of the data problem becomes apparent.  These people do not want traditional jobs. What labor statistics are capturing this? Lets hope Perez can fix the data problems inherent in the Contingent Workforce Supplement, because the world of work is being redefined quickly and the government needs to catch up.

Expertise 15 years later

Expertise and the Independent Consultant

I recently reread my book, A New Brand of Expertise, published in 2001. It was a book about, as the tag line said, how ” free agents, independent consultants and interim managers are transforming the world of work.”

bookIt was an odd experience, after all of these years to read the words. Perhaps more prolific authors are used to it, but for me it was very strange. I was surprised at the passages I didn’t recall at all, (really, I wrote that?) including some rather remarkable anecdotes. I had to laugh at the few (and luckily there were only a few) references that didn’t hold up at all; for example, my advice to new consultants to build a personal brand offered Martha Stewart as the role model. Obviously this was written before her prison sentence. My opening chapter referenced the Donna Reed show, because her husband, ” the company man” was becoming an anachronism. My guess is there isn’t a millennial around who could relate to that TV reference. (Oops, I am dating myself, but I only saw the show in reruns as a very young child…)

What dismayed me was one aspect of the forecast I made 15 years ago about what would happen to this nascent independent marketplace in the years ahead. I had suggested that on the horizon there could be some simplification of the legal ambiguity that was a threat to the dynamic growth of an independent talent market. I offered hope that U.S. 344, the Independent Contractor Simplification Act, authored by then Senator Kit Bond of Missouri would pass. I was overly optimistic. Not only did it not pass, it never made it to the floor — It died in committee the following year.

And now, the independent contractor issue is in the limelight again as the “gig ” economy has been caught up in the ambiguous regulatory environment, as firms like Uber, Handy and Instacart try to maneuver in the anachronistic definition of employment today. . In the meantime, the free agent and interim management part of the gig economy has only continued to grow. Perhaps the sharing economy, led by the Uber driver lawsuit, will help bring much needed clarity to this issue. Isn’t it about time?

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