Gig Economy, Technology Changing the Future of Work

Hard-to-regulate freelance jobs deprive future workers of benefits, bargaining power and job security

By Dawn Onley Dec 28, 2015

Workplace experts are having difficulty predicting what is in store for workers of tomorrow. With so many changes happening so quickly, prognosticators say they are unsure about the future of work. At the Future of Work Symposium, sponsored by the Department of Labor in early December, public servants, employers, economists, academics, think tank experts, philanthropists, venture capitalists and labor leaders gathered to brainstorm what employment will look like in the years to come, and to dive into the impact of globalization and technology on the economic landscape of the U.S.

Hundreds of attendees, panelists and people on social media—all invested in the outcome of the country’s job future—took part in the conversation. On one hand, panelists heralded the positive impact technological advancements have made for on-demand jobs, or the gig economy—the workers who work at their own pace and on their own schedule to make money off of what they already own, such as their cars, homes or social media presence. On the other hand, experts and thought leaders say it’s hard to regulate these jobs, which typically come without insurance benefits and offer less pay and even less bargaining power.

Most experts foresee an ever-increasing breakdown of the traditional labor market because of the impact of digital technologies. Black and Hispanic workers have felt the greatest impact. According to data from the Bureau of Labor Statistics, while the unemployment rate nationwide for November was 5 percent, the unemployment rate among blacks for that month had increased to 9.4 percent. Hispanics had a 6.4 percent unemployment rate and Asians experienced a 3.9 percent unemployment rate. Even when employed, people who hold jobs as hotel baggage carriers, domestic workers and cooks are increasingly working for subcontractors—which in some cases is a major shift from when these same workers were employed by the hotel or other business and received all of the same benefits that other employees received.

Fixing Disparities

Labor Secretary Thomas E. Perez provided a lesson on the history of work to guide the discussion, while offering perspective on ways to ensure that in the future, workers are protected and valued and that everyone has access to economic prosperity. Perez said the United States has gone from farm to factory to computer-based jobs over hundreds of years and has passed some important laws protecting workers along the way, so it certainly should be able to “find a way to harness new digital technologies in a way that ensures workers are fairly treated and prosperity is broadly shared.”

“We can't fall into the trap of believing that the latest innovation is so different and so transformational that we simply can’t accommodate and acclimate,” Perez said.

“I refuse to shrug my shoulders, throw my hands in the air and say that the degradation of work is the price we pay for smartphones, or that the cost of receiving same-day online purchases is denying someone their basic employment protections,” Perez added. “And at the same time, we can't be afraid of technological change. I just as emphatically reject the notion that we have to put the brakes on innovation in order to preserve or advance the dignity of work.”

Panel discussions at the three-day symposium explored opportunities and challenges in the changing structure of work, emerging trends, employee benefit coverage, labor standards enforcement, skills training and workforce development.

The conversation delved into the dwindling middle class, a broadening of the working poor, racial and gender pay disparities, and an increased upper class. Most speakers emphasized the need to increase funding so the Bureau of Labor Statistics can conduct and keep more thorough records to help inform future discussion, laws and mandates.

The Gig Economy’s Impact

“The structure of the labor market is no longer rewarding workers in the way it used to,” said Edward Montgomery, dean of the McCourt School of Public Policy at Georgetown University. “There is a hollowing out of the middle. We’re still creating jobs, but we’re not creating middle class jobs.”

Yet the nature of work is changing, shifting from full-time jobs to contract, freelance and consultation, according to Steven Berkenfeld, a managing director in the Investment Banking Division of Barclays Capital in New York. If a worker is not core to the mission of a company, increasingly, that worker is at risk of losing his or her job. “There’s a feeling that technology often does it better, faster [and is] more precise,” Berkenfeld said. “I think everyone is affected by technology as a substitute for the workers.”

Natalie Foster, fellow with the Institute for the Future in San Francisco, attributed the shift to on-demand and gig jobs to four main reasons:

  • People who are in between jobs.
  • People looking for supplemental income.
  • People searching for flexibility.
  • People who are entrepreneurs.

Sarita Gupta, executive director of Jobs with Justice in Washington, D.C., a grassroots network of coalitions and leaders that fight for workers’ rights, cautioned that with the increased flexibility of gig work comes some risks as well. “It’s less pay; less bargaining power,” Gupta said. “Work has become insecure. We need to focus energy on addressing insecure work.”

The ones who suffer are the workers, especially certain groups, added Gupta “Large groups of women, workers of color, incarcerated workers—there are so many [impacted] communities out there. When people are struggling to get by, the question on who loses … it’s such a moving target.”

Path to Enlightenment

Perez thinks meetings like the symposium are getting the right people talking about the challenges and potential solutions. He and thought leaders working to advance workers’ rights and opportunities say they can see the path. They’re just not completely sure how to get there.

Perez told attendees that the symposium was an “ongoing conversation” that will continue to inform the department’s work through the end of the Obama administration and beyond.

“We are actively contemplating what these changes in work will mean for the programs we administer and the laws we enforce,” Perez said. “We're figuring out how to adjust what we do, in a way that fulfills our statutory mandate without creating unnecessary impediments to innovation.”

Dawn Onley is a freelance writer based in Washington, D.C.


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