Last week, the Biden administration made another effort to drag the U.S. labor market back into the past. The Department of Labor withdrew the independent-contractor rule, a Trump-era regulation that made it easier for firms to classify workers as contractors instead of employees. It’s not yet clear what will replace it, though President Biden says he supports the ABC test that California tried to implement, which would classify most contractors as employees—including not just drivers for Uber and Lyft but even freelance writers.
The Labor Department and the media are framing the administration’s move as a way to ensure that workers in the gig economy are protected and paid overtime and minimum wage. Yet many workers prefer the flexibility of contract work, which lets them set their own hours and work for other companies. According to a Fed survey, most gig workers report high levels of satisfaction with the arrangement. When California tried to classify gig workers as employees, the state faced pushback not just from companies but from gig workers themselves.
They have good reasons to prefer it. The nature of work is changing, as it has throughout history. It once was considered dehumanizing that most workers should be beholden to a single employer. Today, we’re forcing this arrangement on people who don’t want it.
The rollback of the Trump rule joins a list of policies—efforts to increase unionization, low-skill manufacturing, and “shovel-ready” infrastructure jobs—by which the Biden administration is attempting to shoehorn the modern labor market into a 1950s mold. The problem with these policies is that the labor market has changed. When work was more uniform, workers were easier to replace, so forming strong ties to one’s employer made sense for job security. Unionization also made sense because it allowed the large numbers of lower-skilled workers to pool together for similar pay and benefits.
Over time, however, manufacturing, construction, and most other jobs have become more technical, requiring skilled workforces. The more skilled the workers, the less incentive they have to attach themselves to individual jobs or to pool risk with fellow workers. The more skills you have, the less unionization makes sense because you’re effectively subsidizing lower-skilled workers. And workers today also place a higher premium on flexibility. This may explain why the unionization drive at Amazon has not succeeded.
As we emerge from the pandemic, we should expect the value placed on flexibility in work arrangements to increase. The expanded availability of remote work, combined with the continuing unpredictability of school re-openings and child-care arrangements, make benefits like the ability to set your own hours and the freedom to work for multiple employers more important than ever.
Some Biden policies, like making it easier to buy health insurance without an employer, move in the right direction. The administration would do well to pursue more measures like these that embrace the new economy, rather than trying to force workers into structures better suited for the economy of more than a half-century ago.
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(CNN) — It’s been more than a year since San Francisco Uber driver Lucas Chamberlain was knocked unconscious by a would-be customer who attacked him during an argument over whether or not the patron was old enough to ride solo.
“I woke up with blood coming down under my eye,” Chamberlain told CNN Business. “I was like, ‘Why are there rocks in my mouth?’ It was my broken teeth.”
The March 15, 2020 attack temporarily put Chamberlain in the hospital, which only made his problems worse. He says he is one of many Uber drivers who do not receive health care benefits from the company even though they spend more than 40 hours a week working for Uber.
Situations like this are among the reasons some California Uber and Lyft drivers are calling on the National Labor Relations Board to classify them as employees once again.
Rideshare drivers from the organization We Drive Progress and delivery couriers with the Mobile Worker Alliance publicly stated their NLRB grievances during a Tuesday afternoon Zoom press conference. The groups say their total membership includes about 24,000 gig workers.
Representatives from both groups said they want the NLRB to reconsider ruling on a gig worker complaint filed after the November passage of Proposition 22, a California ballot initiative that allowed gig companies like Uber to classify their drivers and couriers as independent contractors rather than employees.
Prop 22 created an exception to California’s AB-5, a law passed in 2019 that granted gig workers all the rights and privileges associated with full-time employee status, including paid time off, paid sick leave, mandatory health care benefits for individuals working 40+ hours a week and the right to collectively bargain.
Uber and the other gig companies fought hard against AB-5, launching a $185 million ad campaign that convinced a majority of California voters that most ride-share drivers and couriers preferred the flexibility of being independent contractors, citing multiple polls ans studies on the issue.
In May, a Benson Strategy Group survey showed 82% of Uber drivers are still happy with Prop 22. The same survey found 51% of drivers remained “very happy” with the ballot measure.
“What California has shown is that the issue of independent work doesn’t follow the ideological lines,” Uber said. “Some political leaders are out of touch with what drivers and voters actually support.”
But the aggrieved drivers say Uber, Lyft and other gig companies haven’t kept the promises they made to voters when they campaigned for Prop 22.
“Those things that drivers rely on to ensure a good pay and a livable wage, they’re keeping that from us,” Lyft driver Jerome Gage told reporters Tuesday.
The drivers said the gig companies’ list of promises included providing a health care stipend to qualifying drivers and couriers who don’t already have medical coverage provided by the government or another employer.
Tulchin Research determined in April that roughly 86% of surveyed California gig workers are ineligible for the healthcare stipend.
Uber also added a fare multiplier feature to its app during the Prop 22 campaign after drivers complained about reduced fare prices cutting into their profits. Uber told drivers the fare multiplier would give them greater control as independent contractors by allowing them to set their own prices for trips “as a multiple of time and distance rates,” but the company abandoned the feature after customers pushed back earlier this year.
“Over the last few months, 80% of riders matched with a driver with a fare multiplier above 1x declined the higher fare and did not re-request a ride on Uber,” the company said in an April 8 blog post. “Additionally, drivers who set a high multiplier received fewer trip requests.”
Chamberlain said the broken promises cemented his view that being a gig employee is better than remaining independent.
“If I was an employee, I would have workers’ comp, insurance,” he said. “Because I don’t have that, I’m stuck with broken teeth. And I didn’t get paid for time off.”
The National Labor Relations Board said Tuesday that it isn’t aware of any California rideshare drivers or couriers filing a specific complaint against Uber, Lyft or any other major gig app company.
An NLRB spokesperson noted that under the Trump administration, the board previously determined the it doesn’t have jurisdiction over the gig workers because they are considered independent contractors and not employees, but that could change once a new complaint is filed under President Joe Biden’s NLRB.
Ken Jacobs, chair of the UC Berkeley Labor Center at Institute for Research on Labor Employment, says it’s “fairly likely” Biden’s NLRB will eventually weigh in on the gig workers’ battle with companies like Uber.
“It’s hard to read where they’d come down, but I would not be surprised if they reversed it,” he told CNN Business.
Celine McNicholas, director of government affairs and labor counsel at the Economic Policy Institute, says the Trump-era NLRB ruling effectively denied Uber drivers and other gig workers the collective bargaining rights granted by the National Labor Relations Act.
“We hope the NLRB will correct this error and ensure that these workers have the right to a union,” she said.
Keysight Technologies, Inc. (NYSE: KEYS), a leading technology company that delivers advanced design and validation solutions to help accelerate innovation to connect and secure the world, today announced a demonstration of a physical design validation solution featuring high speed Ethernet partners in the quad small form factor pluggable double density (QSFP-DD800) ecosystem.
Network equipment manufacturers (NEMs) in the high-speed Ethernet ecosystem are working to meet the demand for higher speeds and traffic density in hyperscale data centers. To meet the power and performance demands for high-speed network solutions, the QSFP-DD Multisource Agreement (MSA) group announced a hardware+revision+6.0+to+introduce+the+QSFP-DD800 specification and Common Management interface Specification (CMIS) 5.0 in May 2021.
The multi-company demonstration is first to showcase this form factor running full line rate, Ethernet speeds based on the IEEE+802.3ck 100G Pulse Amplitude Modulation 4-level (PAM4) electrical lanes. Along with Keysight, the demonstration includes partners in the DD800 ecosystem including host board connectors from Amphenol and link partner from system company Cisco. These leading companies are active contributing members of the QSFP-DD MSA.
“The QSFP-DD form factor continues to evolve to support next generation data centers supporting signal integrity, thermal performance, and port density,” said Scott Sommers, co-chairman of the QSFP-DD MSA and Molex director of Industry Standards. “Keysight’s new G800 builds on the industry momentum supporting QSFP-DD infrastructure.”
“We are pleased to see the QSFP-DD800 ecosystem expanding with test solutions such as the G800 from Keysight,” said Mark Nowell, Cisco Fellow. “This capability is critical to Cisco when developing products with 800G QSFP-DD800 ports.”
Demonstration Highlights New High Data Rate Multiple Channel FEC Test Solution
The new Keysight G800 advanced bit error ratio test (BERT) and forward error correction (FEC) error density and performance analysis system is the first test solution designed specifically for testing all Ethernet speeds based on 112G electrical lanes, including Ethernet Technology Consortium 800GE and IEEE 802.3 400GE, 200GE and 100GE. The G800 integrates with the Keysight+M8040A+bit+error+ratio+tester (BERT) and the Keysight UXR-Series+oscilloscope to provide insights into FEC constraints for physical design validation and compliance.
Keysight’s latest test solution enables NEMs and hyperscale data center providers to evaluate interoperability and FEC performance with error analysis such as patented BERT inferred FEC. It features an easy-to-see system overview of FEC performance across all Ethernet speeds in real-time, in 112Gb/s electrical lanes.
“Higher-speed Ethernet is a complex multiple channel environment. NEMs need visibility into all Ethernet lanes to detect and correlate meaningful errors to achieve the best performance,” said Jerry Pepper, Keysight Fellow. “Keysight is first to deliver these test capabilities, integrated with our BERT and UXR real-time oscilloscope. Together, they enable NEMs to gain unprecedented insights into their higher data rate implementation challenges for the hyperscale data centers of the future.”
About Keysight Technologies
Keysight delivers advanced design and validation solutions that help accelerate innovation to connect and secure the world. Keysight’s dedication to speed and precision extends to software-driven insights and analytics that bring tomorrow’s technology products to market faster across the development lifecycle, in design simulation, prototype validation, automated software testing, manufacturing analysis, and network performance optimization and visibility in enterprise, service provider and cloud environments. Our customers span the worldwide communications and industrial ecosystems, aerospace and defense, automotive, energy, semiconductor and general electronics markets. Keysight generated revenues of $4.2B in fiscal year 2020. For more information about Keysight Technologies (NYSE: KEYS), visit us at www.keysight.com
More than one-third of the U.S. workforce (36%) participated in the gig economy in 2018, a figure that some predict could rise to more than 50% by 2023. This trend accelerated significantly in 2020, largely driven by the fallout from Covid-19 and its impact on small businesses and larger employers’ budget and resulting mass layoffs.
Regardless of whether this shift is being driven by individual preference or necessity, there are significant public policy interests at hand: many safety net benefits for individuals in the U.S. have been funded or administered by employers. Accordingly, there have been state legislative efforts to force the companies enabling gig work – technology platforms such as Lyft, DoorDash, UpWork and others – to categorize the workers as ‘employees’.
2020 saw platform companies fight back, collectively spending $200 million to promote (and subsequently win) the Proposition 22 direct ballot measure in California, which exempts these companies from classifying independent contractors as employees.
With platform tech giants spending this type of capital to protect their interests, questions have come up around how to protect workers concerns.
One answer? A ‘public market’ marketplace option: creating a government-run gig economy platform, which could infuse competition into marketplaces that have historically been thought of as “winner take all” and could protect for gig workers’ interests and that of the public.
But, should the government be in the gig economy marketplace business?
British entrepreneur, Wingham Rowan, founder of Modern Markets for All and a long-time TV and media figure, believes so. A vocal proponent for a public gig-work option, Rowan believes that having government-run marketplaces is the best way to improve in the best interest of gig workers and provide a public good — and the only way to address what he outlines as the key issues impacting gig workers.The public marketplaces, which Rowan calls “Public Official E-Markets”, or POEMs, would be overseen by government entities or non-profits to ensure they are run as public utilities.
Roadblocks To Public Platforms Solving The Gig Economy’s Problems
There are a few problems with taking a POEM-approach to expanding the gig economy that Rowan and policymakers should consider prior to making any investments:
1. Big vision vs nailing the narrow “core interaction”
Rowan outlines a big, bold vision for how a government-run gig economy platform could provide a public benefit, with the article noting that, “If public e-markets really took off, they would fill with a constant hum of microeconomic activity, drawing an ever-wider set of people into exchanges of goods and services without private companies cashing in.”
The challenge with this big vision is that by their very nature, platforms that seek to be successful must start out with a very limited scope. Why? Three key reasons:
The value of the platform itself tends to come from the size of the network of users of the platform (commonly referred to as Network Effects);
In order to attract users they typically face a “chicken and egg” adoption problem in which each “side” of users (buyers or sellers, for instance) wait for the other to join; and
In order to create enough value to keep each side on the platform, they need to quickly facilitate enough value to both sides that both decide to continue using the platform (and not other methods) for future interactions
This may all sound easy, but even if one solves the adoption problem, this can prove a false victory if the third piece is not addressed in time. Termed the “core interaction”, this seemingly simple concept largely explains the difference between eBay and Yahoo! Auction, Bumble’s success by putting women in control, and Lyft’s increasing ride-matching success.
If the platform cannot create successful interactions for those first early users, those users drop off the platform, which reduces the value to remaining users. Indeed, Rowan himself seems to recognize the folly of ‘big vision’ thinking based on his experience with a government-run platform: “‘The first week, with very little publicity, they had eighteen thousand hours of residents’ availability for work…. [but] they had seventy hours of demand from employers, because nobody had thought to outreach to the demand side.’”
2. Government as matchmaker and holder of sensitive financial information
A primary role of most gig economy platforms is to help reduce “search costs” by providing a curation function: to make a match between supplier and consumer as easy, fast and successful as possible. This curation can come in different forms: Lyft uses GPS to efficiently match drivers and riders; Amazon allows users to rate the quality of products and merchants; Airbnb encourages hosts to post pictures so guests aren’t surprised, etc.
A secondary role of platforms is to minimize “transaction costs,” which are all costs associated with consummating a commercial transaction, including those not commonly thought of. Upwork, for instance, provides standardized contracting, dispute resolution, payment, and other services to remove as much friction as possible for both sides (the payer and freelancer) of the transaction.
Rowan makes the case that a government-run platform could fulfill the same set of functions: “As on Uber, buyers and sellers would accumulate reliability records; unlike on Uber, features such as health-care contributions and retirement benefits could be built in.”
To this end, there are two immediate (and likely many more) questions that come up that pose a challenge for any government-run platform:
When push comes to shove, which “side’s” interest should drive the matching algorithm?
Do we really want the government (or a contractor) storing the type of sensitive personal information necessary to make transactions seamless?
Regarding the first, there are typically small nuances that make or break a platform’s matching success. Bumble IPO’d this year because it put women (not men) in charge of matchmaking and the first point of outreach; similarly, Lyft outperforms Uber with a smaller network in part because it focused on and prioritized the importance of managing the quality of both its drivers and riders. At the end of the day, the challenge for a public marketplace will be in determining which side’s interests are preferred in order to determine the proper matching algorithm — and this isn’t easy, especially when trying to serve a public good.
Regarding the second — and what could ultimately be the public option’s fatal flaw — it maps back to consumer trust. Platforms like Uber and Lyft, DoorDash and GrubHub, etc. all store personal and financial data about its users to drive quick, seamless transactions. Will the American public want the government to have visibility and control of our private information? There will be inherent trust issues in that people may not trust a government-run platform for that very reason.
3. Platforms require organizational agility, not exactly the government’s strong suit
From 2006 to 2016, research indicates that 94% of large federal information technology projects were unsuccessful, more than 50% were delayed, over budget, or didn’t meet expectations, and 41.4% were deemed complete failures. Because governments and nonprofits typically do not have the technical skills, experience or resources required, they are not in the position to launch, manage, grow, govern, or monetize a gig-focused platform company.
Furthermore, developing a plan to attract and create value for just one set of users requires rapid testing and iterating on a multitude of factors; doing this for two different sets of users is even harder.
There are also user interface and experience (UI/UX) considerations, which require both a very specific set of technical skills to build and constant improvements to keep up with changing market expectations. We don’t usually associate public utilities with having a slick UI, but this is an incredibly important part of creating platform “stickiness” in terms of keeping people active on the platform.
Shortcomings in both of these areas should raise a red flag: research suggests that platform companies fail at twice the rate as non-platform tech startups. And in a recent study of 250 platforms, the authors found that many gig economy platforms collapsed within two to three years because they did not have enough users or funding.
While Rowan does mention having a private company involved in public platform development in his article, simply outsourcing this function and to a private company with the lowest bid for the job — or, worse, to a government entity or non-profit with little to no experience in platform development and marketplace creation — is likely to be the public platform demise.
An Example And Exception: HealthCare.Gov
With the enactment of the Affordable Care Act (ACA) in March 2010 came the introduction of health insurance exchange marketplaces, including Healthcare.Gov. Launched on October 1, 2013, HealthCare.gov lets consumers compare and shop for coverage, identify if they qualify for federal subsidies, and enroll in a chosen plan.
Like other federal IT efforts, Healthcare.Gov’s rollout was anything but smooth. The initial failure was mocked by government officials and talk show personalities alike, with only six individuals successfully completing and signing up for individual insurance on launch day. It also came in at ~17X its initial $93.7M budget, ultimately costing $1.7B.
Today, the experience on HealthCare.gov is much different than it was eight years ago. This is largely because of the government’s fixed technical issues with the site itself, but also because the platform itself serves different functions than those that Rowan envisions.
First, HealthCare.gov itself has a process by which individuals can identify if they qualify for a subsidy. Second, the insurance exchanges aggregate vast amounts of information from multiple plans and provides that information in a standard format, allowing for easy search and meaningful comparison shopping. Third, the nature of shopping for health insurance is more similar to buying a house than hailing a taxi: purchasing decisions are few and far between, and there is significant money at stake in the transaction, and there
Finally, HealthCare.gov now has the budget behind it to make it work after substantial budget cuts under Trump. The Biden administration recently committed $50 million in spending to help market and promote Obamacare insurance options to eligible enrollees. The administration is also working to secure more “navigators,” human beings available to help walk enrollees through their options and the process to ensure they are paying the lowest price possible.
Public vs. Private Run Marketplaces and Platforms, And What Can Work
With both state and federal public health insurance exchanges as an example, there are certainly instances where the government can play a role in public marketplace development:
There is a high-degree of information asymmetry between consumer and supplier
The cost of a failed transaction (or poor quality service) is high
There is significant utility provided to a large group of consumers by standardizing and simplifying the way options are presented
Purchasing decisions or information exchange needs are infrequent
When these conditions are met, a government-run (or sponsored) platform may yield value.
But for most other marketplace and platforms seeking to make commercial and information exchange more efficient, private capital is much better positioned to succeed. In healthcare, for instance, despite millions of taxpayer dollars invested into interoperability efforts, adoption and use remains low. While there are additional contributing factors for why this is the case, it is also true that most forms of health information exchange deal with frequent interactions between providers (and/or patients), different groups of providers and patients have different information needs, and standardization at too high a level renders information to any one constituent virtually meaningless.