Gig Economy

With Gig Economy Booming, Job Marketplaces Find A New Role

Post-recession, with gig workers now powering 33 percent of the U.S. workforce, the on-demand worker seems very mainstream. But paying these workers on demand is no long an option. In the latest PYMNTS Gig Economy Index™, a Hyperwallet collaboration, 84 percent of gig workers say being paid faster is now make or break for them. ManpowerGroup Solutions’ VP of solutions Jim McCoy weighs in, saying that job marketplaces are bound to play a larger role in matchmaking and providing those benefits. That interview, plus 920 data points, awaits.

In the aftermath of the Great Recession, some 8.7 million jobs were lost. From its ashes emerged a rising workforce that hustled multiple part-time job — wherever and whenever it could.

Almost a decade in, no longer fueled by desperation, the gig economy has taken a new shape and form. Today, the $700 billion-plus economy is powered not just by people who have lost their jobs or students working summer jobs, but increasingly by those who prefer the gig lifestyle. As of Q3 2017, 69 percent of gig workers said they wouldn’t quit their gig work for a full-time job, according to the latest findings of PYMNTS Gig Economy Index.

As more workers trade their traditional 9:00 a.m. to 5:00 p.m. jobs for the ad hoc lifestyle granted by gig work, the gig economy is witnessing new personas emerge within its workforce. Among others, the gig economy is powered by millennials still on their parents’ health insurance plans and baby boomers looking to stay busy in retirement, said Jim McCoy, vice president, global practice leader, RPO at the ManpowerGroup.

PYMNTS recently caught up with McCoy to talk about the emerging trends in the gig economy and the shifting attitude toward offering benefits to gig workers.

How gig workers get paid

The majority of gig marketplaces today function solely as matchmaking platforms for gig workers and employers.

No wonder, then, that a mere 29 percent of overall gig workers are paid on a weekly basis, according to the latest Gig Economy Index.

ManpowerGroup has taken a different approach to it, McCoy said. For processing payroll, the Milwaukee, Wisconsin-based company, which employs nearly 600,000 workers each day, treats its freelance contractors as if they’re its own employees.

As such, when it comes to processing payments, gig ” workers are paid weekly through direct deposit via the ACH network, McCoy explained.

However, as more and more workers become part of the gig workforce, there’s a growing demand for faster payments. Eighty-four percent of gig workers reported they would do more gig work if they were paid faster, the Index reports. That finding did not surprise McCoy.

“There’s something about the velocity of payments [that] tends to get people motivated, because they know that in seven days there’s going to be another payment waiting for them,” he said.

The need-for-speed concept, McCoy added, is also applicable to recruiting in the gig economy.

“What we find is that the longer you wait between when you make the individual the offer and when you start them on the job, the more likely you’re to lose them before the job,” he said.

To retain gig workers, paying them for the time leading up to the date they start working goes a long way, he added.

Benefits in the gig economy

Offering benefits to gig workers has become a bone of contention for employers since ride-hailing apps went mainstream.

In July 2017, gig workers in the ride-hailing business came a step closer to acquiring benefits from employers like Uber and Lyft after a North Carolina- based federal court allowed Uber drivers to challenge Uber’s classification of said drivers as independent contractors, The New York Times reported.

Whether Uber drivers succeed in their bid for reclassification as regular employees remains to be seen, but the outcome of the lawsuit is likely to have a ripple effect across other industries with a heavy reliance on gig workers.

According to McCoy, offering benefits in the gig economy can be a two-pronged challenge.

First off, he explained, by nature, gig work involves short-term contracting and, as such, Affordable Care Act (ACA) mandates do not necessarily kick in within the timeframe of a gig worker’s employment. Secondly, as in the case with Uber and Lyft, a lot of the work is set up so that the burden of acquiring benefits falls on gig workers themselves rather than their employers.

“That is part of the reason that gig work tends to be more attractive to millennials, because many of them can remain on their parents’ healthcare benefits until the age of 26, so that does drive that kind of behavior,” McCoy explained.

ManpowerGroup has taken a different approach to hiring and offering them benefits, he said.

Its approach of hiring gig workers as W2 employees instead of 1099 employees not only allows workers to acquire benefits for their gig work, but also alleviates pressure on employers to treat independent contractors as full-time employees, McCoy said. This hints at the role job marketplaces will likely soon play in offering benefits to gig workers.

Meanwhile, the U.S. government is taking its own steps toward introducing gig worker benefit provisions. In September 2017, Senator Mark Warner, D-Virginia, and Senator Suzan DelBene, D-Washington, introduced the first federal bill aimed at providing benefits to the gig workforce.

The Portable Benefits for Gig Workers Act would set aside $20 million in grants for nonprofits, state and local governments, a sum intended to help them craft programs offering benefits to such workers.

With the gig economy now powering more than one-third of the U.S. workforce and growing, offering benefits to its workers is set to take center stage among other labor and employment issues.

But for now, McCoy said, a lot remains up in the air.

The gig economy’s road ahead

Over the years, McCoy said, the gig economy is likely to see development of new business models that will help systematize recruitment of gig workers with different experience levels and expertise.

“You are going to see new models around how you get and maintain licenses, or certain certifications,” he said. “We will [also] see a bifurcation between what would be, say, entry level, high volume gig work, versus, say, professional and specialized gig work.”

One such new model, McCoy highlighted, is already starting to reshape the hiring of workers for summer jobs on ManpowerGroup’s platform.

Seasonal businesses tend to hire from the same pool of candidates and tend to lack specificity around shifts when hiring, which can create an ongoing problem at the peak of their business season, he explained.

ManpowerGroup’s WorkMyWay platform aims to resolve this issue, mapping candidates by their skill sets and geographic locations as well as helping employers check candidate referrals and fill in available shifts.

The platform’s goal is to bring businesses with sizable needs for gig workers together in consortium, so talent is rotated to help fulfill the seasonal needs of businesses, McCoy said. It’s new models like this that are going to play a larger role in matching gig workers with gig roles using their technological prowess.

With technology playing a bigger role in shaping the future of gig economy, it comes as no surprise that the gig economy is projected to power half the U.S. workforce in the near future.

And, with that, perhaps the U.S. workforce is looking at fewer job losses in case of yet another economic downturn.

To download the PYMNTS.com Gig Economy Index™, a Hyperwallet collaboration, please fill out the form below.

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About the Index

The PYMNTS.com Gig Economy Index™, a Hyperwallet collaboration, is designed to better understand workers in the gig economy, people who often work in short-term, ad hoc positions — who they are, what services they supply and what percentage of their overall income the gigs represent.

The Index features a survey of nearly 1,000 people who have participated in the gig economy in the past three months. Findings identify five main gig worker personas, their payment methods and their goals, motives and satisfaction with freelancing. The Index further breaks down details such as age, gender, race, income, education, time spent in the gig economy and payment mechanisms.

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