Dec. 12, 2018
As our Lyft slowed to a stop in front of a museum frequented by tourists, a confused first-time rider refused to get out of the car until the driver answered all of his questions. Did he have to leave a tip? No, he could do it in the app. Does he just get out? Yes, please leave 5 stars. After moving on, the driver mused over how long it had been since he met someone new to the rideshare app.
He made a good point—for many, gig and piecemeal temporary work, has been around for years, but for others the ability to hire people for one-off services or labor is something completely new. This shift in the nature of what work can look like isn’t exactly brand new, but the recent growth of alternative work arrangements fueled by technology has inspired national conversations about how to support gig workers’ education and training and workplace innovation in a labor market built for traditional employees.
Through the Learning, Skills, and Economic Mobility in the Gig Economy project, the Center on Education and Skills at New America, with support from the Better Life Lab, is delving into the topic of upskilling and reskilling contingent workers in order to better prepare for the changing nature of work. While labor trends show an increasing number of people engaging in gig and alternative work, education and training systems continue to operate under traditional assumptions about employment. Rather than benefiting from the traditional route of gaining knowledge and training through the workplace, alternative workers tend to switch from job to job, losing access to professional development and advancement opportunities.
To date, research on the gig economy has concentrated largely on labor policy, referencing the lack of workplace protections and benefits for contract workers. In order to build on existing research, we have been conducting a literature review over the last several months, exploring the various ways education and workforce development providers respond to challenges and opportunities to train the changing workforce. This deeper research on contract workers’ education and training contributes to a more holistic understanding of how to support the economic mobility and education of gig workers.
Those currently in the gig economy know the ups and downs of working as independent contractors, but policymakers and institutional leaders still have to catch up in order to support economic mobility and enhance job quality for the 3.8 percent of the workforce, or about 6 million Americans, relying solely on contingent work.
Independent contracting, a type of gig or alternative work arrangement, comes with some benefits. Gig work connects workers to flexible jobs quickly and theoretically allows those workers to set their own schedules. And, those that use contract work to supplement their income and high-skilled freelancers generally report higher satisfaction rates with the gig economy—using gigs to stabilize their primary income or build their body of work.
However, the gig economy doesn’t benefit everyone equally, nor does it provide stability for already low-income workers. Satisfaction with contract work drops significantly for workers who receive their primary income through the gig economy out of necessity. People of color generally occupy contracted positions with lower wages and less flexibility than white gig workers, contributing to racial economic inequality. And full-time contingent work places an increasing number of workers in precarious jobs with fewer legal protections and benefits than traditional employees, limited access to training, and no clear route toward career advancement or promotion.
The growth and widespread use of contracted labor was fueled by market demand for cheaper services like care work, transportation, and education, and assisted by the creation of online platforms and marketplaces. Although many people associate the gig economy with online platforms like Uber’s rideshare and TaskRabbit’s skillshare services, one in three gig workers hold jobs in health services or education. Health and education fields historically rely on educational attainment to hire workers and ensure quality, but independent workers must budget time and money for training largely on their own, which limits their ability to find more work. Since companies can’t legally train independent contractors, for fear of misclassification lawsuits, independent workers take on more risks related to skills attainment, training transferability from one job to the next, and accessing high-quality training.
Companies requiring highly-skilled work increasingly hire contingent workers to operate on a leaner staff, saving between 20-30 percent of operation costs. Contingent work makes economic sense for companies—by using a different employee tax classification, it changes the relationship between employers and workers by shifting legal responsibilities, healthcare and training costs, and other risks from the employer to the worker. Meanwhile, the independent contractors they hire must find training, healthcare, and other benefits and protections that employees traditionally receive on their own. Because of these shifted responsibilities, independent workers make 10.6 percent less than traditional employees. Without training opportunities, clear career advancement paths, benefits, or labor protections tied to traditional employment, contract workers eventually fall further behind traditional employees.
New America aims to continue advancing the understanding of gig workers and exploring the implications of gig work on educational attainment opportunities. Gig work raises new questions about training future workers and ensuring equitable access to stable career pathways in an increasingly fragmented and unstable work environment. Workplaces change, demands shift, and technology disrupts tradition, but innovation doesn’t have to worsen workforce insecurity as long as the underlying systems meant to support workers adapt to modern workforce needs.