Universities have often offered courses teaching students how to navigate the workplace and manage their careers. Now, we’re starting to see some of these courses focus on teaching students how to best participate in the gig economy.
We reported last year about the importance of a new retirement system for the gig economy. Typical gig workers are currently not entitled to enjoy a traditional employer-based retirement plan because the law only permits such plans to cover employees and not independent contractors. But the need for gig workers to have opportunities to save for retirement has done nothing but increase in recent years. Research shows that there are 56.7 million freelancers in the United States and Congress has yet to pass legislation creating a retirement system for them.
As the evolution of the gig economy continues, highly skilled workers who operate on a project-by-project basis are leveraging the gig economy to find new clients and to align their workload according to their personal preferences. Likewise, companies are increasingly able to work with highly skilled freelancers to scale up their workforce in an efficient and cost-effective manner. Companies are also able to manage fluctuations of the demand for their services by hiring skilled freelancers on a project basis.
You can tell we’re well into the midst of the campaign season when presidential hopefuls reveal their plans for handling various societal concerns. We saw it as several Democratic candidates lined up to offer their plans to combat pay equity issues. Now, it’s the gig economy’s turn. A few months ago, South Bend Mayor Pete Buttigieg put forth a plan that called for greater protections for gig economy workers. Next up: Senator Bernie Sanders.
Lyft recently filed for an initial public offering with the hopes of raising as much as $2.1 billion. As part of its registration statement for its IPO, Lyft acknowledged the company could be negatively impacted by several potential business risks. The filing acknowledged not only increased and intense competition from competitors, but also the specter of litigation across the country as drivers contest their classification as independent contractors and the applicability of Lyft’s arbitration agreement. Within its S-1, Lyft cited lawsuits disputing the employment status of its drivers – as well as new municipal regulations – as potential risks that investors should consider when evaluating the company.
As the competition to secure investments with startups continues to increase, venture capitalists are discovering new ways to strengthen their relationships with potential investment partners. In addition to listening to pitches from startup founders and reviewing financial projections, Bloomberg reports that venture capitalists are now immersing themselves in the gig economy by working for the startups that they may ultimately invest in.
It is no secret that employers struggle to identify, hire, and retain top talent. Given technological advances and increased globalization, the need to access and hire specialized talent in an efficient and cost-effective manner will likely only increase in the future. Companies may also struggle with determining the best staffing solutions as they enter new industries, obtain new customers, or try to keep up with and manage their growth. Notably, companies also struggle to develop initiatives that allow them to identify and retain specialized experts on a short term or on demand basis to tackle difficult but short-term problems. For companies in need of short-term specialized expertise, professional learning networks offer an on-demand model for access to diverse talent pools that do not exist in-house and often times would not make sense for companies to expend resources building and maintaining on a long-term basis.
Traditional employers are continuing to discover that they can benefit from the gig economy through the utilization of external platforms to hire contract workers. Sometimes companies are caught off-guard by a sudden uptick in demand or an employee resignation and suffer from the detailed and drawn out process of hiring a long-term employee. Employers are increasingly eliminating staffing lag time by relying upon gig platforms to efficiently hire and onboard workers for short-term needs during peak demand cycles.
As if gig businesses haven’t had enough bad news to digest in the past few weeks... fresh off the heels of the California Supreme Court’s decision in the Dynamex Operations case, members of Congress are now focusing on increasing workplace rights for gig economy workers while handing them the ability to bargain collectively.
As an increasing number of workers continue to join the gig economy, it is increasingly imperative for lawmakers and regulators to create a new retirement system that allows for freelancers and individuals working for multiple businesses to easily save for retirement. Although the American workforce is changing, the traditional retirement system does not yet present an option for the changing workforce. Gig workers are currently not entitled to enjoy a traditional employer-based retirement plan because such plan are only permitted to cover employees and not independent contractors.