Interview 11: Janice Simmons

Reading Time: 12 minutes

Janice Simmons is a business executive with Accenture.

Tim: Could you tell me a little bit about your background is in dealing with staffing temp or contingent work?

Janice: Throughout my career I’ve had opportunities to hire people in the contingent and temp workforces. As a consultant, sometimes we need to bring in additional people to help us on a temporary basis.

When I was an executive in industry, I did the same thing, whether it was bringing in consultants or contingency staff for a short period of time to help out on a particular project.

Tim: You’ve been doing this for a number of years. There’s a lot of talk right now that this contingent work thing is new. Is that your experience?

Janice: Not really. What is new is that more people are seeking this kind of work as their preferred way to be in the workforce. More people are taking the lead in saying “This is how I want my life to be. I want to be able to come in and out of work. I may want to be able to work for 10 months in a row and take 2 months off. This fits in with my goals and how I want to develop professionally.” More people are interested in contingent work and wanting to do it instead of saying, “I’m just going to do it for a little while until I find the permanent position.”

Tim: There’s a lot of discussion right now that says technology is destroying jobs. But the way you speak about this suggests people are choosing to go into this kind of work. Do you feel people are choosing this work for lifestyle reasons or being forced into contingent work arrangements?

Janice: I think it’s a combination of things. Some people may find themselves in that space because of changes in jobs or changes in a company. Some people who find themselves there don’t necessarily want to be there. But I think other people are choosing it. My perception based on my friends, colleagues and the folks I’m working with are more people are choosing it intentionally.

Technology is becoming more and more a part of how we get work done. I’m currently working with the hospitality industry quite a bit. We’re seeing more robots in hospitality every year. For example, Hilton has a new concierge that works alongside of a human concierge. The name of the robot is Connie the Concierge, and she works with humans. She can process information faster than a human being. And so having a robot working alongside of a human you get both the personal touch as well as the power of a computer that can analyzed vast amount of data more quickly than a person can to answer a guests question.

Pizza Hut has a robot that they’re trying out in Japan called Pepper. You order from the robot, it can answer all kinds of questions about the menu, nutritional information, etc. It is so cute that you want to interact with it. Your order is instantly placed and you pay the robot with your phone. It makes it fun for people to come in and to interact with a robot.

I’m actually pretty optimistic that what we’re going to see with technology is some of the more mundane tasks that people can master quickly and don’t want to do will be done by machines. And new jobs will be created that are more focused around making great decisions and working with people and inspiring people to do new things. I think as robots become more and more a part of businesses, you’re going to have to have people who can care for those robots, who maintain those robots. Machines can continue to do stuff that is dangerous for people to do or do tasks that are mundane for people. This will open up new work that is more interesting. It’s going to create different kinds of jobs for us.

Tim: What is unexpected or surprising about the current discussion around contingent work?

Janice: One of the things that will have to change is the way companies engage in the gig economy. A lot of really big companies that I’ve either worked for or worked with have some very cumbersome processes in place to be able to bring in gig economy workers. If there’s somebody I want to bring in to do a certain piece of work for a certain period of time, there are many, many hoops to jump through, often in procurement and legal processes.
So one of the things I think people are finding as they’re trying to become consultants is a lot of big companies have very difficult, complicated processes for approving contractors.

I believe companies are going to have to streamline their processes if they want to be able to use more flexible external resources. They will need to become more agile, more nimble.

Tim: How do the people you have worked with handle the volatility of contingent or project-based work?

Janice: The individuals I know who do this well are really good at planning and budgeting. They know the basics of how much money they need to live and cover their bills, and they have a great marketing plan for their services. What I found is people who tend to be very successful are quite networked with other entrepreneurs and other people who do this kind of work. So that if one finds an opportunity that is bigger than their own capacity, they can bring somebody else in.

Successful independents have a number of different ways that they are making money. They might have something like an Uber on the side of their main business, and then they have an iron in the fire to develop in another area. To be successful in this space you have to be very entrepreneurial, look to expand your network, and know how to creatively use the tools available to you.

Tim: How should workers be thinking about work differently? How should they be thinking about the jobs they take on?

Janice: My suggestion is that people need to think about it in a number of different ways. Most people want to use their skill set because they’ve built up capabilities and want to to use those capabilities to do great work. But they need to get creative about how they can apply those skills today. They also need to think about where they want to be two or three years from now in terms of capability and in terms of happiness. And then they need to look for areas that are going to become hot. Maybe it’s is getting deeper in their current field are or maybe it’s broadening their capabilities.

I think every individual has to say to themselves, “What am I great at today? How can I make a great impact, build my reputation, and build my brand? And what should be next for me in two or three years?” I don’t care if people are permanently employed in a company or doing gig work, these are the questions that everyone should be asking because work is changing so quickly.

I think in the next five to ten years we’ll see massive changes in work, how work is done, and who’s doing work. New jobs will be created. We all need to be thinking not only what we are great at today, but what do we need to be great at two or three years from now. And we need to seek out assignments and projects that will give us those capabilities.

Tim: What skills do you think people need to have to be successful today?

Janice: One skill is being able to build trust very quickly by being transparent. I call it being radically transparent by sharing your process, how you work, how we work together, and sharing all that up upfront. If you’re good at building trust and being very transparent about how you want to work, how things will get done, you get clarity with your clients very quickly, get shared understanding, and are able to move very fast. These things that are important to me when I look for folks to bring on my team.

The ability to move fast, to be agile, is very important. The quicker you are, the better able you will be to take advantage of opportunities that come up. That’s incredibly important. It’s networking, and it’s keeping your eye on what’s coming next so you can learn about it and take advantage of it.

Tim: How should businesses be thinking about and working with talent differently?

Janice: I work for Accenture and what we’re working with a lot of clients on right now is exactly this question: How do we think about work and workers differently? As a company, I need to start thinking about work in chunks. If I’ve got an important chunk of work that can be done, or needs to be done by somebody from the outside, how do I package or chunk the work and then find the best possible people to do this work in my external network. Businesses already have to work hard to find the right talent to bring in.

There are going to be more what I would call “talent broker” kinds of positions inside of companies or in external companies that can link a bigger organization with talent from different sources. If I were a large company, I’d be thinking about how do I get connected to talent brokers who can bring in talent for specific projects. And that talent broker could be a website. It doesn’t necessarily have to be a person. It could be an exchange site where I can go and say, “I have this work to do. Who can do it for me?”

The other thing that is interesting for companies to think about is what we’re calling the “liquid workforce.” These are people who want to come into the workforce maybe for two or three months to do a project, and then they want to maybe do something else for two or three months with another organization. Or maybe they want to work for six months and then they want three months off, and then they want to come back in and work for six months. It becomes this flexing in and out of projects and roles. Companies are going to have to be able to manage that flexing and give people more choices in scheduling. I’m working with a hospitality and entertainment client right now where they schedule resources for months at a time. They’re thinking about to attract people to work the time slots that aren’t the most attractive. They are asking lots of questions. Can they let people bid on when they want to work? Can they offer premiums for doing some of the jobs that are less desirable jobs or the jobs that are at less desirable times of the day? Maybe people can earn additional money or additional benefits. They’re playing with how to use this liquid workforce and people’s desire to come in and out of work, and their need to make certain jobs attractive for people. They are only thinking about permanent positions.

Every company needs to think through how are they going to set it up so that we are bringing in the best of the best. Every company needs to consider how well networked they are. Whether or not they are chunking the work in ways is attractive to people.

Many companies go out and give work to the lowest bidder. So they may be able to find high quality work done by the lowest bidder. But some tasks may be different. Companies may have to offer a little more incentive for people. Companies need to know the work, know the workforce that’s out there, and know what has to be done in order to attract the right kinds of people.

We just finished Accenture strategy graduate research study where we went out and for the last two or three year interviewing recent college grads in the US. One of the things that they’re consistently telling us over the last couple of years is most people don’t want to work for large companies. In fact, only one out of seven in our study said they wanted to work for a large organization. If you are a large company, how are you going to make your organization or your work attractive to these recent grads? How are you going to make it attractive for them to work in your company when they’re more inclined to want to work for smaller companies where they feel they are able to learn quickly, work on more interesting tasks, and rise through the ranks?

Tim: Where are companies on the learning curve? Do you think companies are in a position where they’re ready to make these changes, or are they still very much in a learning phase?

Janice: I was just talking to some colleagues about this question a couple of weeks ago and we came up with companies in two big buckets. Some of the more traditional companies that have been around for a long time are really having to pivot to this new way of thinking about work, the gig economy, and workers. They realize what’s going on and they’re working hard to pivot to the new. And it’s not always easy when systems, and processes, and mindsets are set-up for a different way of working.

And then there are folks who are actually creating the next new way of working. This is the “Uberization” of work that emphasizes flexibility of what work, how much work, and when work is done.

There are a lot of very well-established brands and companies who are working very hard to pivot to the new. And then there are lots of leading edge companies who are creating whatever the next new is going to be and taking it direct to the people.

Tim: What sort of system changes do we need? What do you think we need to be internalizing as a society as the nature of work changes?

Janice: That’s a great question. One thing I think is terrific is people will have new opportunities to use their skills and capabilities. That’s very positive for people because we all want to use our unique skills and capabilities. We need to be ready to embrace and support those new opportunities.

As an independent, whether you’re an entrepreneur or a small company, you do need to think about healthcare. Maybe we’ve made some strides in that direction already with the Affordable Care Act, time will tell. And I think we need to make it easier for people to access opportunities for themselves. We need to make it very obvious to folks where the work is and help people get connected. Those are the two main things I’m thinking of today. There are probably deeper questions than I probably have thought about right now.

Tim: I appreciate your perspective on the importance of accessing new work opportunities. I’m from rural Wisconsin where folks tend to be farmers, in the skilled trades, or have a very small business. Their skill sets are incredibly entrepreneurial, yet there is often this pressure to leave the work that created these entrepreneurial-minded people in order to get a college degree and a white-collar job. Meanwhile a lot of people in business ecosystems are saying they really need entrepreneurial people. That seems like a missed opportunity. Similarly, I do some work with marginalized communities in Milwaukee, and a lot of these folks are also very, very entrepreneurial. Yet there is this push towards acquisition of jobs that in a lot of ways just aren’t there.

How do we make a system that recognizes and values these entrepreneurial skills for what they are and connects them with work?

Janice: I do think there’s needs to be a collaboration. How do we make it really easy for both the companies and the people to find each other and connect? That’s going to be critical because there are opportunities out there.

For a lot of people that I know who think about stepping into the gig economy, their biggest question is how to find work. Especially if they have specialized skills or if they want to broaden develop new skills. We all need a fair amount of certainty and stability in ours life. For some people it’s a lot more than others. But how can people get into the network and consistent get opportunities? I think is one of the critical things we have to continue to solve for. And I think it’s happening. Creative people are finding creative ways to connect people. And I think that will continue to happen. It’s interesting.

The other thing I found is people questioning is what they really need in terms of education and learning. Is college the best path to success that we make it out to be? There are wonderful opportunities out there for folks without degrees, such as service technicians in auto dealerships. These are amazing high paying jobs where they use computers all the time. They are troubleshooters. They solve problems. It’s not always getting dirty and spending your life under a car. Cars are so much more sophisticated. Those jobs have changed significantly. There are lots of options for people with varying specialties and education.

Do I need a four year degree? Do I need to go to graduate school? It depends on what I want to do. I can make a great living in a lot of different ways. What’s going to make me happy and what’s going to be able to give me the life that I want? How can I keep learning and growing? These are important things to be thinking about as well.

Tim: I think you just identified that one of the potential systems changes is a change in perception of education and understanding how it’s important and when it’s important. A 4-year degree is great, but the real takeaway for me was learning how I learn.

Janice: Learning how you learn best is critical. When you know that about yourself, you are able to handle new situations that you may not be familiar with. Some companies are really great and they’ll give you tons of interesting learning opportunities that help and support development. Some companies don’t do that so much anymore. So I think you’ll find more people taking classes on their own and teaching themselves new skills.

Tim: Last question for you. What core challenges, and/or opportunities in this world of work are you focused on or do you find most exciting?

Janice: What I find most exciting are the opportunities people are going to have in this new world. There are going to be new jobs created, and these jobs are going to be really interesting. Being able to leverage and work side by side with machines—the human-machine interaction—can make the human part of our work much more exciting. People will also have new opportunities as we think about the liquid workforce and working in chunks on a project-basis. There’s going to be a lot of opportunities for people to broaden their skills, to deepen their skills, to do more rich and meaningful work.

Tim: Great. That’s everything. I really appreciate you taking the time for this interview.

Work Future 8: Gig Work as Workforce Development

Reading Time: 6 minutes

The Brookings Institute recently relaunched their Metro Monitor1 with the declaration that cities need to move beyond the focus on jobs when it comes to benchmarking success:

…the problem is that the relentless chase for jobs, absent broader goals to improve people’s economic well-being, can be costly. Local tax incentives to build a shopping center, for instance, can result in near-term job growth. But if that development occurs in a region where incomes aren’t growing, then that subsidy merely shifts consumer spending and associated jobs within the region, rather than creating net new (quality) jobs and lifting incomes.2

This narrow focus on jobs misses the point that jobs are actually means to other ends3 with the most important of those ends being consistent and sustaining income. This obsession with job-creation is built upon the assumption that a job equates to consistent and sustaining income. The reality is there are plenty of jobs that do not provide consistent or sustaining income. Many “jobs” today have more in common with project-based work than they do with traditional W2 employment even though they are frequently categorized as such.4

Far too few of our workforce development efforts focus on the generation of value for society as a whole.

Workforce Development Today

Workforce development efforts typically take two forms. Sector-based approaches (demand side) assess the current and future needs of specific industries and employers and attempt to provide workers to meet those needs. Place-based approaches (supply side) focus on training unemployed workers to improve their prospects in the labor market. There are models that integrate both approaches.

The sector-based approach is reactive in that workers are molded to the needs of employers today and those employers’ best guesses about tomorrow. This approach was very functional when an individual could spend years building up skills and then secure a position that provided consistent and sustainable income for years or even decades. But the fast pace of the 21st Century economy means the sector-based approach has become a boom and bust cycle. Timing has more to do with workforce development than we acknowledge. The current economic pace inherently favors those who are already on a leading edge. Having skills and connections begets the further development of new skills and new connections. The reality of this situation is that by the time most sector-based workforce development programs are defined and implemented, many of the opportunities have already passed.

The place-based workforce development approach is more worker-centric in that it begins from the current state of the worker rather than the needs of employers. Factors as varied as housing, language fluency, and soft skills are often incorporated into place-based programs. The essence of the place-based approach is to prepare workers for the labor market in general while addressing both employment and non-employment concerns.

The down side to the place-based approach is twofold. The first issue is many people who are most in need of income have a very long way to go before they become desirable employees. Very bluntly, if an individual is struggling with basic skills such as language and the use of email, the odds of that individual securing quality, long-term employment are slim. Knowing that 44%5 of college graduates are underemployed6 is a sobering reminder how competitive the job market is today.

The second failing of the place-based approach is the emphasis on job rather than work. Some people are unemployed not because they are unprepared to work, but because their life circumstances prevent them from being able to make a full- or even part-time commitment. We need to recognize that factors such as health conditions, family responsibilities, and transportation limitations often restrict employability. Our current concept of equating jobs and work severely limits how we value work and how we prepare people to provide for themselves.

The core elements of the sector-based and place-based approaches are incredibly useful. Employers most definitely need to be a part of the plan, and programs need to address the entire reality of the worker. This means we need to embrace squishy issues like health, housing, and family along with the challenge of income generation as part of a systematic approach to improving our economy. These are not separate issues to be addressed in silos by hospitals, governments, and businesses. It is because of this complex nature of the workforce development challenge that project-based work is an opportunity.

Workforce Development Tomorrow

The opportunity of project-based work for workforce development is that it allows for a more incremental approach. Instead of focusing on taking people from unemployment to $30,000 a year, we should instead focus on moving people up the income scale in smaller increments. Uber slices up taxi jobs into smaller increments. AirBnB slices up hotels into individual rooms. The mental shift required is to focus on income generation and network-building and skill-building as the end goals rather than getting people jobs.

More businesses could participate in workforce development programs if the emphasis on traditional employment was reduced and the programs invited projects-based work. This model would be mutually beneficial to small businesses and project-based businesses in particular. Small business face growth challenges because each new employee massively impacts the bottom line. Going from two to three employees is a 50% increase in labor costs. This approach to business growth is often undertaken on a bet that an increase in future revenue will cover the additional employment costs. By focusing on full-time employment, workforce development programs effectively dismiss many small businesses as partners because they aren’t in a position to risk the overhead of a new employee.

The reality is small businesses are already using the project-based model informally. Our research has found that skilled trades businesses will bring on a new worker on a cash basis to avoid the employment commitment while vetting the worker’s performance. If the worker is a good fit, that person is made an employee. If not, the worker is paid for the time and moves on. This very useful process is technically illegal under the current IRS classification system of employees and contractors7. It is easy to imagine how workforce development programs could better partner with businesses if this process were legalized and elegantly regulated.

On the worker side of the equation we see a similar opportunity for project-based workforce development that is currently unrecognized and in a legal gray area. Many people entering workforce development programs already make some money. The vast majority of this income is unreported and a portion of it is due to illegal activities. Informality and illegality aside, the core point is if people are participating in the market in any fashion they are practicing entrepreneurship through project-based work. Furthermore, this is a much more practical (if often inefficient) form of entrepreneurship than the institutionalized classes, accelerators, and bootcamps that organizations are scrambling to activate. These workers already have income potential and marketable skills. Yet this income potential and these skills are often overlooked or set aside by existing workforce development programs.

The other opportunity of project-based workforce development is that by changing the unit of work to something more flexible and incremental, we can better acknowledge and support the full breadth of roles and responsibilities people have. Project-based work allows for income generation to be better integrated with non-work concerns such as caretaking responsibilities, chronic health conditions, and transportation limitations.

Start where people are.

A paradox of the current job obsession is that prior to entering workforce development programs, many underemployed and unemployed workers are forced to be practitioners of project-based work to get by. When these workers enter workforce development programs, their project-based work potential is not recognized as a viable means to stable income because it doesn’t look like a “job” or can’t immediately be a “job.” Ironically, research is currently showing that the vast majority of new work opportunities are exactly in the area underemployed and unemployed workers have already been working: project-based work.8

As a society, we are beginning to quantify the high social and economic costs of prioritizing economic concerns over social concerns. It is being recognized that we cannot address the economic without the social. A project-based work approach is one way to begin to integrate approaches that have been separate for too long.

Questions for further consideration:

  • What are the first steps workforce development programs need to take to incorporate project-based work into their approach?
  • How can more businesses be brought into workforce development efforts through project-based work?
  • What parameters need to be set to prevent the abuse of project-based workforce development programs?
  1. http://www.brookings.edu/research/reports2/2016/01/metro-monitor#V0G10420 ↩︎
  2. http://www.brookings.edu/blogs/the-avenue/posts/2016/02/01-moving-beyond-job-growth-liu ↩︎
  3. http://gig.work/work-future-2-what-is-work/ ↩︎
  4. This is core argument put forth by the Gig Work Project. ↩︎
  5. https://www.newyorkfed.org/medialibrary/media/research/currentissues/ci20-1.pdf ↩︎
  6. https://en.wikipedia.org/wiki/Underemployment ↩︎
  7. https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee ↩︎
  8. https://krueger.princeton.edu/sites/default/files/akrueger/files/katzkruegercwsmarch2920165.pdf ↩︎

Interview 4: David Rolf

Reading Time: 15 minutes

David Rolf currently serves as president of the Seattle-based Local 775 of the Service Employees International Union.

Tim: What’s your background in dealing with workers? I know it’s quite extensive. 

David: I have been an organized labor leader for 24 years.

Tim: How have things changed in those 24 years?

David: I talk frequently about how a lot of us were organizing essentially contingent workers, like janitors and home care workers, people who were, either through subcontract or through misclassification, or through creative legal categorization, not full scope employees of their true upstream payer. People who organized with Justice for Janitors or in Comcare viewed those efforts as part of a long-term effort to make those jobs into “real jobs.” What happened in those couple of decades is that real jobs became more like Comcare jobs and more like contracted janitor jobs. Through a variety of mechanisms, many of them having nothing to do with technology, work became less predictable, less secure, more poorly compensated, less benefited, etc. Those are long-term trends that date more to the origin of the transistor than to the origin of the smartphone.

Tim: Is it difficult to organize contingent workers? These are not traditional full-time factory jobs where labor has typically been organized. 

David: For one thing, most of them are not covered by the National Labor Relations Act, which means that state and local laws can innovate and not be preempted. It was kind of the trifecta of federal labor law exclusion. They were publicly reimbursed independent contractors working in a domestic environment. So three out of the five exclusions from the Act apply to a lot of the people in that workforce. But we were able to design state and local laws to facilitate something very much like old school collective bargaining. All the Teamsters are now trying it here in Seattle with ride share drivers, which because they are independent contractors are excluded from the National Labor Relations Act. In retrospect, I worry we didn’t get creative enough when we had our moment, and we could’ve actually built a better labor law. Instead we copied all the elements of the ones we didn’t like that much to begin with because it’s what we knew. 

Tim: There’s a big debate right now about whether jobs are being destroyed or jobs are being created. What’s your take on this?

David: We don’t know yet. The Labor Department’s finally getting funded to do a comprehensive survey of the space. The last time they did one might as well have been the Stone Age considering changes in technology and the maturity of the workforce. I think there’s essentially three credible hypotheses here.

One is that nothing’s actually happening. This is much ado about nothing and the majority of the growth in contingent work is people adding small income streams to their otherwise full-time or significant part-time employment. When I get into an UberX and I ask the woman driving me across town for an appointment what she does. She says, “I just got off shift at the hospital where I’m a medical social worker, and that’s my job. But my boyfriend is spending a year on sabbatical abroad and I’m saving up for a big international trip to go visit him. So I’m trying to get as much extra pocket money as possible.” That’s one hypothesis. It’s funny listening to the rhetoric of the platform themselves. Before they hit the challenges of misclassification in labor law coverage, they were insisting that they were changing the fundamental nature of work. And now they’re all pulling statistics showing that the supermajority of the people working on their platforms are doing it for a small number of hours a week primarily as extra income. That’s one hypothesis.

Another hypothesis is that the technology and the ability to profit from that technology for both providers and platforms is the next evolution of something that used to live on bulletin boards, subsequently lived on the Craigslist and Angie’s List, and now lives on these on-demand apps. That it’s not really replacing traditional jobs. It’s the stuff people always have done but in a more efficient way of matching the consumer need with the provider availability. I’ve always been able to hire a dog walker, but what used to be true is that if it was the middle of the day and I realized I wasn’t going to be able to get home to walk my dog, unless I have a regular dog walker I was SOL. Now I go to an app and a dog walker shows up, walks my dog, and the app sends me a report on how long they walked, how many minutes, how many miles, what happened, and verify that they locked up my place, and it’s all done through some magical thing on my phone. Arguably that’s not new work, it’s just a different way of distributing work in a way that is more efficient and that companies can charge a premium for. 

And then the third hypothesis is this is a new way of working that is not suddenly being imposed on everybody but over time has grown significantly and is starting to replace traditional jobs both as a strategy for companies to get the work done and for workers to earn their income. I looked at this in my book and there’s surveys, there’s interpretations or extrapolations from data, but there just hasn’t been a really unbiased, comprehensive study of the contingent worker economy and its employment effects to date that can answer these questions definitively.

Tim: What parts of this discussion around contingent work, on-demand work gig work, etc. do you think is surprising and overlooked? What are we not recognizing?

David: If we look at the era in which we were assigning responsibility for what in many countries is called the the social contract to the employment relationship, the signal moment was 1950. This is when the Big Three automakers settled the contracts with the United Auto Workers that assigned health care, pension, and cost of living adjustment responsibility to the employer. Later they would even add more in terms of retiree health and legal service benefits. But what we did in America that was somewhat unusual was we privatized the social contract through the employment relationship. And that of course makes it much more expensive to be an employer and creates equally powerful incentives for people to not be an employer. 

So four years after the Treaty of Detroit, when the transistor was only seven years old and there were no smartphones, a really smart entrepreneur, a blender salesman name Ray Kroc bought the marketing rights from his largest customer and essentially imported a relatively obscure business model from the sewing machine industry called franchising. This model allowed him to centralize all the profits and decentralize all the risk. So you had workers making poverty wages without benefits. Their “employers” were small business people who would sink their nest egg into a McDonald’s franchise. If these employers did well they were able to maintain an upper middle class lifestyle, but without the ability to compensate their employees well and with the obligation to ship about 20% of the proceeds out the door to the corporate center. And the corporate center simply had to control the marketing rights and a bunch of other things like worker’s compensation, insurance, and ownership of the supply chains, and most significantly the real estate in order to create a multi-sourced profit center where they never actually had to serve any food to anybody. All they had to do is control a bunch of legal rights over property, marketing, and supply chains and then they would collect all the money. It was brilliant from a business strategy perspective, but it depended in large measure on not having to pay the social contract costs that had been assigned to heavy industry and government in that point in our history.

That’s one thing I think people are overlooking. That the reaction to the Treaty of Detroit only took a few years. And by the 60s we had Kelly Girl which advertised that she will never slip a disk, never have a toothache, never have a migraine, at least not on your dime. This flexible, on-demand worker thing really has been with us for awhile. It was partly a way of luring people into the workforce for supplemental income, not career income, just like today’s on-demand economy. And then we saw the beginning of outsourcing and offshoring in the 70s and the use of subcontracting in the 80s. It was not the smartphone that gave us this desire by capital to escape the costs of being an employer. In everything from the way state governments design their home care programs to the way that the airline industry has moved into a subcontracted ecosystem after the Airline Deregulation Act, to Kelly Girl, to McDonald’s, you can see these examples of the workplace fissuring going back decades. I think people do forget about that. Uber is like more a signal that people are reacting to than it is necessarily the beginning of this. 

The other thing I would just add, it’s corollary of all this, is people are now in this debate about do we need a third classification.

Tim: Yes, that’s a question I have. That seems like a bad idea.

David: It’s a terrible idea. Some very smart people are advancing this idea, and I think some of them quite naively, because it really looks like a full time employment act for employment lawyers. Because it’s already confusing enough for a lot of people to understand the difference between independent contractor and full scope employee, how much more confusing would it be if you had introduced a third classification with its own 20-item checklist of what makes that up. It seems to me that a more elegant solution might be to move away from multiple classifications altogether and to simply assign to every employer five responsibilities. Wages over $15 an hour, prorated down to the second if need be, workplace non-discrimination, safe workplaces, fair and humane scheduling, and a payment into a benefit fund that the worker owes. How silly is the health care mandate in ObamaCare that is not calculated as a percentage of payroll? It was done as a binary “yes” or “no,” depending on the number of hours you work a week. This predictably encouraged every retail and fast-food chain to do a hard cap of 29.7 hours a week for their employees to guarantee there would never be a need to pay the several hundred dollars extra in employer premiums. 

It seems like you could design a much more elegant system that begins to decouple the social contract with the employment contract. Maintain the money in the system, but instead of having every employer responsible for a health plan, a retirement plan, and all kinds of compliance with state and federal insurance funds, just outsource that. Let a worker organization handle that and start to disincentivize misclassification, which is really what the current system incentivizes.

Tim: How would you advise businesses to think about this? What positive role can businesses play?

David: First of all, if your business depends on substantial misclassification in order to be profitable then you don’t need to be in business. We have a set of laws. If you can’t figure out how to conduct yourself according to the law and still succeed then you’re in the same category as a butcher who can’t afford to refrigerate. No one wants to buy the meat from that butcher and the public health regulators will shut them down. It may cost us a couple jobs along the line, but in the grand scheme of things we shouldn’t be shy about enforcing the law. And if the laws need to change then we can figure that out. But it’s interesting to me that Instacart reclassified a significant number of their people as W2 employees because they figured out that no one will use Instacart a second time if they get crappy avocados. The problem is if an employer wants to dictate quality, it involves a level of control of the workplace that only comes from employee status. So Instacart re-classed all of their previous 1099s as W2s so they could actually train them and fire them if they failed to meet quality standards.

This same process has already happened with all of the major homecare apps. The majority of them started out as 1099s. But homecare is an industry where quality matters. Because if you’re a thousand miles away from mom and dad and someone’s supposed to be toileting them, bathing them, transferring them, and helping them keep their checkbook, you actually care about whether that person is trustworthy. And so all of the homecare apps went to a W2 model employment so they could guarantee quality. 

In my book, when largely channeling and quoting the work of Zeynep Ton at MIT, I talk a lot about how some businesses adopt high wage models in low wage industries and still win. Costco vs. Walmart, QuikTrip vs. 7-Eleven, In-N-Out Burger vs. McDonald’s, Cooperative Home Care Associates vs. the rest of the industry in New York. Southwest vs. other airlines. You can find plenty of examples of businesses that succeed on a high wage model even in a low wage industry. And so the other thing out there, if you are Uber or you’re Lyft, in addition to your misclassification challenges, why not just build a business model from Day 1 doing the right thing?

I was talking to woman who owns a farm in California Central Valley. She said, “We pay $15 an hour already. It’s just always been our philosophy that we pay our people decently. And if we can’t pay them $15 we shouldn’t be in business.” This becomes interesting when reflecting on the on-demand economy. It may turn out that a high wage model doesn’t actually work for all of the on-demand economy. Let’s say venture capital expects double digit returns and the consumer base is only willing to pay $50 for two hours of housecleaning. By the time you do the math of a $15 minimum wage plus a few bucks for benefits, times a couple of hours, plus overhead for technology and operations staff, you may find it impossible to deliver on the double digit rate of return. It may be that that house cleaning sector doesn’t belong on our smartphones. Maybe it belongs back on Craigslist or back on the bulletin board. And if higher labor costs dictate a lower return on investment, that’s actually not a problem for anybody in the world except venture capitalists. Houses have been cleaned for hundreds of years before they  showed up and tried to figure out a way to monetize it on an app.

Tim: Do you know anyone who’s doing cooperatively or worker-owned apps?

David: There are a few examples of this, but there’s an antitrust law problem. You can do it with taxi cabs. In Seattle the taxicab companies have an app. The reason they can do it is because the prices in that sector are already publicly regulated. But let’s say you had a group of house cleaners and they said, “Let’s cut out the middleman. Let’s cut out Handy or TaskRabbit and let’s collaboratively set our prices. We’ll pay just a couple of percent off the top to maintain the technology, but instead of 15% going out the door to our investors, we are going to actually harvest that as savings for the customer and as more money in the workers’ pocket. It’s a rational proposition, but because independent contractors are considered business people, under the 1912 Sherman Antitrust Act, their collaboration around prices is considered an illegal conspiracy and restraint of trade.

Tim: It’s a monopoly.

David: Yes, or cartel is probably more accurate. So the house cleaners in Seattle can have a venture capitalist hire a technologist to run an app, and that person can set the price because they’re just distributing work on the platform, but when the workers themselves collaborate on price they’re breaking the law if they’re in the 1099 sector. And that’s the problem of with why you can’t cut out the middle man. It’s actually not a technological problem. The technology was developed by Microsoft Research, it already exists. It’s not a tech problem, it’s a legal problem.

Tim: How should workers be thinking differently about the world of work today?

David: Let me speak to a group of workers that I think matters the most in all of this which is low wage workers. I think high wage workers will be fine. Internet software engineers will be fine, lawyers and doctors will be fine. They will figure it out even if a bunch of things are going to have to change. I think low wage workers have got to stop trusting that their employers and their elected officials are going to have their backs because clearly they are not. What we’ve seen is 40 years of wages in decline for the bottom 50% of income earners. Half of Americans now make less than $17 an hour, 43% less than $15 an hour, 25% less than $10 an hour. We’ve seen a cost shift away from employers and governments towards consumers on both health and retirement costs. The most important thing workers can do is resist these forces and do things like the fast food workers have done and start going on strike, start forming new organizations, and demand what may seem to be impossible. When the first group of workers walked off the job for $15 in Brooklyn in 2012, that seemed like a laughable demand, but now it’s the new normal with 18 million American workers getting a substantial pay increase off of the dominoes that began to fall in SeaTac and Seattle in 2013 and 2014. I think the most important thing that workers can do is be demanding and to form organizations. 

Tim: And not necessarily unions?

David: Unions are so inaccessible. Imagine if in order to practice the right of free speech or freedom of worship you had to first get a majority of your neighbors to sign a petition calling for it to happen. And then you have to have the government come in and conduct an election. And let’s imagine that the people of the next neighborhood over disagree with you. They could run a campaign to stop your neighbors from voting to give you free speech and they could go to court to file all kinds of motions to delay the election. Free speech would be a meaningless right. That doesn’t make any sense. If something is right it can’t be optional. But we’ve built collective bargaining as this optional right, and that’s a pretty useless system in the 21st Century. There are a handful of industries and geographies that are still relatively accessible for union organizing. But in general I think people should be demanding both local and state-level legal innovations around different models, or just building organizations independent of state actors and making demands on capital and business.

Tim: What skills right now do you think are really critically important for workers to have? There’s a lot of emphasis on STEM such as science, technology, and…

David: That’s nonsense. Look at what jobs the economy is producing: drivers, home care aides, child care aides, retail clerks, heavy laborers, movers. Even in Higher Ed faculty, the majority of jobs are now low wage jobs. People get their PhD’s then become adjuncts for years and years and years and have to teach nine courses to put together a salary of $32,000 a year. It’s certainly true that if you got aptitude in math and science that becoming an engineer or a research scientist is going to be more remunerative than say becoming a math teacher in a high school. But the problem in the economy writ large is not that we’re under producing college graduates. We’re actually over producing college graduates for the number of jobs that require a college education. There may be some labor market inefficiencies and skills mismatches in as much as we overproduce lawyers, but under produce engineers. But the purported skills gap is largely another money grab by the tech sector to convince a government, to whom it does not pay any taxes, to train its future employees so they don’t have to pay money to do it. That’s some silliness. The jobs the economy is actually producing are low wage jobs. The only way to change that is to make them into high wage jobs. God didn’t make an automobile worker a high wage job, humans did that. And we could do the same thing with baristas today if we wanted to. It’s just a choice.

Tim: What should we really be focusing on as a society? The fight for 15 is obviously one of your focal points. But in our conversation you’ve made it clear it is not about Uber…

David: The on-demand economy stuff is important because it’s new and it becomes a way of talking about this stuff. I’d rather get the on-demand economy organized now when it’s small and young than to wait until it becomes the next Wal-Mart and it’s unorganizable. I don’t think the on-demand economy is irrelevant by any means. There’s a lot we don’t know yet. We can’t really predict whether in 10 years this is going to be how everybody works or this going to be a fad the same way we now remember floppy disks.

Tim: So that’s one thing to focus on: organizing the on-demand space. But in the contingent worker space as a whole, what do you feel are the core issues that we should be looking at?

David: Here’s my overall hypothesis. We need to rewire all of our public policies in order to solve for the creation of a large, stable, accessible, and growing middle class. I don’t think this is that mysterious. Workers need organizations that are powerful, scalable, and sustainable. Our trade policy needs to align towards the creation of good jobs here. Our monetary policy needs to actually aim for full employment as much as it aims for low inflation. Our criminal justice policy has to focus on re-entry and re-employment. Our immigration policy has to focus on allowing people to actually bargain for better jobs with new employers, which means having full legal rights. We need to rewrite the rules of power so they work for everyday Americans. This is not that mysterious. How to get the power to do it is hard. There’s no reason we have to be transferring the costs of higher education, healthcare, and retirement onto individual consumers who increasingly can’t pay. There’s no reason that any of this has to happen. It’s just a reflection of who has power.

Tim: To summarize that, you’re talking about a systems-wide rethinking of the social infrastructure that solves for a strong middle class.

David: Yes, that’s exactly right. We used to have the largest middle class in the world, now we have the 27th largest middle class. Germany pays its automobile workers two times what ours can make and they make twice as many cars. It’s simply not true that globalization and technology require low wages and instability, and it’s not true that we bankrupted ourselves through overspending on social programs. This is misinformation that is designed to intimidate workers into being happy with what they have. It’s in the political and economic interest of some people to make us believe that becoming a low wage nation is inevitable. It’s hardly inevitable. Being a low wage country is a choice and we should make it different.

Tim: Thank you so much for your time.

Listening Session 1: Contractors & Housekeepers

The Gig Work Project hosted a listening session with skilled trades contractors and housekeepers to better understand how they participate in the economy. Below are audio excerpts from that dialog with annotations.


Successful economic and workforce development programs should place their primary focus on the development of fundamental skills such as confidence, communication, problem-solving, collaboration, and market awareness. Currently, most programs emphasize skills that while critical are used relatively infrequently. Examples of these important but infrequently used skills are how to write a business plan and how to interview properly. These skills, while certainly important, are largely useless without confidence to attempt the interview, without trust to collaborate, without language to communicate, and without knowing the market value of work.

Confidence 1

Confidence 2

Trust

The Importance of Language

Learning to Set Prices


The importance of personal and informal networks for successful economic participation cannot be overstated. Relationship management is a fundamental skill that need to be taught and regularly sharpened because the vast majority of support for entrepreneurs and workers comes through informal networks. We have found in our work that, by far, the single most important vehicle for getting new business, learning new skills, and finding collaborators is through interpersonal networks.

Word of Mouth

Informal Support

Network Development


Economic development programs need to better understand how contracting and gig work are already used to start and grow businesses. Workforce development efforts would do well to teach contracting and gig work best practices from both the employer and worker perspectives. Public policy also needs to be updated to enable these best practices while protecting workers and facilitating businesses.

Starting with Side Jobs

Contracting to Vet Talent


Many contingent workers are undocumented. Regardless of political leanings, it cannot be denied that a certain percentage of these people are starting businesses and creating jobs. Furthermore, there is a desire among many of these workers to contribute to society. How can we create a system that holds these individuals accountable for their decisions while still taking advantage of and supporting their drive and ingenuity?

An Introduction (Spanish)

Perdir el Miedo, “Lose the Fear” (Spanish)

To Gain Knowledge and Help Others