As I continue to follow developments regarding the future of work, I recently attended an event co-sponsored by Cornell/ILR’s Institute for Workplace Studies in NYC and the McKinsey Global Institute (MGI) addressing MGI’s report last Fall entitled Independent Work: Choice, Necessity and the Gig Economy. The report examines the increasing numbers of self-employed, freelance and temporary workers in the U.S. and Europe which are currently estimated to comprise 30 percent of the working-age population and rising. The report notes that many workers have chosen this autonomous path as their primary means of income, while others follow it to supplement income, and yet others have no other choice and would prefer a traditional job with fair wages and benefits. Many factors have led to the return to this pre-industrial revolution independent worker model including the recession and the emergence of The Digital Age as workers are more mobile and have increasing access to new technologies which transform how work is performed and goods and services are bought and sold.
The independent model of work is not without its critics. Not everyone is capable of managing themselves as an independent business. Many fear that this model is more appropriate for highly-skilled workers who have special skills and can manage multiple engagements which they have cultivated and that are well paid. For the majority of entry-level or non-specialized workers, however, this model may drive down wages and leave many others unemployed. Further, it is unclear how independent workers will be protected from pay disparities, discrimination, work injuries, unemployment and how they will obtain benefits for such needs as health care, retirement, or disability. Many have argued that employers have moved toward retention of independent workers to avoid employment and benefits legal responsibilities and erode the traditional employer-employee relationship and benefits.
Shifting worker models are also caused by advances in automation and will accelerate with the transformations that will be ushered into the workplace with artificial intelligence, machines and robots that perform many current jobs and will perform jobs of the future. In a December 2016 report from the Obama administration entitled Artificial Intelligence, Automation, and the Economy, it was noted that while the industrial revolution led to the disruptions to the lives of many agricultural workers, the technological revolution has led, and will continue to lead, to disruptions for workers in all industries. This will also continue to impact the professions (e.g., financial services, education, journalism, sales, accounting, law and medicine). The increased use of automation and the demand for highly-skilled workers and those capable of abstract thinking and creativity will result in the displacement of many workers who perform routine tasks and in lower-skilled jobs. Further, it is only a matter of time before robots are built with the manual dexterity to perform physical labor jobs. As society advances and deploys AI-driven automation, a re-thinking of worker models, our educational system and the social safety net is crucial.
With this confluence of events, it is imperative that swift policy action is taken to prepare for the transition that lies ahead and employers have an important role to play. As we have seen with the passage of the Affordable Care Act and proposals for automatic payroll-IRAs managed by states or local governments, there have been movements afoot for several years calling for more government-run forms of benefits in the U.S. which lend themselves to portability without attachment to an employer, but these models are also controversial for numerous economic and political reasons and are under attack. Policy makers continue to put forth ideas to require employers and independent contractor agencies to contribute toward a system of portable benefits for independent workers which may include multiple employer programs, pooled associations, and various types of government funds. The shifting tides will also require individuals to be financially educated and to save in their own health, retirement, and other insurance type vehicles apart from any employer-provided benefits. Employers in all industries will need to contribute to these debates and should consider the following:
- Develop a Workplace Transition Policy. As employers manage multiple generations in the workforce from the traditionalists, baby boomers, Generation X, Millenials, and Generation Z, and as society shifts to new models in the workplace, including use of AI-driven automation, impact on existing traditional-model workers should be carefully addressed. Immediate issues to consider include proper management of employee reductions and retirements (including fair and reasonable severance and related benefits (including career transitioning and re-training assistance), incentives for transfer of knowledge between generations (which may require ongoing consulting arrangements or staggered retirements), guidance for younger generations managing older generations and/or cobot relationships (which may require leadership training or new models of management training which address the newly envisioned workplace), integration of flexible work arrangements and job sharing, and deployment of AI and workplace technologies (with commensurate training and accommodations for their use). Improper handling of these issues can implicate allegations of violations of various employment laws from age, gender and disability discrimination to interference with rights to certain employee benefits.
- Pay a Fair and Competitive Wage. The call for fair wages, including a rise in the federal minimum wage, is not new. As more of the economic burden will fall on individuals to not only afford to live but also to save for all of their needs including health care, retirement, and periods of unemployment without employer assistance, fair wage initiatives are imperative and provide one way for employers to contribute to the eroding social safety net for all workers. If this can be combined with financial wellness and literacy type programs, employers can play a significant role in assisting their workers understand and meet their financial needs.
- Provide Employee and Independent Worker Benefits. It is widely noted that the erosion of employer provided pensions has contributed to the retirement crisis. Further, employer provided health care also continues to be under attack. Employer sponsored programs that address retirement savings and health care benefits provide a crucial safety net for workers and should be maintained lest these needs fall on the government to provide in order to fill the void. Policy makers are also evaluating ways to make these benefits more flexible and portable and these developments should be monitored. Consideration should also be given to making these benefits available to independent workers, which would resolve many of the worker misclassification analyses as it relates to impermissible exclusions of eligible workers for plans. Among the many other types of employer-provided benefits, additional benefits such as tuition reimbursement and student loan debt repayment programs will also assist workers to train for future job skills and ease burdens of existing debts.
- Contribute to Pipeline Development of Workers. Educational systems are in dire need of reform. Employers should consider how to partner with high schools, colleges and universities for job training, internships, and research endeavors to prepare next generations for the future of work. Thought should also be given to re-tooling the current workforce to obtain the skills needed for the marketplace. Ensure that the pipeline of workers obtains the needed skills for future jobs.
- Carefully Deploy AI-driven Automation and New Technologies into the Workplace. The increased use of machines, robots and AI in the workplace will lead to new legal questions concerning data privacy and security, workplace safety, and far ranging employment and labor issues as individuals are required to work with, or be displaced by, these tools. Whether a worker is an employee, an independent contractor, or another yet-to- be determined classification, the co-working relationship between humans and machines has yet to be defined and will require thoughtful planning.
Businesses that have goods and services to sell will need individuals to buy them. If independent work becomes more of a necessity than a choice, the social and economic consequences can be dire. As businesses gain from the increased profitability that is promised by the use of AI-driven automation, impending tax reform, and shifting worker models, it is imperative for employers to contribute to the policy debates and find ways to contribute to the economic security of the individual workers.