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Fostering innovation for and by workers could transform the gig economy

Amid the COVID-19 crisis, workers built new tools and business models with big benefits. It could be one of the most important and lasting economic legacies of the pandemic.

Fostering innovation for and by workers could transform the gig economy
[Source Photo: nito100/iStock]

Remember how the impact of the pandemic and the call to recognize the vital role of frontline or essential workers were supposed to catalyze a transformation—not only in the way we work but also in the protections that make it possible for everyone, regardless of background, to work safely, have a voice, and earn a decent living in America? A year and a record number of job openings later, many workers are still struggling.

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We’ve made some remarkable progress when it comes to helping workers, but will it last? Gig workers, for example—those who earn their income solely through independent contracting or a mix of that and salaried income—didn’t qualify for unemployment insurance (UI) before the pandemic. Then they got temporary access that varied widely from state to state. These and other benefits expired on Labor Day of all days, all while workers continue to face the challenges of the pandemic and related economic turmoil. While a Senate bill introduced in April would permanently offer UI to gig workers and expand the benefit amount, enactment is far from certain.

One thing we can count on is the remarkable innovations workers themselves helped create amid this crisis, and this could be one of the most important and lasting economic legacies of the pandemic. Nowhere is that clearer than in the gig economy. For example, a partnership between the Workers Lab, a nonprofit, and Steady, a for-profit tech company, early last year engaged gig workers to help design a secure tool to help workers and states instantaneously verify income for unemployment insurance. That tool has evolved to include a recently launched income passport feature, enabling users to verify income for a full range of safety net programs.

Why do these sorts of innovations matter? More than a quarter of all workers work in the gig economy. But within that, there’s enormous diversity: The high-paid full-time freelancer, the schoolteacher driving for Lyft on the weekends or between jobs, the first-generation college student providing childcare to help her family pay rent, or the person who cares for grandma while we’re at work. Bureau of Labor Statistics data show that women and people of color are concentrated in the types of gig work, such as house cleaning and home care, that offer the lowest pay and least control over work schedules.

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Compounding that, COVID-19’s fallout revealed how archaic and inadequate our definitions of work and worker protection really are. The state-by-state scramble to improve unemployment insurance has been positive—but also riddled with inefficiencies. It’s a reminder that we need systems, not stopgaps, that are modern, fair, and serve every kind of worker in this country. Some of these fixes could take place through the Congressional reauthorization of the Workforce Innovation and Opportunity Act, which aims to help job seekers access education, training, support, and employment this fall. But it’s hard to modernize a system when you don’t know who it should apply to or even what to call what they do. What counts as “work” now, and who are “workers”?

One part of resolving that question is updating and enforcing the laws that govern how employers classify workers—whether as employees or independent contractors—which state lawmakers and courts continue to debate. Policy reforms to address this, and also to create meaningful protections for gig workers, as New York City has just moved to do in its massive food delivery market, are critical. But even if we made those changes, we would still need to modernize work and worker protection through innovation. Innovation, done right, can transform business models, products, practices, and the nature of work itself for the better. And if innovation is about workers, then it should be driven as much as possible by workers.

All too often the process of innovation, whether developing new policy or technologies, has not centered on workers. Take just-in-time scheduling, in which algorithms assign workers shifts on short notice. It’s a way to cut labor costs, and it disproportionately destabilizes workers in low-wage jobs, especially in retail and the gig economy. Yet research shows that the same technology can generate more stable scheduling for workers while increasing company profits. Companies have to choose to make it so, to include workers in the design and implementation of the innovation so that it addresses workers’ needs, too, instead of creating new problems.

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[Screenshot: Calflexi]
There are other powerful and scalable examples of what’s possible. The city of Long Beach, California, backed a platform called Calflexi to address the toll the pandemic has taken on childcare providers. Unlike Uber and other private platforms, Calflexi is operated by a public workforce agency and a local nonprofit, and gives gig workers more control over when they work and what they earn. Providing at least $17 an hour, it has been called a much-needed “public option” in the gig economy. In Seattle, a nonprofit called Carina offers a similar online matching service for childcare and home care.

Likewise, the nonprofit National Domestic Workers Alliance Gig Worker Advocates has launched a first-of-its-kind pilot program with Handy, an online platform that connects house cleaners with customers. Operating in Kentucky, Indiana, and Florida so far, the pilot raises house cleaners’ minimum rate to $15 per hour and offers time off paid for by Handy, along with occupational accident insurance. It also creates a formal process whereby cleaners can discuss concerns about working conditions directly with decision-makers at Handy.

[Screenshot: Driver’s Seat]
Let’s not forget the value of sharing data itself—the real currency of the digital economy. The Driver’s Seat app helps drivers harvest their own data about which rides and delivery apps are the most lucrative for them, keeping an independent record of their earnings. This democratizes data and empowers drivers, not just private equity investors or shareholders, to make better decisions—for example, about when, where, and which platform to work on to maximize earnings.

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That app (and the other innovations we have highlighted) also promotes ongoing engagement with workers to exercise their voices and participate in problem-solving. Workers’ lives—and, crucially, their ideas—are at the heart of all of these innovations.

It’s time to commit to this approach and center innovation on workers. To start, we need a clear and open debate, informed by evidence, about what counts as work now, who gig workers are, where and how they work, and what they need. Resources like the Gig Economy Data Hub help, but they are only as useful as the data they can source, and those sources need updating to ensure that they capture all types of income-generating work that workers do.

Unfortunately, these advances are happening at the margins of our economy. It’s time for investors and policymakers to make innovation for and by workers the rule—the new default, not the exception. If the Department of Labor, for starters, committed itself to working with business, philanthropy, and other partners to seed, test, and scale such innovations, it would be a labor year to remember—one worthy of the extraordinary sacrifices America’s workers have made.

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Adrian Haro is CEO of the Workers Lab and served in the Obama administration. Xavier de Souza Briggs also served in the Obama administration; he is a senior fellow at the Brookings Institution and former vice president for inclusive economies and markets at the Ford Foundation.

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