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Workers of the world, disunite! The gig economy is transforming the future

Independent contractor statuses are being reviewed by the government, but they’re asking the wrong questions and missing this historic moment as we shift toward an entrepreneurial society.

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the gig economy

the gig economy

Independent contractors are a staple of the “gig economy”

Hiring workers as independent contractors (ICs), rather than employees, is a staple of many “gig economy” company business models. Uber and Lyft are two notable leaders in the new gig economy; nearly all of their drivers are ICs. These drivers work when they want – jumping in and out of service as their schedules allow, or when the feeling strikes that making a few dollars is more desirable than sitting down and marathoning their favorite TV show or writing the next great novel. The use of ICs isn’t contained to ride services, however. Maids on demand, grocery delivery, and online courier services are all types of companies that utilize armies of ICs.

ICs enjoy scheduling flexibility, greater control over tax planning, and a degree of independence and freedom not generally shared by the average employee. In return, they give up security, health benefits, and other things that are the hallmark of most full-time employment positions. There are pros and cons even for companies. ICs can be less devoted to the company than employees and, by law, companies can’t exert much control over ICs. This is why many companies do not like managing ICs.

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Do a little online reading, and you are bound to come across articles vilifying the gig economy companies who use ICs. Read too many of these articles, and you may buy the myth that no IC wants to be an IC—that they are all pushed into this precarious status because companies won’t make them employees. Many online commentators are calling for the government to step up and curb the abuses of these companies.

The feds are asking questions, but ignoring the obvious

The Department of Labor (DOL) has prioritized the enforcement of misclassification of workers as ICs for several years. The DOL recently stated that whether a worker is classified as an independent contractor under the Fair Labor Standards Act is based on the “economic realities” test. The DOL listed the following questions to assist in making a determination:

  • Is the work an integral part of the company’s business?
  • Does the worker’s managerial skill affect the worker’s opportunity for profit or loss?
  • How does the worker’s relative investment (this does not necessarily include tools or equipment) compare to the company’s investment?
  • Does the work performed require special skill and initiative?
  • Is the relationship between the worker and the company permanent or indefinite?
  • What is the nature and degree of the company’s control?

Notably absent from the list of questions is the desire of the workers and companies themselves. The DOL isn’t concerned with how companies and workers would like to define their relationship. Shouldn’t that consideration enter into the determination?

The media’s skewed view of the gig economy

As discussed earlier, from the standpoint of each group, there are pros and cons to employee status versus IC status. Does each get exactly what they want, in every context? No, of course not. Let’s consider hypothetical worker, Pat, who values security and would love a full-time job. Not finding that full-time position, Pat starts driving for Uber as an IC. After a couple of months, Uber lets Pat go due to too many customer complaints. Now, Pat is back out of work and can’t claim unemployment.

It is possible that, if Uber had employed her as an employee, they would have hesitated to let her go so quickly? Pat did not get what she wanted – safe, full-time employment. If the media picks up on her story and spins it into a cautionary tale of the gig economy, we all forget about the many ICs who willingly embrace the arrangement. We also forget that Pat might be out of a job even if she had been hired by Uber as an employee.

We may overlook the fact that Pat received an opportunity in the first place.

If you think there will be the same amount of employment “gigs” to go around if all workers are required to be employees, you are incorrect. In most European countries, employers are required to give at least 90 days notice in order to terminate and employee. You may laud that regulation, which is fine, although it’s not debatable that employers who are required to make greater commitments to their hires are less inclined to hire until they know, with absolute certainty, that they need a new employee long-term.

The same thinking is at play with employees (even “at will” employees who can be let go at any time for almost any reason) versus ICs. Companies are quicker to hire the latter, slower to hire the former. Quick hiring is action that is pro-efficiency, pro-progress, pro-company, and pro-worker. Quick firing is the first three, obviously not the latter. On balance, there’s a strong argument that maximizing company flexibility is of the greatest benefit to our overall economic system. Hence why there isn’t ta ton of chatter in the U.S. for modifying the default “employment at will” standard.

Could a self-employed world would be a more productive economy?

So, why do so many people seem to believe that IC status is only good for the companies that engage the ICs and not the ICs themselves? Using IC labor may allow companies to be more nimble, reduce (if not eliminate) pay for periods of non-performance, incentivize workers to continually develop their skills, and demand that workers consistently perform at their peak in order to compete in a more fluid market for talent. All four of these outcomes are clearly pro-company.

However, the last two outcomes are also solidly pro-worker, at least if we gaze beyond the short-term. We all benefit from performance incentives and expectations from others to deliver our best. Admittedly, the process of shifting workers from employment status to IC status may be, for many, painful. Full-time employment is easier, it’s safer. That is exactly what makes it less efficient. It’s human nature to work harder when you need to, when it really matters. Does anyone doubt that, pound for pound, self-employed people work harder, are more dedicated, than regular employees? A world in which everyone was self-employed, no one collecting a steady paycheck, would translate into a more productive economy.

Is government intervention the answer?

But let’s say you completely disagree with me and feel that we’re not talking simply about a fundamental right of companies and workers to freely label their contractual working relationship. Let’s say you believe this is very clearly about companies using their leverage to push their agendas on reluctant workers. And, you also don’t buy my argument that the company flexibility of being able to hire and fire translates, quickly and directly, into pro-worker benefits. In that case, is government regulation the best way to address the problems at hand, to contain these Dickensian companies?

Government intervention has its limits, the primary one being that companies, just like the human beings that comprise them, don’t generally embrace things they are forced to do. They reluctantly comply. They do just enough.

Empowerment is shifting from companies to workers

Guess what’s more effective than using legislation to force companies to change? The free market when it works well. The relationship between companies and workers is changing rapidly and radically. Because we are living through it, it is sometimes difficult to step back and soak in just how much change has already occurred. Empowerment is shifting from companies to workers.

Today, the playing field is considerably leveled, if not slightly tilted in favor of the worker. Among the reasons for this tectonic shift are:

  • Mobility: 100, even 50 years ago, workers were much less mobile. Our modes of transportation and attitudes about relocation have changed remarkably. Meanwhile, the rise of the telecommuter and virtual worker have made physical proximity to the workplace much less critical.
  • Information: Glassdoor, Vault, and similar sites give workers information about which companies treat their workers well and which do not. Company reputations matter today in a big way.
  • The Internet: In the Industrial Age, the means of production was the factory. Factories are expensive and, consequently, the few who could afford to build them, the “industrialists,” became fabulously wealthy while the rest of the population made ends meet. Today, the Internet is the most important means of production and it is just about free to everyone.
  • The Freelance Movement: Freelancing is no longer viewed as something you pretend to do while you’re really scouring for full-time employment. The freelance movement is bestowing a level of independence on workers that was previously unheard-of. Over one-third of the American work force is now made up of freelance workers. According to a new report by the Roosevelt Institute and the Kauffman Foundation, our economy will be “scarcely recognizable” in 25 years, as this number is expected to balloon.

Though full time employment is safer, it is much less empowering. Daniel Priestley, author of Key Person of Influence, speaks about the transition that we are living through from an industrial economy to an entrepreneurial one. He points out that the owners of capital in an industrial economy, the factory-owning industrials we spoke of earlier, are motivated to keep workers just content enough – content enough to keep doing their jobs and to not challenge the system. Employers don’t want to make their employees wealthy and financially independent, because that isn’t ideal for controlling employees. As a society, we can legislate these employers to do a little more – provide more time off, better health care benefits, etc., but they will always do just enough when forced to act. And, “just enough” will never be all that fulfilling for the employees.

Workers have been handed a golden opportunity to wrestle power from companies

Companies can’t control ICs like they do employees. ICs that work for multiple companies have the leverage in the relationship. It’s game-on and it’s not from unionizing and government intervention. Workers are gaining power due to a shifting work landscape. They are gaining power by disuniting.

Admittedly, some workers are not embracing this opportunity with open arms. For them, it may take a while to see the seeds of opportunity planted in this “problem.” As a society, if we adopt the paternalistic viewpoint that companies must give workers employment (as opposed to IC) status, we are disrupting a natural, positive, and powerful rebalancing that is at work in the market. In doing so, we would unwittingly be undermining the power and long-term well being of the very constituency we seek to protect.

We should all be freelancers, self-employed, entirely responsible for ourselves

Those anachronisms of the bygone era of lifetime employment – frothy pensions, gold watch retirement ceremonies, etc. – are not coming back. We can beg the government to step in and try to hold on to the last vestiges of that era, but we will at best be hanging on by a thin thread. And, the security employees seek? It’s been gone for a long time. My parents and their peers expected lifetime employment. No one my age and below expects that.

We all recognize our companies are unlikely to out survive us. In today’s increasingly quick, hyper-competitive, global economy, friction in the employment market is the default standard. There is simply no longer any real security in being a private-sector employee. However, empowered ICs aren’t at the mercy of individual employers. Their security is self-determined.

This is one fight we don’t want the government to win

Many workers are embracing the new gig economy and its flexibility. The option to work as an IC shouldn’t be ripped away due to a misguided sense of paternalism. The process of shifting from employee to IC is challenging for many, and often full of risks, but the ultimate reward of a successful shift is freedom and empowerment. Let’s not force workers to trade the pursuit of those treasures for vision, dental and ten days off per year.

#GigEconomy

Brett is The Startup Shepherd – part startup consultant, part angel investor/financier, and part business lawyer. A six-time entrepreneur and recovering “left brainer,” Brett particularly enjoys helping startups and rapidly growing socially-conscious companies.

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7 Comments

7 Comments

  1. Gabe Sanders

    September 26, 2015 at 1:32 pm

    Yes, I can understand why many workers embrace this concept. Though the ability of the employers (and they are employers) to take advantage of the contractors will grow and potentially do more harm than the potential good.

  2. Robin Bull

    October 7, 2015 at 1:20 pm

    Hi Brett – If you think about it (or, rather, if others think about it), we are all self-employed. For some of us, like me, it’s just more obvious because we work from our homes and with multiple companies. However, even those who work in a more traditional environment (I used to be a paralegal) are still self-employed. It is up to us regardless of the location or type of work that we do to ensure that our clients / employers are happy and that we are able to continue to working. One of the main differences is that what I do as a freelancer is actually more secure. Think about it: what am I going to do – fire myself? Clients may come and go, but at the end of the cycle there are always companies that need good workers. I’m grateful to be able to work on a long term basis with many of my clients (such as http://www.mikogo.com). It definitely helps to have clients that come back on a weekly basis for my services.

  3. Brett

    October 11, 2015 at 8:58 am

    Gabe, I disagree. As (if) IC status grows, I believe it will be more well understood and there will be more opportunities for IC “gigs” (jobs), both outcomes resulting in less power for employers.

    Robin, I agree entirely that everyone should think of themselves as self-employed in that sense. Unfortunately, many don’t, however

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  5. Skip Mendler

    June 8, 2016 at 1:06 pm

    So eventually, would all workers need to become conversant in the potentially tricky language of contracts, and the intricacies of arbitration? Gee, they’re going to need lawyers, aren’t they?

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Opinion Editorials

7 ways to carve out me time while working from home

(OPINION / EDITORIAL) It can be easy to forget about self-care when you’re working from home, but it’s critical for your mental health, and your work quality.

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Woman in hijab sitting on couch, working from home on a laptop

We are all familiar with the syndrome, getting caught up in work, chores, and taking care of others, and neglecting to take care of ourselves in the meantime. This has always been the case, but now, with more people working from home and a seemingly endless lineup of chores, thanks to the pandemic. There is simply so much to do.

The line is thinly drawn between personal and professional time already, with emails, cell phones, and devices relentlessly reaching out around the clock, pulling at us like zombie arms reaching up from the grave. Working from home makes this tendency to always be “on” worse, as living and working take place in such close proximity. We have to turn it off, though.

Our brains and bodies need down time, me-time, self-care. Carving out this time is one of the kindest and most important things you can do for yourself. If we can begin to honor ourselves like this, the outcome with not only our mental and physical health, but also our productivity at work, will be beneficial. When we make the time to do things we love, our body untenses, our mind’s gears slow down that constant grinding. Burnout behooves nobody.

Our work will also benefit. Healthier, happier, more well rested, and well treated minds and bodies can work wonders! Our immune systems also need this, and we need our immune systems to be at their peak performance this intense season.

I wanted to write this article, because I have such a struggle with this in my own life. I need to print it out and put it in my workspace. Last week, I posted something on my social media pages that so many people shared. It is clear we all need these reminders, so I am paying it forward here. The graphic was a quote from Devyn W.

“If you are reading this, release your shoulders away from your ears, unclench your jaw, and drop your tongue from the roof of your mouth.”

There now, isn’t that remarkable? It is a great first step. Let go of the tension in your body, and check out these ways to make yourself some healing me-time.

  1. Set aside strict no-work times. This could be any time of day, but set the times and adhere to them strictly. This may look like taking a full hour for lunch, not checking email after a certain hour, or committing to spending that time outdoors, reading, exercising, or enjoying the company of your loved ones. Make this a daily routine, because we need these boundaries. Every. Single. Day.
  2. Remember not to apologize to anyone for taking this me-time. Mentally and physically you need this, and everyone will be better off if you do. It is nothing to apologize for! Building these work-free hours into your daily schedule will feel more normal as time goes on. This giving of time and space to your joy, health, and even basic human needs is what should be the norm, not the other way around.
  3. Give yourself a device-free hour or two every day, especially before bedtime. The pinging, dinging, and blinging keeps us on edge. Restful sleep is one of the wonderful ways our bodies and brains heal, and putting devices away before bedtime is one of the quick tips for getting better sleep.
  4. Of course, make time for the things you absolutely love. If this is a hot bath, getting a massage, reading books, working out, cooking or eating an extravagant meal, or talking and laughing with a loved one, you have to find a way to get this serotonin boost!
  5. Use the sunshine shortcut. It isn’t a cure-all, but sunlight and Vitamin D are mood boosters. At least when it’s not 107 degrees, like in a Texas summer. But as a general rule, taking in at least a good 10-15 minutes of that sweet, sweet Vitamin D provided by the sun is good for us.
  6. Spend time with animals! Walk your dog, shake that feathery thing at your cat, or snuggle either one. Whatever animals make you smile, spend time with them. If you don’t have pets of your own, you could volunteer to walk them at a local shelter or even watch a cute animal video online. They are shown to reduce stress. Best case scenario is in person if you are able, but thankfully the internet is bursting with adorable animal videos, as a backup.
  7. Give in to a bit of planning or daydreaming about a big future trip. Spending time looking at all the places you will go in the future and even plotting out an itinerary are usually excellent mood-boosters. It’s a bit different in 2020, as most of us aren’t sure when we will be able to go, but even deciding where you want to go when we are free to travel again can put a positive spin on things.

I hope we can all improve our lives while working from home by making time for regenerating, healing, and having fun! Gotta run—the sun is out, and my dog is begging for a walk.

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Opinion Editorials

Why robots freak us out, and what it means for the future of AI

(OPINION / EDITORIAL) Robots and humans have a long way to go before the social divide disappears, but research is giving us insight on how to cross the uncanny valley.

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Close of R2D2 toy, an example of robots that we root for, but why?

We hate robots. Ok, wait, back up. We at least think they are more evil than good. Try it yourself – “are robots” in Google nets you evil before good. Megatron has higher SEO than Optimus Prime, and it’s not just because he’s so much cooler. It cuz he evil, cuz. It do be like that.

It’s not even a compliment to call someone robotic; society connotes this to emotionless preprogrammed shells of hideous nothing, empty clankbags that walk and talk and not much else. So, me at a party. Or if you’re a nerd, you’re a robot. (Me at a party once again.)

Let’s start by assuming robots as human-like bipedal machines that are designed with some amount of artificial intelligence, generally designed to fulfill a job to free up humanity from drudgery. All sounds good so far. So why do they creep us out?

There’s a litany of reasons why, best summed up with the concept of the uncanny valley, first coined by roboticist Masahiro Mori (Wow he’s still alive! The robots have not yet won) in 1970. Essentially, we know what a human is and how it looks and behaves against the greater backdrop of life and physics. When this is translated to a synthetic being, we are ok with making a robot look and act like us to a point, where we then notice all the irregularities and differences.

Most of these are minor – unnaturally smooth or rigid movements, light not scattering properly on a surface, eyes that don’t sync up quite right when they blink, and several other tiny details. Lots of theories take over at this point about why this creeps us out. But a blanket way to think about it is that our expectation doesn’t match what we are seeing; the reality we’re presented with is off just enough and this makes us uncomfortable .

Ever stream a show and the audio is a half second off? Makes you really annoyed. Magnify that feeling by a thousand and you’re smack in the middle of the uncanny valley. It’s that unnerving. One possible term for this is abjection, which is what happens the moment before we begin to fear something. Our minds – sensing incompatibility with robots – know this is something else, something other , and faced with no way to categorize this, we crash.

This is why they make good villains in movies – something we don’t understand and given free will and autonomy, potentially imbued with the bias of a creator or capable of forming terrifying conclusions all on its own (humans are a virus). But they also make good heroes, especially if they are cute or funny. Who doesn’t love C3PO? That surprise that they are good delights us. Build in enough appeal to a robot, and we root for them and feel empathy when they are faced with hardships. Do robots dream of electric sheep? Do robots have binary souls? Bits and zeros and ones?

Professor Jaime Banks (Texas Tech University’s College of Media & Communication) spends a lot of time thinking about how we perceive robots. It’s a complex and multifaceted topic that covers anthropomorphism, artificial intelligence, robot roles within society, trust, inherently measuring virtue versus evil, preconceived notions from entertainment, and numerous topics that cover human-robot interactions.

The world is approaching a future where robots may become commonplace; there are already robot bears in Japan working in the healthcare field. Dressing them up with cute faces and smiles may help, but one jerky movement later and we’ve dropped all suspension.

At some point, we have to make peace with the idea that they will be all over the place. Skynet, GLaDOS in Portal, the trope of your evil twin being a robot that your significant will have to shoot in the middle of your fight, that episode of Futurama where everything was a robot and they rose up against their human masters with wargod washing machines and killer greeting cards, the other Futurama episode where they go to a planet full of human hating murderous robots… We’ve all got some good reasons to fear robots and their coded minds.

But as technology advances, it makes sense to have robots take over menial tasks, perform duties for the needy and sick, and otherwise benefit humanity at large. And so the question we face is how to build that relationship now to help us in the future.

There’s a fine line between making them too humanlike versus too mechanical. Pixar solved the issue of unnerving humanoids in their movies by designing them stylistically – we know they are human and accept that the figure would look odd in real life. We can do the same with robots – enough familiarity to develop an appeal, but not enough to erase the divide between humanity and robot. It may just be a question of time and new generations growing up with robots becoming fixtures of everyday life. I’m down for cyborgs too.

Fearing them might not even be bad, as Banks points out: “…a certain amount of fear can be a useful thing. Fear can make us think critically and carefully and be thoughtful about our interactions, and that would likely help us productively engage a world where robots are key players.”

Also, check out Robot Carnival if you get the chance – specifically the Presence episode of the anthology.

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Opinion Editorials

4 simple tips to ease friction with your boss while working remotely

(OPINION / EDITORIAL) Find it challenging to get along with your boss while working from home? Here are a few things you can try to ease the tension.

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Woman stressed over laptop in remote work.

Most people probably feel like their relationship with their boss is fine. If you’re encountering friction with your boss for any reason, though, remote work will often exacerbate it—this is one instance where distance doesn’t necessarily make the heart grow fonder. Here are a few ways to remove some of that friction without adding to your boss’ overflowing plate.

According to CNN, determining the problem that exists between you and your boss should be your first step. There’s one caveat to consider, however: Your boss’ boundaries. Problem-solving on your own time is fine, but demanding more of your boss’ time—especially when you’re supposed to be working—may compound the issue.

An easy way around this is a low-impact communique—e.g., an email—sent at the beginning or end of the workday. Since that’s a more passive communication style that takes only a minute or two out of your day, it’s less likely to frustrate your boss further.

If ironing out the issue isn’t your prerogative for now, examining your boss’ parameters for success is another place to start. Does your boss prefer to receive multiple updates throughout the day, or do they want one summative report each morning? Do you respect your boss’ preferred communication styles? These are important questions to ask during remote work. If you find yourself reaching out more than necessary, for example, it may be time to cut back.

It can also be difficult to satiate your boss if you don’t know their expectations. If you’re able to speak to them about the expectations regarding a project or task, do it; clarifying the parameters around your work will always help both of you. It is worth noting that some supervisors may expect that you know your way around some types of responsibilities, though, so err on the side of complementing that knowledge rather than asking for comprehensive instructions.

Finally, keep in mind that some bosses simply don’t communicate the same way you do. I’ve personally been blessed with a bevy of nurturing, enthusiastic supervisors, but we’ve all had superiors who refuse to acknowledge our successes and instead focus on our failures. That can be a really tough mentality to work with during remote periods, but knowing that they have a specific communication style that hampers their sociability can help dampen the effects.

As always, communication is key—even if that means doing it a little bit less than you’d like.

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