Workers In A Gig Economy

Last Thursday, the U. S. Department of Labor held a conference on the Future of Work. Many speakers from different organizations including government, think tanks, education, investment banking, private sector businesses, non-profits, unions and others were included in the panel discussions on how work is evolving especially as technology advancements are occurring in workplaces.

Some of the employment in the U. S. is shifting to more of a “gig economy.” This has been the term for the rising number of temporary, outsourcing or contract jobs. While this appears to be making a major change in how we work, some of the panelists said more data is necessary to determine the impact this is having for workplaces and workers. Some suggested lower-skilled and older workers may be impacted more by this change but, again, without the data it’s hard to say who and what jobs are seeing the most change. There also was a question as to why this is occurring. Some of this could be happening because of technology but the representative from investment banking noted that employers don’t want the people issues. Those issues include both financial and policy concerns. It’s much better, he said, to be able to focus on just the business than on employee issues. Before the gig economy was centered around certain work sectors but, as the Dept. of Labor noted in a summary of the conference, this is expanding to many other sectors. Some also reported this doesn’t happen in other countries. In European countries, there is greater respect for jobs and the worker. Laws, regulations and policies are focused more on worker employment.

The gig economy raises issues for workers. Some of these issues concentrate on pay and benefit structures. As it appears now, contracted employees may be responsible for their own benefits such as healthcare, retirement, and unemployment coverage. The Dept. of Labor is also concerned about areas they oversee for worker protection. For the employer, there are still the financial and personnel issues they must manage. While some employers, like the investment banker said, will want to contract out to focus more on what they do, those same employers will still have personnel issues to contend with. They may have to negotiate with firms about pay. They probably will have the supervision issues of making sure the work is completed even if it’s done by the “gig” hire. There is no way to get around those issues.

In fact, in an article from the New York Times on the same day the conference took place, companies who had used contracted individuals to fulfill work in their organizations were going back to traditional roles of actually hiring these individuals as their employees. Problems such as having people come to work on special days and turnover issues were outweighing the initial lower costs they had with contracted workers. In addition, the quality of work by contracted employees was much more difficult to manage so the companies decided to hire employees. One company said the change back to the traditional employer-employee relationship has made a substantial positive difference. It may have increased their cost by 20-30% but they said it was well worth it.

Another concern for contracted employees are other business costs that could be required of them. Recently in Ohio, legislators have focused on changes reflecting the increase in Uber drivers. Legislation is being proposed to require drivers to have personal liability coverage for commercial drivers. How will this impact the pay for contracted employees? Will they be able to make money off these jobs or will requirements such as liability coverage cause them to lose money? Will contracted employees be able to negotiate their pay through organizations such as Uber or will they be paid only what Uber wants to pay them. More than likely, it will be much more difficult for individual contracted employees to negotiate pay so their ability to be able to cover any rising or additional costs will be nil. A group of contracted employees may have a better opportunity to negotiate than individuals.

Lots of questions and issues surround the gig economy. Some people like that type of work but some want work that is more reliable. Some say younger workers are more open to gigs. My nephew is one. He’s one of these techies but my niece who isn’t would much prefer a more reliable source of income. Gig work may be great during periods of higher employment ability but what happens when there’s greater unemployment? Those who like gig work want the flexibility and supposedly less hassle it brings but in the end that doesn’t sound like it really happens. Even Uber is having its share of problems and that will probably increase as issues are addressed.

As one panelist suggested, and she’s right, much of what contracted workers and organizations like about gig work can be addressed in the traditional work setting. Worker voice or employee engagement or labor-management committees address issues like these all the time. It doesn’t take a gig economy to change how we work!

http://www.dol.gov/featured/fow/factsheet.pdf
http://www.nytimes.com/2015/12/11/business/a-middle-ground-between-contract-worker-and-employee.html
http://www.crainscleveland.com/article/20151018/NEWS/310189986/state-legislation-is-likely-for-uber-lyft

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About CALMC Blog

Columbus Area Labor-Management Committee is a not-for-profit organization dedicated to involving employers and employees to preserve jobs, resolve workplace issues, and promote labor-management cooperation. Visit our website at http://calmc.org
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