The market is stacked against the low-skilled worker

Should we call low-skilled workers – the Uber drivers, dog walkers, and retail workers – “micro-entrepreneurs?” Wingham Rowan, director of Beyond Jobs, thinks so: As with entrepreneurs, laborers need to be able to apply their time toward the work that offers the greatest opportunity.

The issue, Rowan said, is that right now the market is stacked against the low-skilled worker. While modern businesses can very efficiently portion hours to workers, and gig work is touted as giving workers flexibility, the advantage very much lies with the companies. So, for now, at least, “micro-entrepreneur” might be an aspirational term. But, many cities are now recognizing the need to support low-skilled workers, and the results of a Kauffman Foundation-funded project may bring the prospect of an organized market for workers closer to reality.

“The existing markets, the Ubers and so on, are there to make a commercial killing. There [are] all sorts of things you can do to keep the workforce under your thumb and extract as much profit from their ends as you can while shifting all the risks and uncertainty onto the workers,” Rowan said. “It’s a hugely successful business model, and it’s happened because the public workforce system has just not evolved in the way the labor market has.”

It is one thing to accept that many of the people we interact with in the course of a day are working on a contingent basis, but the facts are surprising. Government estimates suggest that more than 30 percent of the workforce now earn irregularly, and some predict that number will reach 50 percent by the 2020s. These workers are not in control of their own schedules, the number of hours of work they’ll get in a week, and typically receive no benefits.

While widely acknowledged, the shift that’s happening isn’t captured in official data, nor have most of us come to an understanding that this is happening. We’re in the middle of a transition toward the future of work, without realizing it. But, it is all around us.

The irregular economy

Rowan gives the example of Jodi, who wiped his table in a fast-food outlet recently. A 28-year-old single mom, she told him that there were no traditional, low-skill jobs with steady hours, promotion prospects, and benefits available to her. Around her main employment, Jodi has to fit a patchwork of dog-walking through online services, clearing glasses for a bar, and semi-regular house cleaning, all with the contingency of finding child care.

“Her ‘job’ involves being called in as required by an employer matching headcount to fluctuating footfall very precisely. When not required, she has to find short-term opportunities,” Rowan said.

Here’s where terminology is important. Irregular workers don’t have jobs, and Rowan refers to “buyers of labor,” rather than employers. A job implies stability and employment as a measure of commitment. Hourly workers don’t have the systems that allow them to be in control of their work lives, unlike skilled gig workers – web designers, accountants, and other consultants – who can practice their professions from home and regulate their rates and the amount of work they get via the Internet. And irregular workers are also unlike traditional job-hunters seeking full-time employment, who benefit from established state workforce agencies and job boards.

In addition to a lack of control over their hours, Rowan said hourly workers suffer from a lack of data. “I might be running around LA doing deliveries today, I have no data telling me which marketplace I should be doing that through, whether there is higher paying work available, what skills I should be acquiring, to position myself better in the market. Most of these [gig-work] sites don’t allow me to decide what I’m paid, so I can’t say, ‘Well I’ll work on Sunday mornings for a higher pay rate.’ Or, ‘I’ll do longer journeys for a higher pay rate.’ Everything is decided by the site.”

Creating a horizontal market

Given that the shifts in the market favor companies, it is unlikely that there will be a self-correction to benefit workers. But, states can create the necessary infrastructure and metro areas have the local networks to “make a market” for low-skilled workers.

“What’s really exciting is when America’s mighty public workforce system decides that it’s going to be the neutral arbiter of a much better marketplace for this labor. That’s when all sorts of possibilities begin to emerge,” Rowan said.

What would a new infrastructure that matches low-skilled workers with providers of work look like? It would be a “horizontal market,” allowing workers to make decisions about the type of work available – if today’s demand made carpet laying more profitable than roofing or garden work, for example. It would also alert workers to emerging opportunities, such as where gaining a certification or other qualification might improve their earnings.

“That is where all the might of the American public workforce system comes in. This is what they do for traditional job seekers: they train people, they find out what employers need, make sure everyone is aligned, and they’ve got the best possible labor market intelligence. But nobody knows what’s happening in your regular work market,” he said.

This kind of “market making” is an emerging science. It takes a step forward this month with publication of a manual, “Making a Market for Irregular Employment.” Drawing on lessons from Britain, around the U.S., and a specific project by the Pacific Gateway Partnership in Long Beach, the manual shows a path for cities to move beyond their traditional focus on job creation to supporting the reality of modern contingency employment.

The manual lays out practical steps that project managers in cities can take to facilitate local discussion about setting up a market. It first provides the rationale for making a market, then provides tactical recommendations as to how to lead local stakeholders through a decision-making and launch process.

Although the market-making concepts are new, they are already being recognized. In June, Long Beach Mayor Robert Garcia received a top honor at U.S. Conference of Mayors on behalf of the preliminary work done by the Pacific Gateway Workforce Partnership for the Citywide Market for Hourly Labor program. Pacific Gateway received a $300,000 grant as part of the award, which will help the market officially launch in 2019.

A screen from a Central Database of Available Hours (CDAH) platform currently being developed in Long Beach. It will allow irregular workers to log preferred times to work, and the hourly rate for their work. It will also allow them to track certifications and licenses they’ve earned.