Weekly Insight

Finding a new gig

The “gig economy” is one of my favorite cultural designations. It combines coolness, technology, and modernism in a way that sounds desirable.

Like most macro concepts, the term has evolved to become more and more loaded, at the same time becoming less and less clear. I have read commentary chastising its deficiencies and seen studies heralding the way that it brings fun to work.  The gig economy is like a municipality with an aggressive annexation plan; it is expanding to incorporate more and more conceptual boundaries.

The Bureau of Labor Statistics has a great overview of the gig economy, including the Bureau’s challenges with tracking it. According to BLS authors Elka Torpey and Andrew Hogan, “there is no official definition of the ‘gig economy’—or, for that matter, a gig…[A] gig describes a single project or task for which a worker is hired, often through a digital marketplace, to work on demand. Some gigs are a type of short-term job, and some workers pursue gigs as a self-employment option; those concepts aren’t new. However, companies connecting workers with these jobs through websites or mobile applications (more commonly known as apps) is a more recent development.”

A recent New Yorker article uses the term “sharing economy” to provide context and to associate it with global brands like Air BnB, TaskRabbit, Uber and Lyft. 

I think of the gig economy as a series of concentric circles.  At the core are the sharing jobs where a worker is an independent contractor, works autonomously, and uses electronic platforms to identify jobs and connect with payers.  I envision the average Lyft driver.

One circle out is a level of workers that are still assignment-based and still independent contractors, but are tied more to traditional networks and methods for getting assignments. Many of these workers have had a place in the economy for some time: freelance graphic designers, musicians, or carpenters. They are different from the first gig circle in their dependence on real-time, relationships, but they rely on piecing together shorter-term, episodic work.

The third circle consists of contract workers with greater stability and regularity in their work patterns.  These are people whose projects are longer term in nature and whose connection to specific clients are deeper.  These workers might work in niche areas and only have a small subset of clients for whom they primarily work.  They might relate well to a specific client and connect for cultural or personal reasons.  This group of the circle has the blurriest lines between being an employee and being a contractor.

The final layer is the mass of service sector jobs.  Think accountants and plumbers. These workers usually possess specialty skills and training but can deploy their talents entrepreneurially through small business ventures or through large institutions. The goal of workers in this layer is to develop long-term client relationships and to become support entities for other producers.

The gig evolves

Currently, most of the discussion about the gig economy revolves around the decentralization and digitization of private services.  Within this larger structure is the opportunity for the public sector to address some of its labor challenges and to potentially enhance opportunities for workers. 

By way of illustration, I will describe a structure that is modeled from two nonprofit organizations that I have worked with recently and that have a similar human resources model.  With the exception of a couple of full-time employees who focus on management and ministerial tasks, independent contractors (“contributors”) do the work in this model. The ratio of full-time equivalent employees to contributors is 1:3.

“Independent Work: Choice, necessity, and the gig economy,” McKinsey Global Institute, October, 2016

 

The contributors’ workloads are structured to be part-time and to allow for supplementary pursuits. What it means to be part-time is malleable.  When a team member is early in his or her relationship to the organization, the workload is more. When a team member is more advanced, they are more efficient and their workload is proportionately less. The goal is for management and contributors to meet quarterly and assess workload and to regulate the expectations.

Contracts with the contributors are year-long, with a default for renewal. Compensation levels are more competitive than most part-time jobs and proportionate with full-time compensation levels in other organizations.

In many cases the contributors prefer this set-up to full employment.  Many of the team members are entrepreneurial in nature and want to balance a steady gig with the development of business interests or other outside pursuits. Many have student loans or other obligations that require some base level of income stability, but they like the flexibility to enhance their careers and lives in ways that many full-time jobs do not allow.

In addition, by being in the second or third circle of the gig economy, the contributors can take advantage of some elements of a work environment that first circle gig workers may not be able to access. There is a mentorship structure in place to help them with their specific work and provide career guidance. Furthermore, the organization leaders understand that contributors’ careers exist inside and outside the organization and try to support both.  

Management has also found the model effective.  Leaders believe they are getting the equivalent of full-time production in fewer than full-time hours.  The work product is client-based and deadline driven, so management can offer work with a variety of different schedules and types of commitments. In addition, management is able to adjust compensation, workforce, and workloads on a rolling basis to meet demand. 

For example, if one contributor moves on from the organization or needs to roll back their work load for a period, management can ask another contributor to fill the gap in a temporary way but one in which the contributor is appropriately compensated and not locked-in.

Young adults, non-whites especially likely to get work via online gig platforms

An option for the public sector

The public workforce is struggling to hold on to qualified people.  They are struggling to pay for public benefits and to justify the type of long-term commitments that were once available.  In addition, the retirement tsunami that has been forecast for several years is affecting many government sub-sectors.  In some states and communities these attritional factors have been made more difficult by ongoing budget cuts and budget instability that make it difficult to project employment needs.

In addition, many governments are struggling under the weight of public benefit obligations. North Carolina, thankfully, is in a better position than most, but it is clear that the social contract between public workers and public employers will evolve, at least for future workers.

The gig model has the potential to provide some relief and already is in many cases.  Take my friend, Billy.  Billy has been a contract IT worker in state government for a while. He has moved around a number of different employment gigs and contracts but has appreciated the opportunity develop different skills and work with different teams. Billy is also a professional musician and enjoys teaching music on the side. There are not a lot of full-time jobs that allow him the flexibility he desires, so he continues to move from gig to gig as a lifestyle choice.

There are already many Billys in the state and local government workforce.  However, our human resource managers, employee associations, legislators, managers, and other necessary stakeholders have not all consistently evolved to embrace the gig opportunity.  In some case, they see it and are skeptical.  In others, it requires a shift in frames that takes them outside of the comfort zone. Regardless of the reason, many are missing the opportunities to reframe their production needs in terms of “gigs” and to attract a new type of contributor.

Reasons for skepticism

Gig work, especially in the public sector, does not lessen the need for a strong, permanent workforce.  Many of our most important public jobs require the security and structure that full-time positions require. Teaching, for example, is a challenge to structure as a gig. In addition, as the McKinsey infographic above shows, it is important to note that there are already many involuntary gig workers. Some of these are in government and where people may who are work multiple vocations, e.g., teaching and retail sales, not as a lifestyle choice but to subsist.

There are still several acknowledgements and areas of concern that we need to address as we consider further growth and structures for the gig economy.

  1. A movement toward more public sector gigs does not necessarily cost less upfront. The models I have observed do not cost less than more traditional models. They do, however, provide greater flexibility and allow for greater levels of production. 
  2. Shifting towards a gig workforce involves working within labor, tax and other regulatory structures designed to protect workers. These structures have utility, but they also create complexity and blurriness that make it difficult for organizations to understand how gig contributors can fit into their operations. Regulatory structures need to evolve to better consider these types of contributors.
  3. Most gig workers do not have employer-sponsored health insurance and retirement benefits. The future of these needs is in constant fluctuation and needs to be worked out before any planned expansion of the gig economy will make sense.
  4. Finally, the public sector will have to think through enhanced systems for managing conflicts of interest. Public sector workers have different expectations and responsibilities than do many private sector workers. When public sector workers begin operating in both sectors those lines can blur and be difficult to manage.

While the rise of the gig economy embodies a shift in the work paradigm, it has the potential to provide desired alternatives to the status quo. Senators in Washington are beginning to consider policies that will affect the gig economy.  North Carolina should follow, if not in substance, in principle, and help to structure, enhance, and protect the evolution that is currently taking place. 

AHH headshot-2016

Andrew Holton is a board member and contributor to the N.C. Center for Public Policy Research.

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