This is a newsletter about public policy and technology [regulation stuff] in Canada. 🇨🇦
*Proposition “Prop” 22 [App-Based Drivers as Contractors and Labour Policies Initiative] is a proposal on the state ballot in California (the world’s 5th largest economy) that asks whether companies should be able to create a new gig contractor category for their workers that DOES NOT include employee benefits and protections. It’s worth reading about if you haven’t already.
As a thought exercise, I wondered if there was anything about the “gig” economy worthy of our admiration or that we could learn from and apply to the broader, more traditional labour market. 🤔
🤯 So, *is* there anything policy people can (or *should*) appreciate about the app economy? 🤡
Here’s an answer I offer: As the economy starts (or tries) to re-open(ish?) and we inch towards a new normal, it is critical that the labour market is able to match qualified candidates with open positions as soon as possible. Every day that a job applicant waits to hear back from a prospective employer is a delay to their realization of economic independence and freedom; adding stress and anxiety and straining mental health. A 2019 report found that the typical time-to-fill a job posting ranged between 25-46 days - more than a month.
However, there is more than just administrative bureaucracy that is holding job seekers back. Much of the job market is invisible or “hidden;” privileging personal connections and referrals. We know that at present, the labour market has evolved to be overly reliant on social capital. One 2014 study found that 30-50% of hires in the U.S. came from referrals, and that referred candidates are over four times more likely to be hired than non-referrals. According to one hiring consultant’s estimate, referrals lead to 85% of critical jobs being filled. Thus, many advertised opportunities are in fact inaccessible; frustrating applicants and wasting precious search time.
This is an ugly reality that exacerbates social inequalities and further limits intergenerational mobility. As policymakers and the business community confront the various factors that underpin the modern labour market’s inaccessibility, it is imperative to recognize the interim utility of flexible work opportunities that people can find using apps. This work is often a bridge between traditional employment engagements.
Typically referred to as “gig” work, there are a range of mobile applications that unlock the ability to be matched to an employment opportunity in moments on a smartphone. These firms have created a different kind of commerce - a platform or “digital matching firm” that offers “electronically mediated employment” - and that has been replicated in various versions. Some popular examples include: Coople, Deliveroo, Handy, Instacart, Stitch Fix, TaskRabbit, and UpWork.
There is longstanding debate as to whether these platforms are a digital ‘trend’ or have become entrenched. These tools have been - appropriately - deeply criticized as they tend to not offer benefits and lack basic workplace protections such as:
worker’s compensation protections,
employer contributions to social security and payroll taxes,
paid time off,
family leave protections,
or unemployment insurance benefits.
These criticisms often ignore the need of immediacy that the platforms effortlessly facilitate.
In the past, Uber has signalled their willingness to make tiny compromises, such as supporting portable benefits - so if policymakers can meet them (somewhere) in the middle with a new model for taxing employers - it *could* create a more stable foundation for all gig businesses.
Researchers studying the dynamics of independent contractors have demonstrated that it is [way too] difficult to distinguish whether these jobs are a person’s main job, second job, or additional work for pay. Certainly, more comprehensive, illustrative research is needed for scholars to deeply appreciate the dynamics, incentives, and constraints that motivate this work.
While that scholarship happens, significant matching needs remain in the broader labour market. While some Canadians will be working from home, others that were previously in the service or hospitality sectors have seen their livelihoods diminished. Meanwhile, demand for delivery of groceries, restaurant meals, and other goods have surged as e-commerce thrives, creating modest short and medium term employment opportunities for more people.
Recognizing this need and seeking to solve for a painful gap in the world of work, Uber recently released Uber Works, an app dedicated to matching temporary workers with shifts. It has partnered with staffing agencies to do this, and the temps are technically employees of the staffing agency - not Uber. This exploration connects people to work opportunities, turning one’s smartphone into an economic lifeline.
In 2017, McKinsey estimated that 68 million American workers were currently in the gig economy, and that 20 million (so about one third) were only doing it because they couldn’t find better pay or a better job elsewhere. In Canada, a 2019 report from Statistics Canada found that about 1.7 million workers - 8.2% of the Canadian labour force - did some form of gig work in 2016.
It’s time to interrogate and repair the dynamics that constrain access to the labour market.
For instance, the Government of Canada could learn from platform apps and consider better matching + hiring through the Job Bank to accelerate getting Canadians back to work.
I wanted to put an example of a service firm that hired basically based on a lottery, but I couldn’t find a link to it because my brain did not retain enough detail. Basically this company hired randomly from their applicant pool and people felt that it was MORE FAIR in terms of process than if they had been interviewed. That process felt app-like to me in that it was a simple matching exercise. K, bye.
Concurrent to this, there are significant structural changes that must be made to help equalize fair access to the labour market, such as regulating applicant tracking systems (ATS) and resume-processing algorithms, considering the benefits of auto-hiring for entry-level service work, and overcoming implicit bias.
While many continue discouraging job searches, more Canadians will be working from home once the COVID-19 pandemic is over. These apps could liberate less lucky individuals as they choose when and how to work, potentially while seeking more traditional employment engagements.
Unlike the typical hiring process, app-based work opportunities are honest, transparent, and egalitarian in the very same ways that we fantasize the broader labour market is. 🦄
As relationships and algorithms barricade the bulk of the labour market, governments must recognize the interim advantages of app-based engagements that democratize access to work for millions of people every moment.
There are small things that policymakers can and should learn from what “works” in the app-based gig economy as we seek to support connecting people with job vacancies:
Near-instant work opportunities;
A tangible and accessible labour market;
No (or minimal) BS “referrals.”
This could be done while work to make the broader labour market more tangible.
💭 What do you think?
⏭️ beyond jobs
Wingham Rowan is the Director of the “Beyond Jobs” project in London (UK). Beyond Jobs grew out of multiple UK government investments to create advanced markets for low-skilled people seeking non-standard employment. He has written a ton about the potential of new markets for irregular economic activity in communities.
🔥 I also like this screenshot because it looks like there is a fireball behind him.
Here’s the transcript.
[*from his website] Rowan has written multiple policy papers about the “grey zone” between structured work and unemployment. His papers advocating “Full Spectrum Employment Support” – increasing options for irregular workers in the workforce system, not just job seekers - have been published by institutes from the anti-poverty left to the free-market right.
Prop 22 would establish drivers as an independent class of workers w/ access to limited job benefits, along with wage and worker protections they’ve so far lacked under the gig economy model;
Could be informative as Canada re-structures the Employment Insurance regime;
Much of the labour market has become less or in-visible as it has digitized;
Hiring based on recommendations/referrals privileges certain people and makes the labour market less penetrable. Apps are more transparent re: matching.
Platform companies save $$ by not offering benefits and paying other payroll taxes (etc);
Social capital is a primary driver of access to opportunity, and the labour market has become less penetrable as it has digitized. Digitization has created the illusion of transparency and access.
Worldwide, the COVID-19 pandemic has disproportionately affected gig economy workers due to the contingent and precarious nature of their work. Many gig economy workers have had to adapt quickly to new forms of working, and even learn new skills, to sustain their livelihood. At the same time, gig economy companies have prioritized profit and customers' needs over workers' safety. In this position paper, we draw insights from recent academic literature, policy papers, and media reports from across the globe to explore broad implications the pandemic has had on gig economy workers. We then discuss how gig economy platforms might be redesigned to support better working conditions and foster workers' development.
[The paper discusses a worker-centred gig economy and designing for online gig workers].
🤓 Vass Bednar is a smart generalist working at the intersection of technology and public policy.