My Quick Take on California’s Sweeping Gig Economy Law
High-Level Takeaway for you lazy people: This law is an opportunity to start the discussion around protecting workers from being taken advantage of (through misclassification) without hindering the opportunity freelance creates.
This week California passed Assembly Bill 5, a bill forcing app-based platforms like Uber to classify drivers as employees if the company directs their tasks and the work is part of the company’s main business. To be honest, many of these laws are already in place, as Microsoft learned the hard way in it's misclassification lawsuit in 2000. But as we shift from physical temp agencies as was the case in the above lawsuit, to digital platforms, both the act and principal of this bill hold weight.
For some, this is great. For some, this is not so great. For most, this is just confusing. Hopefully I can help add to the confusion :)
*excuse any typo’s...I skipped the final edit for my next meeting.
What’s the big deal?
On the surface, this can sound like Thor and his Hammer to the Gig Economy. But under the surface, there’s a lot more to this bill that both helps and hinders our transition to an inevitable transformation in how we organize workfrom physical, centrally organized large organizations, to digital, distributed networks of independent individuals.
Cat's out of the bag. Freelance is here to stay, but we're in the first inning of this transformation, and this law can be a forcing function to responsibly shape how we work for the next 150 years.
For me, freelancing changed my life. I hope this law starts the discussion to make sure freelance is everyone's engine to opportunity.
This law is an opportunity to start the discussion around freelance being everyone's engine to opportunity.
How can we start this conversation?
What as an industry will we accept and expect from models distributing the potential of the freelance economy?
Will we accept models that commoditize workers (make every worker the same), promote geographical arbitrage (outsource to cheaper countries), and create a race to the bottom (combination of these two)? Or will we recognize this, and intentionally put controls in place? Who is responsible for this, the platforms, the companies using the platforms, or government?
I’m inspired by Brad Smith’s (President of Microsoft) recent book Tools and Weapons: The Promise and the Peril of the Digital Age. Will we hold leadership teams in our space accountable for weighing the goods and bads of their model? Similar to how public companies must weigh the risks to their business in their annual report, maybe we require leadership of freelance platforms to weigh the risk of where their freelancers fall on the amplification effect spectrum?
Say we used a score of 0 to 5. 0 = worse than the McDonald’s cashier. 5 = The software developer.
On one end, Amazon’s Mechanical Turk gets a negative 5, since humans are literally pushing buttons in the dark with little to no growth potential.
On the other end, knowledge-work freelance platforms are well above 2, unlocking massive opportunity for individuals. Take Upwork enabling freelancers like J Cheema, a top rated designer on that’s realized well over $100k (an obvious 5). Or Catalant and Business Talent Group doing this for management consultants. Or Paro for finance & accounting professionals. Or Parker Dewey for students. Or Shared Harvest Fund for recent grads combining volunteering with paying down student debt (how cool is that!?!?!). These are just a few of the incredible players in our space.
Where do we draw our line in the sand?
This bill can be a forcing function for what we as an industry will expect from those distributing the value realized from the “gig” economy
Why do we need this conversation?
The Gig Economy isn’t good, it isn’t bad, it’s technology, and technology is value-neutral. Take Facebook. The good - rekindle old friendships. The bad - the election.
For the “gig” economy, this is reflected through what I call the Amplification Effect - the freelance economy amplifies what we already value.
Take the words of Benek Lisefski, a UX/UI designer from Auckland, New Zealand in his post The Myth of the Full Time Freelancer:
“Generations of young minds, tired of employment norms that no longer served their needs, thought gig working was their ticket to career freedom and meaningful work. Now they’re realising they’ve traded one prison for another.”
The reason? The “Gig” Economy model simply amplifies what society already values. Thus it’s not freelance platform OR full time employment. It’s about the work, and the actual value you have, regardless of whether freelance or full time employment. As he told me in a further conversation,
“If you become a slave to online gig marketplaces you’re no better off than being a slave to an employer”
The bad: If your full time job is a cashier at McDonald’s, freelance’s equivalent is something like the mechanical turk - a dystopia of humans in dark rooms pushing buttons and getting paid pennies for each click. Mary Gray and Siddharth Suri do a great job of exposing this in their book Ghost Work.
The good: If you’re a highly ranked software developer or product manager, you’re way better off as a freelancer. Sarah Kessler does a great job of exposing this through her book Gigged.
The “Gig” Economy isn’t good, or bad, it follows the amplification effect - amplifying what we already value.
What actually is the "gig" economy?
While thought leaders are great at buzzwords. News outlets are great at headlines. And leadership is great at strategy. Unfortunately for our industry, few of these parties are actually living it, and those that are, are too busy working (for example, my friend Joe just released a post How Uber manipulates its drivers: Insights from doing 300 deliveries for Uber Eats. While he’s got no skin in the game, he has no time to consistently write articles as such). Which leaves us sifting through various definitions seeded in self promotion and bias.
So what really is it? A bunch of Uber drivers? Or bands at your local bar? Or the “Hollywood Model”?
Neither. It’s simply project-based work, and has been around for as long as we have. In technical terms, it’s a 1099 instead of a W-2. And it can happen through various ways. This bill addresses the B2C, app-based way, commonly intertwined with the term sharing or on-demand economy. Left out is the various B2B knowledge work platforms discussed above.
The Gig Economy is just a model to organize project-based work
Where do we go from here?
Fortunately, it's just the first inning of this seismic shift.
The internet unlocked the ability to connect with anyone around the world for free. Cloud computing then unlocked collaboration (communication, task management, file sharing, feedback) through tools like Microsoft Teams, Slack, Trello, G-Suite, so we could work with anyone around the world in a way that’s equal, if not more productive remote than in the office.
What if there were a third event? One that wasn't the sexiest line of code, but ensured we build this future in a way that's equitable for everyone. I think that sounds sexier than any user story. My hope is that this bill starts the conversation about what it takes to create this.
Here's my take on what I hope we create:My Vision for the Future of Work