Almost anything you need can be only one click away: Transportation, food delivery, valet service, grocery shopping, you name it.

On-demand services are built around a new kind of workers. This very short article explores facts and projections about the future of gig-economy labor.

Labor Market Shift

The U.S. labor market is seeing a clear trend (among others): workers have more choice than ever.

Technological advancement and a bullish economy have allowed for cherry picking of schedules and employers. Major enablers of this trend are gig-economy companies [also referred to as: sharing economy, on-demand economy, 1099 economy].

This has brought a new type of labor force: Diversified Workers (=people with multiple sources of income from a mix of traditional employers and freelance work).

A recent study (07/2015) produced the following estimates:

• Total U.S. civilian labor force: 157 million
• Total U.S. freelance labor force: 53.7 million
• Total diversified workers [part of freelance labor force]: 14.1 million (+8% growth since 2014)

Despite it being one of the major labor force groups, diversified workers still find themselves in a no man’s land – under public law. Legislators and employers are fighting over a suitable legal classification (1099 vs. W2) while the workers themselves remain uncertain about one of their most basic needs: social security.

“We create numerous jobs in every market we’re in. Uber and Airbnb create a massive amount of jobs in different ways. When that happens, policy makers have to pay attention.” – Tri Tran (CEO, Munchery)

Policymakers Are Eager to Learn

2015 as a policy year has centered heavily around labor market topics (minimum wage increases for service jobs are only one example of that).

If Jeb Bush’s and Hillary Clinton’s visits to gig-economy companies across the country are a leading indicator, then we will also see a big focus on labor market topics throughout the presidential campaign 2016 and in the following term.

Policymakers find themselves in a learning phase. They get exposure to different types of on-demand business models and will evaluate pros & cons for further legislative debates.

The White House has set an example by addressing public questions about labor policy and endorsed a ‘labor standard’ initiative called Good Work Code.

As part of ongoing labor market development the current and next government will need to secure a regulatory framework that protects diversified workers and allows for a sustainable growth of the gig-economy sector.

Policymakers and the public seem to agree that there is still unclarity in regards to the following areas:

• Insurance planning (health care, general liability, etc.)
• Benefits planning (child care support, 401k contribution, etc.)

The primary impact of this debate will be aimed towards clarifying ‘whose  responsibility it will be’ and the ‘extent of it’.

Outlook

“End of the day, I think we will end up with a third classification” – Sen. Mark Warner (D-Va.)

Expect to see concrete reforms and initiatives in the following areas:

• Classification of ‘new types of labor’
• Potential ‘unionization’ of the new labor type
• Introduction of minimally required obligations/contributions from the employer side (min. benefit, etc.)

Additional Reading & Links:

• [Presentation] Freelancing in America: 2015 (url)
• [Twitter] Sen. Mark Warner (url)
• White House – Worker’s Voice (url)

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About Spencer Parra

Spencer Parra is the VP of Product Management for advertising and data products at Radancy. In that capacity, Spencer and his team of product managers, program managers, data scientists, and data analysts work to develop products in a data driven mindset. As the leader of Advertising products, he works to bring a holistic full funnel approach to Radancy’s advertising technology stack with Programmatic Jobs at its foundation. Through data products, he tells the story of media performance via Radancy’s Metrics Gateway and helps ensure data is democratized through Radancy’s unified platform. Spencer came to Radancy from the Perengo acquisition in mid 2019 where he served as Lead Product Manager and a member of the founding team. With Perengo, he worked towards the vision of leveraging the same rigor and concepts from ecommerce advertising technology to the recruitment advertising space. Prior to Perengo, Spencer launched and supported in-app advertising products at Criteo as a solutions engineer. Spencer holds a B.S. in Aerospace Engineering from the Massachusetts Institute of Technology.

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