Meet The Gig Economy Companies That See Investing In Workers As A Smart Business Strategy
3.16.2016 | Cole Stangler | International Business Times
Evan Bochner is part of what’s often dubbed the “on-demand economy” or the “gig economy,” the growing collection of app-based startups providing services to clients at the click of a button. The 27-year-old handyman works 30 to 40 hours a week for the New York City-based office cleaning and maintenance company. He does everything from assembling desks, shelves and chairs to unclogging toilets, painting and electrical work.
“It’s fun and exciting because I’m always doing something different, going to different offices, different people,” Bochner said. “It’s never the same thing two days in a row.”
The pay isn’t bad either. Unlike most workers in the on-demand economy, Bochner is pretty well-compensated, earning around $40 an hour, according to Managed by Q. And as an employee rather than an independent contractor, Bochner’s company offers benefits like medical, dental and vision insurance in addition to a 401(k) plan.
It’s in sharp contrast to his previous job situation. In the two years before he started at Q, Bochner said he worked as an independent contractor, relying on referrals, friends, family and the on-demand app. It was deeply unpredictable.
“When you’re paid well and you get good benefits and your company actually cares about you, you’re more likely to take pride in your work and do your job better and stay with the company,” Bochner said. “This is definitely a place I could see myself staying for a long time.”
Between the low pay and extensive use of independent contractors, the on-demand economy has achieved a certain notoriety for exploiting workers at the expense of consumers and Silicon Valley investors. But a growing number of companies like Managed by Q are taking a different approach, classifying their rank-and-file workers as employees and offering them higher pay and benefits. . . .
Palak Shah helps oversee the Good Work Code, an agreement inked last August between the National Domestic Workers Alliance labor group and 12 online-based companies, including Managed by Q. Each of the companies has agreed to endorse the Good Work Code’s eight values and implement at least two of them. Shah, who serves as social innovations director for the workers’ group, believes the growing use of employees is part of a broader shift taking place in the on-demand economy.
“I think what’s really happening is a larger shift toward focusing on workers, and this is just one way that it’s taken root,” Shah said. “I think what we’re seeing is a kind of adjustment that’s happening as the models mature and get a little bit further away from only focusing on customers or only on investors but also focusing on a longer-term solution and a model that’s sustainable.”
These modest workplace improvements are in part a response to the slew of misclassification lawsuits. But they’re also sound business moves, Shah said. Gig economy companies are finding it harder to attract and retain workers.
In addition to more apps using employees, Shah pointed to the growing prevalence of equity schemes. New ride-hailing startup Juno, for example, is reserving half of its founding shares for drivers by 2026. (It will also lets them choose whether to be independent contractors or employees.)
Rather than home in on misclassification, the Good Work Code promotes a set of broad values like safety, stability and flexibility, transparency, shared prosperity and a livable wage. The idea is to encourage the app-based companies that have signed on to improve workplace conditions any way they can.
“The classification conversation isn’t the complete conversation,” Shah said. “The classification tool is an important tool we have to protect workers, but there’s so much more stuff we should be doing ... There’s lots of people in this country who are employees who have really horrible schedules or get disrespected at work.”
Still, the basic protections of employment offer more of a safety net than the barebones contracts signed by most independent contractors. And in the eyes of Matt Faustman, co-founder of UpCounsel, an on-demand platform for legal services, many startups are grappling with the classification question in a way they never did just a few years ago. That’s in large part because of the swarm of litigation, he said.
“Every one of these companies — the ones you hear about, ones that have raised at least a series or more, they’re all being sued for this issue,” Faustman said. “I would bet you that when new startups are being formed, one of the questions people are asking is, well, are these independent contractors or employees?“
Whatever lies behind it, that conversation stands in stark contrast to one that accompanied the early days of the on-demand economy. New apps, the most starry-eyed of tech enthusiasts promised, were transforming the very concept of work itself: Traditional employment was on the wane, set to be replaced by an army of independent workers, traveling from gig to gig, being their own bosses.
“I think maybe 2013, 2014, the hype of ‘this is really changing the way everyone’s going to work forever’ maybe is a little bit overstated,” Managed by Q's Teran said. “The nature of work has changed, but I think the basics remain much of the same. ... This is like — a time clock used to be something that was mounted on the wall of a factory; now it’s a mobile app.”