Whether we like it or not, the way we work is changing. The increasing ubiquity of the Internet, the constant presence of mobile devices, the growth of the “app economy” and a rising generation of workers insisting on aligning their values with their jobs is forever changing the nature of work. The labor force of the future will be more flexible, more freelance, more mobile and more collaborative. It will also be more insecure.
When we look at the workforce of today, it’s not easy to bring precise data to this new class of workers. Estimates reflect a broad range of up to as much as 35% of the workforce that are considered to be part of the “freelance economy,” largely due to the fact that there isn’t a clear set of definitions to categorize these workers. This definitional challenge underscores that it is no longer as simple as the old categories of 1099 versus W-2 workers. Indeed, policies, institutions, classifications and employment practices that have supported American workers to date were built around the workforce of the Industrial Revolution and a WWII era when full-time employees worked for one, maybe two, companies over the course of an entire career. And those full-time jobs often came with benefits—health coverage, preferred withholding of taxes, contributions to retirement and unemployment insurance—all of which provided a basic level of social security for the workforce.
As the future of America’s work shifts to a flexible workforce, America needs a new “social contract” that, while different, still provides a certain level of security and dignity for our labor force—a safety net that supports them when they’re injured, sick or when it’s time to retire.
The idea of a new social contract seems to be taking root. Just last week New America dedicated an entire conference to this very topic. What is becoming increasingly obvious, as more voices call for this new social contract, is that a large and diverse set of problem-solvers need to be at the table to take on this challenge. The collaborative table of government, big business and labor that set the workforce architecture of the Industrial Revolution needs to embrace new actors—philanthropy, entrepreneurs and people who have truly “lived” the problem. People like Ace Callwood, CEO of Painless1099, who has developed a solution that helps 1099 workers pay their taxes. Or Nicole Sanchez, CEO of eCreditHero which helps low-income families clean up their credit reports—a disproportionately significant problem for people with irregular income coming from multiple “gigs.” And we are beginning to see a growing number of apps and tools that enable workers to easily designate a portion of earnings to savings and to long term wealth creation. The kind of entrepreneurs who have been at the forefront of major innovations throughout our nation’s history will again play a leading role as we face this workforce transition.
As Congress seeks to address these issues, Senator Mark Warner has been a leading voice on the need to bring together a diverse set of actors to address some of the unintended consequences of the gig economy.
The Case Foundation has always supported the role of cross-sector partnerships in both driving innovation and solving major social challenges. So when Senator Warner called on us to help him and his colleagues at the Aspen Institute Future of Work Initiative, we joined forces with our partners at DC-based Village Capital to bring together entrepreneurs, investors, foundations and policymakers for an ideation session on opportunities for business and government to make the future of work a brighter one. While one ideation session is certainly not a panacea for the host of solutions that are needed, a few key concepts emerged:
• Income smoothing: One of the biggest challenges for workers in the gig economy is that instead of receiving a steady paycheck every two weeks, you may have three “fat” days followed by 11 “lean” days (perhaps some with no income at all). There are significant opportunities for technology to play a role in providing new options for income smoothing—and we’ve already seen private sector solutions such as telecoms who give a free month of service for every 12 months billing, or apps like Sweep and Digit which help people manage their own cash flow. A number of policy ideas also surfaced during the conversation, including opportunities to spread benefits like the earned income tax credit and tax refunds over time (rather than in one lump sum). Or bringing the government and the private sector together to extend government programs, like the America Recovery Capital Loan, to individuals.
• A safe space for gig economy innovators: One of the big challenges for companies in the gig economy is a lack of incentives to invest in their workers. Modernizing the binary employee classification system to include a hybrid classification is an obvious first step. The idea of an independent benefits platform that allows for independent access (not tied to an employer), new and portable benefits, and multiple-payer options was also raised.
• Aligning education benefits with the future of work: As employers increasingly pick “labor à-la-carte,” workers are now turning to educational opportunities that give them “skills à-la-carte.” So how do we create a policy environment that allows funding—like Pell Grants—to flow to some of these programs that are showing real traction in the form of job placement?
Bringing together entrepreneurs, government and philanthropy around the future of work is just one example of the important role that these purposeful collisions play in driving solutions to big challenges. In Washington, we can and must do better about finding ways to work together not just across the aisles, but across sectors and industries for a better future. We applaud Senator Warner, Mitch Daniels, John Bridgeland, Bruce Reed, Anne-Marie Slaughter and others for their leadership in thinking about the future of the American workforce.
This is just the start of a conversation that I hope ends in a concrete set of policy proposals. The future of work is now.
