Despite historically low unemployment, too many workers in America are effectively sidelined or forced to accept work on the wrong terms. While there is no single solution to this multifaceted problem, an important part of addressing it lies in rethinking gig economy work, much of which is found on digital platforms such as Uber and DoorDash. This kind of work and the app-based way of finding it have become core features of our economy.
Xavier de Souza Briggs
Senior Fellow - Brookings Metro
Founder - Modern Markets for All
But this growing and poorly understood corner of America’s labor market and service economy is now at a turning point. Many public officials, worker advocates, and others are understandably skeptical about gig economy work and how it can benefit communities—not just the companies and consumers relying on contracted workers.
Yet gig workers are meeting many critical needs, whether as helping hands at home, transporting people and goods, or delivering other skilled tasks in flexible ways. Now, two years after the American Rescue Plan Act’s passage, that law’s historic federal aid is flowing to states and localities, many of which are using the funds to develop locally driven innovations that invest creatively in their low-income workforce. This presents an opportunity to drive change that would benefit millions of people in need of gig work services as well as the workers (who are disproportionately women and people of color) who deliver them.
Addressing such vital community services and worker opportunity simultaneously constitutes a highly promising form of “two-sided innovation.” And in communities across the country, from Long Beach, Calif. and Portland, Ore. to Louisville, Ky. and southern Indiana, a first wave of public agencies is seizing the moment and showing the way.
The state of—and need for—nonstandard employment in America
Defined broadly, nonstandard employment (the technical term for gig economy work) is the world of breadwinners who do not have a salaried work relationship and may not know what hours, if any, they will be working next week, or even the next day. Many discussions on the future of work overlook or misinterpret this workforce, which is both unfair to those workers and a missed opportunity.
According to surveys, about one-quarter of working adults in the U.S. engage in nonstandard employment each year. Crucially, that figure counts those who rely on non-salary sources for either some or all of their income—for example, the home-based caregiver driving for Uber when she can, but also the full-time schoolteacher supplementing their salary by working as a weekend handyperson through TaskRabbit. In a 2021 study by the Pew Research Center, about one in six adults said they had found work on an online platform at some point.
Nonstandard employment, at least in the public conversation, can seem a consolation prize at best and exploitative purgatory at worst. Fierce criticism of gig work platforms has added to long-standing concerns about unregulated day labor in construction and other industries that rely on nonstandard employment. Wage theft, unsafe working conditions, and other abuses have been well documented for decades and are often tied to racial and gender discrimination, as leading labor researchers have highlighted.
However, nonstandard employment is not inherently bad for workers—and some workers need more flexible schedules and terms than what they can find in even the most flexible salaried jobs.
Set aside for the moment the much-debated ways that Uber, GrubHub, or other companies describe the opportunities they offer, which typically highlight the flexibility to work when you want, improved earnings, and access to financial benefits. Consider what workers, when we bother to ask them, say about their needs.
Some of the earliest known research on the subject was done for the British government in 2006. It found that 15% to 20% of adults could not work regular hours (full or part time) due to medical needs, unpredictable family caregiving duties, school and training schedules, or similar constraints. But crucially, over 70% of them reported they badly wanted to work. That’s a large number of workers who were motivated but effectively sidelined.
In the U.S., a 2017 Brookings analysis of who was not participating in the labor force and why arrived at comparable figures across subgroups of workers (but did not produce a specific national estimate), as well as a similar mix of medical, academic, and other barriers to working regular hours. And earlier this year, the Workers Lab—a nonprofit investor in worker-centered innovation—and the Aspen Institute’s Future of Work Initiative reported findings of their Gig Worker Learning Project, which underscored how some workers need and benefit from flexibility as an on-ramp to broader employment or entrepreneurial opportunities.
With people of color and women disproportionately represented in this part of the workforce, the sizable group of those who need greater flexibility than they can find in a regular job includes some of the most vulnerable people in our communities, who often provide critical support to other vulnerable people. And as the pandemic quickly taught us, they are not the only workers who need and value flexibility in when, how, or where they work. In fact, that’s true for most of the U.S. workforce.
But as investigative reporters began to highlight during the worst of the pandemic, many companies’ gig work platforms and workforce scheduling systems have created pools of commoditized, low-cost, controllable workers, often managed by opaque software algorithms. The success of these products is swelling another category of nonstandard worker: people who used to have regular hours and job terms (for example, as grocery store delivery drivers), but have now seen the buyers of their work (the companies) move to a gig work model in the name of efficiency and flexibility—for the buyers, that is. The New York Times Magazine recently captured these trends in a bracingly titled feature, “When Your Boss is an App.”
Consequences of that one-sided efficiency show up in broader problems of rising partial employment, unpredictable earnings, an inadequate safety net, and, predictably, widespread anxiety and other mental health pressures. In other words, workers sidelined or compromised by these increasingly widespread business practices feel even more of the pressures that affect most workers—but are, at last, getting more attention and creative response from employers, the media, and concerned policymakers.
The debate over classifying gig workers
In recent years, the legal classification of gig work and workers—as either independent contractors or employees—has become a political flashpoint in multiple states and a proxy battle in the larger fight over worker voice, security, and reward in our changing economy.
Hard-fought advocacy campaigns and litigation with massive political spending on the corporate side have pushed for or against classifying certain nonstandard workers—especially those working through Uber, DoorDash, and other app-based platforms—as either independent contractors or regular employees. Many companies favor the former and many worker advocates the latter. For example, in March, the decision of a California court of appeals to uphold much of a corporate-backed ballot measure, Proposition 22, was hailed as a victory for Uber and other platform companies.
Policymakers have struggled to thread this needle, with some aiming at new hybrid legal definitions of gig work, with a mix of the flexibility championed by app-based platforms and the benefits and protections traditionally attached only to regular jobs.
Lawmakers are starting with industries such as app-based delivery and ride-sharing services, whose popularity soared even higher during the pandemic and arguably became essential services in terms of market norms and customer expectations. Last year, for example, Washington state enacted legislation preserving the independent contractor classification of ride-share and delivery drivers, but granting them some of the benefits and protections attached to a regular job, including paid sick leave.
And in the last Congress, a bipartisan group introduced the Worker Flexibility and Choice Act, which would allow certain service businesses to continue treating their workers as independent contractors but strengthen those workers’ control over their jobs (for example, their ability to accept or reject assignments and work for multiple platforms) and give them certain limited benefits, as well as privacy, safety, and antidiscrimination protections—but not wage protections or access to unemployment insurance. The bill’s provisions are hotly contested; the National Employment Law Project, a think tank focused on workers’ rights, called it “deceptively named” and argued it would “radically erode fundamental worker protections in the United States to the benefit of big corporations.”
Not surprisingly, Congress has not yet advanced reform legislation. And at the state level, the classification fight has approached an impasse, even in pro-labor states such as California and Massachusetts, where reforms to expand gig workers’ rights have been rejected by voters or thrown out by the courts. New state legislative proposals, such as a reformulated “basic benefits bill” for ride-share drivers in Massachusetts, continue to attract debate and support—though unions and other labor advocates have not yet come together around any one policy framework. As the Economic Policy Institute highlighted in a recent analysis of dozens of states, we will likely continue to see significant policy variation across states—which have broad latitude to define their own labor laws and regulations—for the foreseeable future.
In October 2022, the Biden administration, proposed a new Department of Labor rule meant to address a key challenge for the protection of workers as the forms and terms of work shift: the test applied, under long-standing federal labor law, to determine whether a worker can be classified as an independent contractor or an employee with the standard set of protections and benefits. If it goes into effect, the rule would overturn a much more permissive one issued under the Trump administration. As the announcement of the rule stated, “The Department believes that its proposed rule would reduce the risk that employees are misclassified as independent contractors, while providing added certainty for businesses that engage (or wish to engage) with individuals who are in business for themselves.” But court challenges to this change are widely expected.
In sum, the gig economy’s stakes are rising while the rules governing it are still being contested. But alongside legislative and regulatory advocacy to ensure high-quality work standards and enforcement, there’s a complementary strategy moving up the agenda as well. As outlined below, local and state leaders are beginning to adopt publicly supported work-finding platforms to support people outside traditional job pigeonholes and, where possible, address critical community service needs too.
Two-sided innovation: Enhancing options for gig workers and services for communities
During the Great Depression, public job-finding exchanges were created as a response to the exploitation of desperate, out-of-work people. Today, the country has 2,400 publicly funded one-stop job centers, which started out as a national network of labor exchanges that offered an alternative to predatory private staffing agencies. Yet Brookings research shows their performance to be uneven, and their services routinely outsourced.
But recently, local governments have begun deploying their own innovative, worker-centered platform technologies that address community services while giving vulnerable workers an alternative to private gig platforms. In other words, we are seeing an important, two-sided government innovation: the modernization of public work-finding platforms for underserved workers linked to the broader modernization of public service delivery.
Pacific Gateway, the public workforce board serving Long Beach, Calif., was the first in the U.S. to launch a gig-work-finding platform and one of the first workforce boards to systematically support its nonstandard workforce at all. In 2018, the board’s pioneering early work, especially to aid disabled workers and veterans in need of flexible work, received the top economic development award from the U.S. Conference of Mayors along with a philanthropic seed grant to build the country’s first publicly run gig work platform. But it was the compounded challenges of 2020 that dramatically expanded demand for the service and a vision for what it could become. Using a platform for personalized work originally developed in British government programs, Pacific Gateway launched a pilot during the pandemic to provide responsive, affordable in-home child care for essential workers. The technology is built around protections, such as having a W-2 employer of record, as well as control and progression for workers—making it dramatically different from what workers experience on corporate platform apps.
The Long Beach initiative is now expanding to all sectors of flexible employment, generated by the city’s demand for flexible school support staff, events workers, community health teams, responsive at-home child care, and parks and recreation seasonal positions. It is also beginning to act as a pump primer for the wider local economy’s market, including private sector demand for hourly labor. So, thanks to public spending on those services, once a platform is in place and it offers a critical mass of available workers, serving demand beyond municipal government through the same platform with the same protections for workers becomes straight-forward.
This system helps people like 25-year-old Berenzize (we are using her first name only to protect her privacy). The oldest of six children, she is her family’s only driver and only fluent English speaker. With two disabled siblings, she transports family members around Los Angeles County and translates for them, all while studying to be a nurse.
Through the Long Beach program, anyone needing work that fits around the demands of their life can register with the workforce board. They then have a 30-minute phone interview with a team member, and their experiences are translated into a unique array of digital badges. Berenzize, for example, has a driver’s license, informal child care experience, and is fluent in Spanish and English. She also has full COVID-19 vaccination, hospitality experience, a willingness to work outdoors and be around pets, a swimming certificate, and multiple other verified data points that help reveal her value in the labor market.
People in the program are then hired as W-2 employees by a nonprofit “employer of record” that partners with the local workforce agency. In effect, the employer acts as an intermediary—analogous to a temp agency but with much better terms.
Since Berenzize isn’t looking for a 9-to-5 job, the platform records her hour-by-hour availability, acceptable travel area, minimum period of notice for work periods, and other parameters she decides. The platform—which currently offers opportunities paying between $15 and $21 per hour—will use those parameters and her badges to offer her types of work.
So after further vetting, Berenzize might qualify as a recreation aide for the school district, an event steward at the convention center, a homecare provider for local agencies, and so on. The platform is built around workers’ day-to-day needs across their entire gamut of skills and potential. They are protected W-2 employees for each period of work, with the all the complexity handled by the software, which maximizes earnings from all types of work they are permitted and willing to do. The employer of record is also legally responsible for benefits, just like any W-2 employer.
Now, as part of a broader design sprint focused on promoting good work in the gig economy, the Workers Lab is helping to replicate the Long Beach pilot in Portland, Ore., Oakland, Calif., Louisville, Ky., and southern Indiana. (Full disclosure: One of the authors of this piece is an adviser to the Workers Lab, the other a technology partner for the initiative.)
Along with their workforce boards and nonprofit partners, these four places plan to invest some of the flexible aid provided by the American Rescue Plan Act’s State and Local Fiscal Recovery Funds into their communities in ways that ensure opportunities for seekers of nonstandard employment. (Brookings researchers are tracking the wider array of innovations—many of them workforce-related—supported by these federal funds. For now, the main federal workforce funding system effectively discourages such experimentation, because income from gig work does not count in the wage records the Department of Labor uses to assess the performance of local workforce boards.)
From a service delivery standpoint, these work seekers can bring an additional dimension to programs engaging the homeless, offering vital community health functions, filling entry-level health care positions, caregiving, and more. But in each of these communities, public agencies also hope to foster a more inclusive labor market—one that further narrows the oft-lamented distance between service providers and their clients, as someone who helps others today may themselves need support, of some kind, tomorrow.
From the perspective of reliability and preparedness (or resilient and adaptive public service delivery), a more flexible and fluid workforce inclusive of people who need to set their own schedules can tap a larger number of deployable workers relative to the public service budget than a 100% regular-hours operation, since each person is likely to do fewer hours per week.
A wider pool of workers also facilitates hyperlocal connections and know-how, with workers more likely to live close to those they serve, making the most of each person’s unique experience. A veteran living with PTSD is a very different homeless outreach worker from a formerly professional mother of toddlers who has survived living in her car. But both have lived experience and credibility that can enhance their work with clients in need.
The bigger and more flexibly sourced the workforce, the more competencies can be brought in. With the technology now employed by Long Beach and the other local governments, these competencies can be reflected in the digital badges we illustrated above, which ensure visibility and support progression for workers. As we’ve previously highlighted, this kind of mobility can be personalized and data-driven—building stepping stones as a worker proves reliability and generates income for their next job pathway. Interventions can be tailored to support workers struggling along these nonstandard but critical career paths.
Such “tailored progression” is a key objective of the recent public gig-finding pilots, and it has a pay-it-forward benefit. The flexible workforce should find a seamless ladder as people build track records of reliability that incentivize upskilling to fill shortages that are revealed in local platform data. Ultimately, each person’s ladder can let them advance out of public-service-based, publicly funded work (or only that), so that openings are continuously created for others who need that public customer (the buyer of their work) to get a toehold in the wider labor market.
These are smarter workforce systems too. Governments with a locally controlled platform for nonstandard work can track activity and spending across the dozens of community organizations they fund to deliver services. They can build in climate resilience benefits and other systems intelligence—for example, by gauging how many caregivers or shelter workers trained for extreme-weather events are available during an emergency.
In aggregate, public agencies are the biggest buyers of flexible work in any economy. They contract for seasonal park workers, school aides, event staffers, electoral workers, pandemic response teams, and other positions that must flex up and down as needed. For now, this procurement is neither agile nor well-coordinated within localities—let alone able to strategically build the market for good gig work that helps workers get ahead. The pilots we have outlined above are working hard to change that.
A brighter future for gig workers and the communities they serve
Why should anyone who needs and wants to work be sidelined or forced to take employment on the wrong terms?
We are just beginning to understand what platform technologies could do at scale if operated in the public interest and deployed to better serve workers as well as clients and communities. With once-in-a-generation federal investment now flowing, leaders across the country have a remarkable opportunity to help all workers, with rewarding and dignified jobs for those who seek them as well as quality flexible work for those not available for regular employment.
This research is supported by Omidyar Network, through its grant making to promote more equitable and inclusive societies.