Tag Archives: work

The Sharing Economy versus the Gig Economy

gig economy

Thriving in the Gig Economy - Scholarly Research

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 Gig Economy Eco System

Employment in the Gig Economy

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

From the ShiftPIxy website

From the ShiftPixy website

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.

Employment Laws and the Gig Economy

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.

Wrestling the independent contractor problem

Independent Contractors and Entertainment Law

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 .images

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 aimages-1nd 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.

 

Discipline – or not – and the NBA

Discipline, The NBA and Interactional Justice

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.

“The Millennial Mindset and the Gig Economy”…not…

The Gig Economy and Career Advancement

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...

 

I am Uber the Uber Lawsuit

Uber Lawsuit and The Independent Contractor

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.

 

Just because it has an app, doesn’t make it a gig

A recent article in Forbeshttp://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 Freelance Marketplace Platform Race

Now that I have embarked on my research for the next book on the high-end of the on demand expertise marketplace, I am having a lot of deja vu moments.  Certainly, there is the fact, that though I have been gone from my old firm for several years, things have not changed that much. Tremendous, credentialed  expertise of just about any type is available on demand. Companies continue to avail themselves of this resource in new ways, and new competitors continue to arrive touting different points of differentiation.

It is this last area where the deja vu comes in, because the new platform competitors appear to be cropping up everywhere.  My twitter feed is cluttered with entreaties from one firm to beta test a new platform that "won't suck." (I couldn't help but wonder if they shouldn't get a free

ipo-flops3-1

The Pets.com sock puppet

lance copy writer to come up with a better ask...) Quite frankly, I am reminded a bit of the frothy days of the internet when pets .com  became the 4th ( yes 4th) online pet supply store.  Despite the fact that dog food is not a high value shipping product, the firm had an amazing IPO valuing it at close to $100 million  in 2000 and was out of business 9 months later.

 

I am not suggesting that the online freelance marketplaces are headed for the same fate.  Indeed, I think technology is creating the platform to enable a market to be made in talent, in the true economic sense of the word market. I look forward to better understanding these business models to see how differentiated they really are.  Certainly, some are defined by the type of talent they seek to attract; the sites working with copy writer won't appeal to CFO's, but dancers will do... Interestingly, one in the UK, combines a totally automated service with consultant mixers, so freelancers can gather together.   I can't help but wonder if freelancers will subscribe to all that operate in their area of expertise, or if they will  choose just one.  If it were me, I'd definitely go for the one with the mixers...I am a sucker for cocktails...

 

 

In the beginning….

…there was the Oxford English Dictionary. To retire originally meant to move to a position of safety and or relaxation.  One would “retire to he bedroom”, for example. In fact an archaic definition of retirement is “a secluded or private place.”

Retirement is now a modern concept of  “ceasing work “, but I don’t find that quite accurate.  Perhaps it does involve the termination of regular remunerative tasks for a long term employer, but it can also involve the exploration of new pursuits . That exploration process can require much effort and focus and yes, work. So, the “ceasing work” definition is really not applicable.

Clearly we need a new definition of retirement, and that is part of what I hope to discover through these posts.

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