Freelancing in America: The Present and Future of the Gig Economy


SPEAKER 1: The following is
a presentation of the ILR School at Cornell University. ILR– advancing
the world of work. [MUSIC PLAYING] LOUIS HYMAN: Well,
welcome, everyone. Good evening. This is the second
event in the ILR Cornell Future of Work Series. I am Professor Louis Hyman,
director of the Institute for Workplace Studies
here in New York City. Beginning this year, we
are expanding the institute toward supporting future
of work research and future of work outreach. The future of work is
part of IWS, but also ILR and, of course, Cornell. Over the next few
years, Cornell, in many different ways,
is building bridges to New York City from
Ithaca, so it’s better to engage with this new
economy that is transforming the country and the world. And we hope to
provide new insights on how this workplace will
unfold and how to navigate it. To make the right choices for
ourselves, for our businesses, and for our country require
good data and good conversation. And that’s what
tonight is all about. Tonight, we’ll hear
from two people, who are at the forefront
of innovation and, also, collaboration
in the workplace. Sara Horowitz is a
graduate of the ILR School, so I’m going to
introduce her first. [APPLAUSE] SARA HOROWITZ: Go ILR. LOUIS HYMAN: More
importantly, I think, she is the founder and
executive director of the Freelancers
Union, which was the first national
organization to attempt support of this new
freelance workforce. With over 300,000
members, the FLU is at the forefront of
confronting the new challenges and possibilities of
this freelance economy. Stephane Kasriel
did not go to ILR, but he is the CEO
of Upwork, which is why we invited
him here tonight, which is the world’s
largest freelance labor platform with over three
million annual job postings, 12 million registered freelancers,
and over $1 billion a year in revenue. This is not a startup. Upwork is redefining freelance
labor on a global scale. And tonight, in the spirit
of labor and management coming together, they
will be presenting a new coauthored report on the
state of the freelance economy and discuss its implications for
the present and future of work in the best ILR tradition. So if you would welcome,
please, Sara and Stephane. [APPLAUSE] Now, you guys talk. STEPHANE KASRIEL: Sure. Awesome. Should I start? SARA HOROWITZ: Yes, of course. STEPHANE KASRIEL: So first off– SARA HOROWITZ: You
have the disadvantage, because you didn’t
go to the ILR. STEPHANE KASRIEL: No, it’s like
I’m already starting negative. LOUIS HYMAN: You did go
to college, so it’s OK. STEPHANE KASRIEL: Yeah, the
small school called Stanford. I’m sorry. Broncos, you know,
like [INAUDIBLE].. So first of all, thank
you for organizing this, and thank you, everyone,
for being here. So the Freelancers
Union and Upwork have been partnering now
for– this is the third year, and we’re doing this study
called Freelancing in America. And frankly, the main
goal of the study is to get some numbers
behind and some facts behind a lot of the
talk that is going on. As you probably
know, the government has not been issuing the
contingent supplements since 2005, so there’s
not a huge amount of government detail about
the freelancing workforce. And so we decided
back in 2014 to build, to the best of
our possibilities, to build a report that would
show what this workforce is all about. So the 2016 addition,
the third one, just was published this morning. And I think the first
series of key findings– and then I’ll let you
talk about the rest– but probably the biggest
key finding for me is the size of this
part of the economy. So we’re talking about
55 million Americans, and that’s 35% of the US
workforce, that is doing some amount of freelancing. And not everybody’s
full time, and I think that’s kind of
part of the point. It’s a huge amount of
diversity from people that are doing this exclusively
and only with a handful of clients to people
that are moonlighting or having multiple
sources of income. But what’s interesting is that
number is very big, much bigger than most people think. And it’s also
growing really fast, so when we did
this study in 2014, the number was 53 million. We did it in 2015. The number was 53.7, so we
added 700,000 freelancers to the US economy. This year, it went from 53,7
to 55, so we added 1.3 million. And so it seems like– with
only three data points– but it does seem like
it’s accelerating. And one of the reasons why
it’s growing so fast right now is because of the shift of
the population that’s at work. The baby boomers are much
less likely to be freelancing. Only 28% of them
are freelancers. The millennials and the Gen Z,
48% of them are freelancing, and so what we’re seeing is
the baby boomers are retiring, and Gen Z and the
millennials are coming to be the main
generations in the workforce. And so as a result, this
part of the population is growing really fast. The other key number
we found in this study, we were trying to assess, OK,
so how much money are people really earning
through freelancing? And what we found this year
is that a trillion dollars of earning is going to
freelancers in America. And that’s a very
substantial number, and it’s, I think, the first
time that anybody’s really been able to publish that number. I think that, for me, were some
of the key striking numbers. I don’t know if you had other
things you wanted to add. SARA HOROWITZ: One or two. So let me just start with some
basic numbers in New York, that it’s 38 million freelancers
and a trillion nationally, but 250 billion in new York. And I think that that’s
really significant, because we are at ILR here and
not Stanford, where we actually study how people are working. What I think is so
fascinating, when you think about the data of
the millennials, Gen X, Gen Y, we can start to see that
we’re really talking also about a culture shift, that
when the numbers are so high, it’s just going to
have such an effect on the economy and the culture. And I think it makes sense
if you just intuitively think about sort of the manufacturing
era and the industrial worker, and we had the organization
man of the 1950s, and the idea was the
40-hour work week. And what I think we’re
starting to really see and this study is
starting to show is that this is a new workforce. It’s a third of the
workforce, and they’re changing our culture. And I’ll give you some
examples and some data points. I think for me,
the top number was that the average freelancer
is working 36 hours a week, and it’s A-OK with them. They are feeling that this
is the right amount to work. And I think it’s
really interesting, because when you look at 35-hour
movements that are happening throughout Europe, we’re
starting to see, actually, people are saying very much that
this is how they want to work and that this
really is a choice. And when they talk
about income security, sadly, government
is not where they’re getting any kind of
security that they feel, and that they think their
best chance for security is having a portfolio of gigs. And I think that is really huge. I think that this is the opening
for government and policy, because we are not
really thinking about what is happening. I would say– and then we
can jump into questions– the other thing that I really do
feel like is the biggest policy issue is episodic
work, and so we’re seeing that risk and cost
is being borne by workers. But really, now
we’re seeing that we can make that data point be tied
to GDP, for the Federal Reserve labor economists
in the audience. So for instance, what we
found is 54% of freelancers are saying that they are
withholding spending, because they have to
maintain rainy day funds and reserve for when they’re in
the downside of episodic work. And what that means is we’re
seeing the explanation for why GDP isn’t growing, because we’re
not spending the way we did. And if you close your eyes, and
you remember American history around the New
Deal, that’s exactly the rationale for why we
developed unemployment insurance, because we wanted to
see that money cycle back in. So we’re kind of like
deja vu all over again, but for a gig
workforce, but it’s very parallel to what we’ve
been seeing over time. LOUIS HYMAN: I think this
idea of a portfolio of work is so striking and different. I mean they often
say in economics that the only free lunch
in economics, of course, is an asset portfolio. You combine stocks and
bonds and magically– well, mathematically–
that’s what magic is– mathemagically, you get
this return without risk. In a lot of ways, it seems
like a lot of workers are doing this. It came out of the
JP Morgan study earlier this year that people
are actively using access to these kinds of
platforms to pay back– their incomes go like this. And instead of borrowing
from payday lenders, they’re using freelance labor. Is this something you’re
seeing among the people you– STEPHANE KASRIEL:
Yeah, I think it’s one of the most common questions. When we ask people, how
do you think about having one employer as a full time
job versus multiple clients as a freelancer, and one of
the comments we get is, look, I do the same thing
with my clients as I would do with
my E-Trade accounts. Like I would never put all
of my savings into one stock, so why on earth should I be
doing this with one employer? And that is, frankly, for me– I’m not a millennial. I’m a little bit older, and
the first time I hear this, I’m like, really? Are you guys crazy? But that is totally how
that generation is thinking about it, and as you said,
mathemagically, it actually kind of makes sense. LOUIS HYMAN: Also, I’m really
glad you said mathemagic. STEPHANE KASRIEL: Yeah, I know. LOUIS HYMAN: New term. I like that, you know. STEPHANE KASRIEL:
And part of it, I think, also, with the
millennials and the Gen Zs is these are the kids of the
people whose parents lost their retirement savings dream
in 2008 and 2009 recession. I mean, a lot of
these people thought that they had these beautiful,
defined pension benefits, and that was what the
safety net was all about. You worked for big company X
for 50 years or maybe not– 35 years– and you
will be able to retire at the end of your life. And it turns out that that’s
true, unless the big company X forgot to fund
defined pension benefits and went bankrupt in the
process, in which case, as the child of the person
to whom that happened, you have a pretty high
level of skepticism. And you start to
think, well, maybe I should be in charge
of this, as opposed to relying on big company, the
government, or somebody else to take care of me. SARA HOROWITZ: But
I think undoubtedly, defined benefit plans are great,
and if anyone is offered one, take it. And it’s just that the problem
is that they’re not around, because it was the culmination
of social movements that, for decades, really
fought for the eight-hour day and a lot of other things. And I think that
we’re at the precipice now of really figuring
out structurally what the next safety net is. And it shouldn’t just be that
you’re taking the next Uber ride, and that’s your safety
net, though yay that there are some platforms that when you
don’t have money to pay rent, you can craft on Etsy or rent
your apartment on Airbnb, and those are really critical. And I think what we want
to do is add to that and start to say, what are
the ways that we can do this? And I think that’s part
of the whole conversation around portable benefits. And I think we can
all agree as a country that we do better when we
do have these safety nets, because it lets people innovate. You don’t get punished for being
in a startup if it doesn’t work out, and we make that happen. LOUIS HYMAN: It seems like the
foundation of entrepreneurship is a feeling of,
oh, I won’t starve. No one likes to starve. No one likes to get sick. They don’t want to
see their [INAUDIBLE].. Without that kind of safety,
you can’t have innovation. And it seems like those
two things do go together. SARA HOROWITZ: Not everyone’s
going to be an innovator. Like we can all be
average in some things, and I think that we are
talking about the whole swath of society. And I think it doesn’t have
to be niche or cool to talk about gig work. It really is the reality, and
what we have to be thinking is, what will actually work? LOUIS HYMAN: Can we talk
about the different segments of society? I feel like that’s a
really important point that is glossed over when we
say, American workforce. There’s a lot of
different Americas and a lot of different
kinds of Americans. One thing coming up
on the election– you may have heard
there’s an election going on in the country right now– rural versus urban America. These are very
different economies. How does gig work play out
or freelance labor play out between these two
different worlds? STEPHANE KASRIEL: So what we
found in the study is actually on just about every dimension,
the freelance workforce is similar to the US workforce. It’s a little bit more gender
diverse than the US workforce, but other than that, I mean–
and obviously, it’s younger. SARA HOROWITZ: We
have diverse genders, or you mean it’s
more [INAUDIBLE].. STEPHANE KASRIEL:
Ethnically, but although it’s happening in big cities,
small cities, rural America, it’s happening with highly
skilled workers that do this completely by
choice, and they love it. They don’t want to go
back to a full time job. It’s also happening by necessity
to people that lost their jobs and really struggled
to find another one. That’s probably one of
the most challenging parts of this economy is
that it’s not simple. When we talk to
policymakers, they’d love to resolve it
to just simplify it and say, oh, it’s
the Uber economy. It’s all about Uber. And the answer is no. Yes, you have Uber drivers. By the way, the vast majority
of the freelancing economy is not sitting on
technology platform. As much as it’s cool
to talk about Upwork, and it’s cool to
talk about Uber, the vast majority
of freelancers are people in New York that work
with a client in New York that they found through friends
and family and whatever else. And so I think that the
challenge as a policymaker is freelancers having
[INAUDIBLE] that are different. They have concerns that are
different from the traditional workforce, but it’s
not easy to just say, here’s where you find them,
and here’s what they do, and they all have exactly
the same concerns. And therefore, it’s
pretty simple to address. Frankly, if it was that easy,
it would be solved already. So I think it’s much
more as policymakers, and that’s one of
the reasons why we’re doing this study
is to try to show here are different types of
freelancers in America, who have different
types of ways they look at the world and
concerns that they have. And you need to just understand
all of that complexity before you make
policy decisions that may favor one part
of the society, but potentially really
hurt another one. SARA HOROWITZ: You
know, what I also think is really interesting
is one of the things that Stephane just said that
I think is so critical is we live in a complex time. The technology enables a
lot of really local things to happen that’s just
different from one area. And it was always
like that, but it’s sort of like we
can find each other and see those different things. And one of the
things that I think is going to be really
critical is around, let’s say, portable benefits. 2/3 of the people
in the study said they want to buy their
benefits on their own, and they really want to be
able, in their local area, to find what’s the group that
is resonating with me that I trust, who’s 100% aligned
with my interests, and that’s going
to know my issues. And one of the things that
I am really nervous about is that I think
that we’re looking at all these people, who
don’t get, let’s say, health insurance or
retirement from an employer. So we’ll say, oh, well, there
will be a Silicon Valley solution. A for-profit platform will come. And really– or in contrast, it
will all be done by government. And really, we have
this opportunity to say, people are members of all sorts
of community groups, unions, faith-based groups, regionally
all across the country. And we have the opportunity
to use technology to allow grouping that will make
it so that people can decide what group they want to be in. And I’ll give you a good
example, something that has worked for many a decade. Our mine workers have been in
the Mine Workers Union’s Health and Benefit Fund,
and you could imagine that the people
who run that fund know every single thing
about black lung disease. So you want them
to be negotiating different kinds of
rates having to do with what the local concern is. And so what is difficult
is what I’m saying is complicated and can’t be put
in a little Tiffany policy box, but it’s true. And I worry that we’re going
to have to keep making mistakes when we can realize that at
least we should be setting up hybrid pilots to see. So Freelancers
Union– we understand freelancers, workers. Name a group, and
you can imagine. Or you could have some group
in Silicon Valley saying, we want to try it
this way, and we have an idea of what would work. And we should be able to
let them try it and see what is happening. So I think we shouldn’t
race to make everything set. We should realize we’re in
a period of experimentation, and let 1,000
flowers bloom, which is like how Frances Perkins
and FDR did it, just FYI. LOUIS HYMAN: She’s
right, you know. That’s right. So I mean, it seems like
this is pretty exciting, particularly for people who are
not in San Francisco, people who are not in New York City,
which you may or may not know, are very expensive to live in. And one of the things
that seems so interesting is that people in
rural areas can work through these kinds
of platforms, people in cities, who’ve been left out
of this sort of big geography of jobs. What kinds of programs do
we need to support this? You were talking about
portable benefits. I mean, I’d like to
hear more about what you mean by that exactly,
because not everybody is in on the conversation yet. But also, what
kinds of things can we do to reconnect
the countryside with this kind of work to make
sure that these kinds of jobs go out to all Americans,
not just those who happen to live in particular cities? SARA HOROWITZ: Well, I’ll
just go first on this one. So I’ll just give
you an example. First– then we’ll define
portable benefits between us. But unemployment
is a great example. Unemployment
insurance– right now, if you’re an
independent contractor, freelancer, you’re
just zip out of luck. You’re just not getting
unemployment insurance. But the construct of
unemployment insurance is you’re going to work
this 40-hour a week job. Very infrequently and
occasionally, you’ll be unemployed,
but when you will, it can go on for a
fairly long time. So when you get it,
it’s long and expensive, but fairly unlikely that
it will happen to you. In the gig economy, it’s how
many times during the year will you be unemployed. And so it’s this episodic
income, so if you the average, that’s not the problem. So what we should be doing is
having pilots, where we say, we’re going to take
a small percent. The actuaries are going to
tell us how much we need to do, and we’re going to say, x number
of workers for this amount, and then we’re going
to see over time, and see how much they spent. And that is, to me, like
kind of a no-brainer. It’s not involving
huge amounts of money, and it’s so critical
to the economy. And that one, you really
need like a federal waiver, but you need great
elected officials like Brad Lander, who’s
sitting over there from our city
council, who everyone should vote for everything. But– LOUIS HYMAN: That’s
not an endorsement of Cornell University. SARA HOROWITZ: But we
have a pact, so it’s OK. But seriously, we do need to see
this kind of local leadership that’s connected to federal, and
the idea of portable benefits, to the extent it means
anything– and right now, it’s kind of up for grabs–
is this notion that people are going from project to
project and job to job, and their benefits
should follow them. But I think we, because
this is an ILR School event, we can say, why should
we have job lock and make it connected
necessarily to your employer, but get the funding,
which is the big issue? STEPHANE KASRIEL: Yeah, so
one of the questions we often ask the buyers in our
platform is, what do you think of your relationship to us? And one of the answers
that comes more often is, you are my secret weapon. And what that is is a lot of
small businesses in America, who are based in New York, and
they’re based in San Francisco, they’re really,
really struggling to hire talent locally, because
if you look at San Francisco, everybody wants to work
at Google and Facebook. And if you’re a small
business, you really, really struggle to find talents. Meanwhile, in some other cities
in the rest of the country, it’s the opposite. There’s strong
local talents that is struggling to find jobs. And so that is kind of the
thing that’s happening here. The thing that
needs to happen more is that the awareness
by businesses and particularly
bigger businesses, that there is this talent
pool that is available, and that it’s OK for people
not to sit next to you. It’s something that
needs to change. And I think, fundamentally–
not to pretend that I know anything
about history, because I don’t, but
I’ll pretend anyway. Fundamentally– SARA HOROWITZ: Say it in French. STEPHANE KASRIEL:
[SPEAKING FRENCH] Fundamentally, the
types of jobs that we do every day have
changed dramatically in the last 100 years. And the idea that you
had to work 9:00 to 5:00 and be on onsite when you
worked at the assembly line made a ton of sense. I mean, clearly, the
Ford factory was not going to run if people were
not all at the same time operating the factory. If you look at the type of jobs,
a big part of the type of jobs and a lot of the growth
in jobs in this country comes from service
work, a lot of which does not need to be done onsite. I mean think about
customer service. Think about sales. Think about design. Think about engineering,
lawyers, accountants. A lot of this stuff
can be done not onsite. And yet fundamentally, the
way most employers still think about this
is, I need people to work for me
full time, and they need to show up at the office. And if they’re not
in front of me, then I’m not quite sure that
they’re currently working. And I can’t really rely on them. And that just needs to change. And there’s a whole
generation of managers that need to be trained
to understand that there’s a part of your workforce
that should be full time, and they should work
for you, and they should be coming to your office. And there’s an extended
part of your workforce that are freelancers, and they
bring very specific skills. And frankly, it’s
probably just as well if you let them work
from wherever they live, because they don’t necessarily
want to live in San Francisco or can afford to live
in San Francisco. So if you look at San
Francisco specifically, rent in San Francisco has
been going up over the last 40 years, 7% every year. So if you compound
that for 40 years, that means that San
Francisco is, relatively speaking, eight times
more expensive today than it was 40 years ago. So if you’re a young
college graduate, and you try to live
in the city now, 75% of your after-tax income
goes to pay your rent. It’s four times the
average of the country, and frankly, it’s ridiculous. Nobody should have to do this. And so you talk to
the young graduates, and you say, how much do you
enjoy living in San Francisco? And guess what the answer is. Not so much. Why do they come? Well, that’s because
that’s where the jobs are. But frankly, they’d
be much happier living in Cleveland or in
Portland or other cities in the US, where the quality
of life is very nice. The cost of life, the cost
of living is much lower, but they struggle, because
they don’t have the jobs. And so that’s really
what it’s about is going back to what we
could have done 50 years ago, and we didn’t do,
which is instead of trying to bring the
workers to where the work is, is to do the opposite– trying
to bring the work to where the worker is, and
let people live wherever they want to live. LOUIS HYMAN: So
what does this mean? You talked about the
sort of way in which the workforce for
a large corporation should have a core force and
a flexible force around them. One of the people– one
of the things people often say about this freelancing
thing is that it’s just about finding cheaper labor. It’s about finding someone
who’ll do work for less money, and that’s what it’s
really all about. But what do you say to the
corporate HR department, to the government official,
to traditional unions, or even large universities that– how should they think about
this freelance workforce? What is the value to them, and
what should they be wary of? STEPHANE KASRIEL: So I
think that, honestly, the big companies in America are
a little bit behind right now. Small businesses have really,
especially young companies, have fully embraced this
concept that where people are is completely irrelevant. And you see in San
Francisco, it’s very obvious. I mean you see all of these
technology companies, WhatsApp being a perfect example of a
company, or GitHub, or Mozilla. I mean all these companies
are fully distributed. Many of them don’t even
have an office anymore. Like literally, everybody
works from all over the world, and it really doesn’t
matter where people are. So I think that
transformation is really happening with the
small businesses, particularly when it’s
young founders that completely get it. I think for the bigger
companies right now, rather than try to convince the
world to dramatically change and rethink
strategically how they should be finding great
talent– by the way, number one concern
of CEOs in America is finding great talent. And that question gets
asked by consulting firms every single year, and every
single year, that comes back. A third of the jobs
in this country remain open after three months. So it’s a huge problem, but
it’s also a huge change. So rather than trying to
convince people that, yeah, you can have a virtual
workforce that works from different places
and all of that stuff, I mean that’s transformational,
and we’ll get there. For now, we’re
keeping it– making it much simpler for them. We say, look, what is the
work that you subcontract to somebody else today? An accounting firm, consulting
firm, a marketing agency, an IT software development
company, in some cases, abroad, in some cases, in the
country, and do you realize that by
doing this, you’re essentially making these
people smarter and making yourself dumber? Because that’s essentially
what you’re doing. You’re paying them to become
smarter than you at this stuff, and you’re usually
paying them a lot of money, because there’s
a lot of intermediaries in the middle. And instead of that, and
that work is already not being done onsite,
so at that point, you’ve realized that
location was not an issue. And so instead of that,
can you consider working with freelancers directly? And so that’s frankly been
resonating a lot more, and the idea here
is to say, OK, all of your super strategic
stuff like, what is the brand vision for the next
version of the shampoo, or whatever– keep doing that
with your traditional marketing agency. They have these fancy offices
on Madison Square that cost a fortune, and
you pay a fortune. But frankly, they’re
doing pretty well. It’s a rubber stamp
for your [INAUDIBLE],, so your [INAUDIBLE] feels
good that a big marketing agency delivers the work,
and it’s a little bit of CYA. But then when that’s done,
you need to produce campaigns. What about the video on TV
and the ad in the subway and the hundredth version for
the 100 different countries of what you’re working on and
the blogs and all that stuff? And that frankly, is done
very poorly by agencies and tends to be done
incredibly well by freelancers. By the way, a lot
of the agencies subcontract this to
freelancers today, and then they add their
mark-up on top of it. And you, as the clients, not
only do you pay the mark-up, but probably more
importantly, you don’t know who
the freelancer is, so you have no way of
interacting with them. And so the idea here
is to really say, look, give this strategic
stuff to your consulting firm, your accounting firm, your
marketing firm, or whatever, and keep that. But then the
day-to-day, really, you can do it directly
with freelancers. And it’s this
notion of going away from this binary dichotomy of
either people are full time employees or temp
staffing employees and have to be
onsite, and they’re committed for the long
term, or they’re essentially outsourced to a vendor. And then it’s arm’s
length, and you already know what’s going on. And there’s this
thing in between, where you build these
hybrid virtual company that has a lot of full
time employees, but also has a significant
number of freelancers, who tend to be experts in their fields. And you bring them in to work
with you when you need them, and they have multiple
clients at any point in time. And that’s completely
fine with everybody. And it’s really
that win-win that seems to resonate really well. As an employer, you don’t
feel that it’s threatening or super challenging. It’s conceptually pretty
easy to understand. And as a freelancer,
you make a killing. I mean, frankly,
like usually what happens is freelancers used
to work at those agencies, got billed at four or five times
as much as they were making, and then they come to freelance
through a platform like us all directly, and they made
two or three times more than they used to. SARA HOROWITZ: I would
say that as we’re listening to how the work itself
is so complex in how it’s being organized, it’s kind of
clear there are great ways to get the right person
to do the right job. But when it’s almost
like you lift the hood, and you start to say, OK, they
were like a 1099 over there. They were W-2 over there. They might be a misclassified
employee over there. You start to realize
that part of the problem is we have this New Deal
manufacturing safety net that really is
great, and it’s eroding. And you have this whole
other workforce that’s not yet covered by anything. And it’s this movement across
these work lines that is– what’s happening is it’s
difficult for the companies, but it’s really a
challenge for workers. And I think that when
workers are really independent contractors,
they really are freelancers, they really can experience
a life that is better. They really do feel independent. But I think for so many
workers in America, they’re really the
ones that are going without any kind of
benefits, and that’s why I think that the
big danger is if we say, oh, OK, I just heard
what Stephane said, so let’s just get an outside
agency vendor government to take over everything there. It really won’t work, because
the workers need to have agency to decide what they want. And I think that’s what we
should be starting with is, OK, worker, what do you want? Who do you want
representing you? And I think that if we could
start from that premise, and then literally think
through all the ways that they’re going,
we could say, OK, I want this organization
to be designated as my representative. It will keep track
of my benefits. It will negotiate
these different terms, and then it will,
because it has scale, be able to start navigating
these different routes. And when new routes
arise, you start having representatives that
have some ability, expertise, who can then negotiate. If there’s a problem
with the law, again, you have some entity that
can articulate that to policy. And I just think that we don’t
think like that in America. We really– I feel like
Ronald Reagan has won in a way and that Americans
have gotten to– we’ve internalized
that worldview. We think individuals are
isolated and atomistic, and even the way we’ve
developed some of our most progressive policy,
it’s an individual going to someplace to then buy
something on an exchange, when we could be thinking of the
union movement and the idea of representation. That’s, by the way, how
it’s done in Europe. If you go to the
Scandinavian unions, there’s some basic amount. By the way, I’m becoming
for the public option, and I think that what you want
is supplemental benefits on top that workers can
decide who’s going to be their representative. And workers are so
much more satisfied with that system in Canada,
England, Scandinavia. So I feel like that’s where
we have to move toward. LOUIS HYMAN: Well, I think
what’s interesting here for me about these
two perspectives is that it’s intertwining of a
utopian and a dystopian vision of where this economy
could take us. And what I think gets
lost in this conversation so much is this idea
that is determined by something like technology. That’s not something
that we make choices over– our business
models, over our politics, that we as a society
can come together, and through
organizations at small or local or national
levels, and decide on how we want to
organize our capitalism, that if there’s not a clear
line that went from the assembly line to the New Deal. There were choices that we made
in a moment of great crisis, and it was kind of
terrifying, right? But is this fear and hope
that brings us together and allows us to
sort of move forward? And it’s not inevitable
how these things turn out, because no one is nostalgic
to work on an assembly line. People are nostalgic for
what that world was made– what it made for us, but– SARA HOROWITZ: Let me just say
the Roosevelts were clearly, like, the best family ever. And FDR was a genius. Teddy Roosevelt– pretty
damn good himself. Eleanor– the best. But– LOUIS HYMAN: I’m a
Teddy man myself. SARA HOROWITZ: I like that guy. LOUIS HYMAN: Yeah, you
can tell I’m a hunter. Please go. SARA HOROWITZ: But FDR, when you
think about the National Labor Relations Act, which was the
law that made it so that workers could join unions,
basically, literally, the law was like,
OK, you union people. You go figure it
out, and good luck. The government didn’t
say, this is a union, and this is what it’s like. Literally, there are
these famous stories of the president of the
United Mine Workers Union, and he was like, I’m
going to mortgage my building in Washington,
DC, and take the money and go down and organize
people, because who knows? And then they–
there’s a guy here. Who’s the guy who was at the
National Labor Relations Board? Yeah, so talk to him. And then the National
Labor Relations Board was formed after the fact,
because they were like, oh, my god, we have to enforce these
rules and figure out elections. So it really was a
giant experiment, and I think we’re so
scared almost in 2016 to experiment on that scale. But we have no choice. LOUIS HYMAN: We have to
experiment, because otherwise, innovate or– SARA HOROWITZ: Or not. LOUIS HYMAN: Or not. That’s what Silicon
Valley is all about. And actually, that’s what
the whole economy is about, and capitalism at its
best allows this kind of growth and this possibility. So on that happy note, why
don’t we take some questions from the audience? We have a microphone. I can walk around, or my
colleague can walk around with the microphone. That’s even better. This is the second
time we’re doing this, so we’re still
figuring it all out. So questions? Yeah. If you’d like to wait
for the microphone. AUDIENCE: Sorry about that. You’ve talked a lot about
unemployment insurance and the fact that we don’t
have it as freelancers. You know, I haven’t
heard you really talk about what do you
propose to fill those gaps in the episodic income? Are you talking about universal
basic income or something else? SARA HOROWITZ: I think
it could be interesting, universal basic income,
if you could figure out some experiments,
because I don’t think, again, we’re going to
start, like all of America is going to have it. But I think that there’s
a really doable way to literally have some
cities and states decide that they are going to start
an unemployment pilot for gig workers. And the way that
you could literally do it is you could
decide, what’s the total number of
people in the pilot? Literally, your
actuaries will tell you, you need to have this many. You need to decide what period
of time you’re going to cover, how much money, and then you
literally just set up a pilot. You see what happens, you
measure it, and you see, were people able to
put more money in? How did it work? What was the infrastructure? And so I think that
one feels to me like we should be trying that
sooner rather than later. And the other thing
is, if you start experimenting with
unemployment insurance, you can start by
asking people, where do you want to get your
unemployment insurance? So you could be talking about
low wage workers in Brooklyn, who would rather get their
unemployment through Make the Road, an amazing
community-based organization, or the Domestic Workers Union. You could just
imagine that people would have an
opinion about that, so you’d automatically
start to understand, OK, these groups should
be a distribution line for this benefit. Probably wouldn’t start out
with them holding the money, but you would start creating
infrastructure to do that. So you’d work with
the private sector, but you’d start from the
worker, where they want to go, and how you would do it. And I think that one
is much more doable. LOUIS HYMAN: Stephane, do
you have thoughts on this? STEPHANE KASRIEL: Yeah, I mean,
look, being the optimist– ever optimist, I mean, I
think fundamentally, it’s about giving lots of
opportunities to people. Not to be self-promoting or
anything, because we never ask questions specifically
about us, but we do ask people, is technology helping
you get more jobs? And that question, third time
in a row, keeps increasing. And I think fundamentally,
that’s what it’s about. But if you’re looking
for local gigs, you’re fundamentally limited
by the 25-mile radius, so however much you’re
willing to travel. If you’re looking
nationwide, you just have a much bigger net. And so ideally,
you get to a place where the market is big
enough that it becomes kind of self-correcting,
and you get to a place where you can manage
your work day in a way that you don’t have
these dry spells. I mean you’ll still have
some amount of volatility. It’s not guaranteed employment
like a traditional job, but you won’t go
from 100 to zero. You’ll go from 100 to
110, and then 110 to 90. And generally speaking,
as long as you’re not spending at the 110 level
all the time, you’ll be fine. The other question we
ask in the survey– we ask a lot of surveys about,
what are your top priorities? What are your top concerns? One of them is this notion
of income stability. Another one is access to
credit, and that, potentially, through policies, potentially
through the private sector, waking up to the
fact that, hey, we’ve got 55 million people here, who
earn a trillion dollars a year. Maybe you could
give them credit. How about that? Maybe you could even
make money doing that, so it might even be a good
for-profit activity to do. But fundamentally, if you
look at a freelancer and a W-2 employee, who have similar types
of activities and earn similar amounts of money, it’s easier
for the employee to get a loan, to get a mortgage,
to get a credit card, and that’s partly because the
[INAUDIBLE] is this old monster that people need to– I mean, it’s just a
lack of awareness. If people realize, hey, there’s
this big group of people here that I could serve better,
then hopefully, the industry wakes up on its own. And if it doesn’t,
hopefully, policymakers force them to do it. SARA HOROWITZ: But
like access to credit is another really good
example, because if unions can and cooperatives
and other groups can be the source of
capital, because it’s often difficult for a
bank when there’s not collateral or steadier income. LOUIS HYMAN: Also,
there’s the memory that actually, all this kind
of structured finance grew out of a government’s private
public partnership to create new kinds
of debt instruments that, for a long time,
stabilized markets, allowed these kinds of new kinds
of relationships to happen. And we should probably
think about that as well going forward. Question up front. AUDIENCE: So far,
we talked mainly about unemployment
insurance and access to work and questions like that. But what we also
have to acknowledge is that with this shift to
the 1099 work situation, you also have a drastic
loss of labor rights. It’s not just a
question of income, but also of rights that came
exactly with employment. So that loss hasn’t really
been part of the discussion. And also, given the fact
that over 50% of Americans make $30,000 a year, the
picture that sort of arose here was a bit overly
positive, perhaps. And also, what we
haven’t mentioned yet is maybe that the
centralization on platforms may be exactly like Upwork,
I respectfully intersect, is maybe part of the problem. Maybe we need a much more
decentralized digital economy, where we have a larger,
broader field of many, also, worker-owned alternatives to
these giant platforms that then gain so much power, frankly. STEPHANE KASRIEL: Sorry. I can probably take that. So first thing is, that
study is not– by the way, the way this study
is conducted, it’s not members of the Freelancers
Union or the users of Upwork. This is a national
panel that’s done by a third party
institution that specializes in this kind of stuff. First thing, there’s a
little bit of a misconception sometimes about people
are forced to freelance. So yes, one of the questions
in the survey [INAUDIBLE] is, did you start
freelancing by choice, or did you do it by necessity? And that number keeps going up. So the first time we did this
study in 2014, 53% of people said by choice. 47% said by necessity. This year, the number
went up by 10 points, so it’s 63% that
do it by choice. So you could say– you could
look at the glass half empty. I mean, it’s still
whatever is 100 minus 63. I can’t even do the
math in my head. SARA HOROWITZ: 37. STEPHANE KASRIEL: It’s
still 37% of people that did it by necessity. So I’m not saying that
it doesn’t happen, but we tend to think that
it’s 100% by necessity, and that’s not the case at all. The majority, almost 2/3,
are doing this by choice. One of the questions
we ask, actually, is what would it take– how much would an employer
have to pay you in order to go to a traditional job? And 50%– and this is actually
consistent over the last three years when we
asked the question. 50% of the freelancers
said, there’s no amount of money
you could pay me to go to a traditional
job, which personally, I find a little bit crazy. I don’t know about
you, but there’s no amount of money that would
make me do just about anything. But at least theoretically,
the way people answer that question is they’ve
changed their lifestyle. A third of them have moved
to a different place, being closer to their community,
closer to their families. A lot of them have care at home. There are children
or elderly parents. I mean there’s all sorts of
reasons why people aren’t doing this, and they’re
essentially saying, I’m not going back. So I’m not denying the fact that
there is that 37% that is not doing it by choice,
but to be clear, it’s not necessarily what
people tend to think. It is mostly people
that do it by choice. The question about
platforms, I’d love to be in a position,
where I’m so dominant that this becomes problem. I think Krueger did the
study– when was this? Last year– that
essentially said platforms are 0.5% of the
freelance economy. So if you add Upwork and Etsy
and Uber and Airbng and just about everybody else, I
mean, it’s pretty simple. So as a company, we do a
billion dollars a year, and freelancing in America
is a trillion dollars a year. So we have 0.1% market share. I think by most FTC
definitions, we’re not exactly a
dominant platform that is doing whatever
horrible things that you might be thinking. So realistically,
the problem right now is more the opposite,
which is it’s hard for people to connect with each other. The reason why these
platforms are created is because on one side,
you’ve got companies that are looking for talent. On the other side, you’ve
got independent contractors that are looking for work. And right now, it’s done
through personal networks. It’s done through serendipity. It’s done through meetings
at the Freelancers Union. I mean, it’s done in
plenty of different places, but it’s not super efficient. And as a freelancer, any time
that you spend looking for work is time that you don’t
spend billing for work. As an employee, you’re
going to get paid no matter what, so you might as well
enjoy your three-hour lunches. I’m French, so I
enjoy those a lot. But as a freelancer, if you do
a three-hour lunch, that’s cool, but you’re not getting
paid during that time. And so making it much
more efficient for people to find jobs is one
of the ways that you reduce income
instability, and that’s why are these
platforms make sense. SARA HOROWITZ: I
just want to say, I actually think that we’re
at a really interesting moment in terms of social
movement and labor law and economics, which is we
really are between these two worlds, one where there
were social movements that build a robust safety net, and
the business community that really is an economics that is
changing the nature of work. And I think that we’re seeing
a very big debate, even within labor and progressive
and other circles, because some people
say, this is all bad. This is the precariat,
and we should go back to the old protections. But I think that
what we have to do is build up the
next protections, but it’s not so easy. Like everyone can say, yes,
OK, yes, Chuck, let’s do it. OK, now, exactly what
is that going to mean? And so I think
what it should mean is that independent contractors
should have the right to form unions and to go and do
the things that they should do. And they’ll build it
their way, and they should be given power to do it. As you can imagine, that’s
not a popular view right now. And ironically, in some
ways, the Democratic Party holds it back more than
the Republican Party does, and that’s just the truth. And you can argue why. But I think what we need
to do is start to say, we need to have some
openness and flexibility. And that is going to
be very threatening. It just is. But we don’t have a choice,
because it does mean A, we’re seeing these GDP
problems, but we’re also seeing human being
problems of people who just don’t have money
in the given year to pay the expenses of their kids. It really is very human. And I think that another
interesting point is 85% of freelancers vote,
and 70% of freelancers say that if an elected
official would just talk about freelancer
issues, they would vote for that candidate. The freelancer vote
is up for grabs, and I think that’s when
we’re going to start seeing a safety net get built. LOUIS HYMAN: And we
[? shouldn’t ?] also be nostalgic for traditional
work, so even among– all across America, we think
that this precarious feeling is everywhere so that
even for median income households, around 50 grand,
about half of those households experience a month
to month fluctuation of 30% in their incomes. These aren’t people who–
this isn’t a stable salary. These are shift
workers, but even– or one of them is. There’s fluctuations. So this feeling of
precarity is not just about having a traditional job. It’s everywhere. That stability is gone. And it’s even more for those
in the bottom quintile. It’s about 75% of households
in the bottom quintile have 30% month to month fluctuations. Imagine trying to
budget your household. Now you understand why
we’re in a debt crisis, because all the debt crisis
is is a labor crisis. These things are
fundamentally intertwined, and there’s somebody behind
the bright lights over here who wants to– BRAD LANDER: Sure. Hi. I’m Brad Lander from the
New York City Council and working very hard
for the freelancer vote. But no, in all
honesty, I’ve been very lucky to work
with Freelancers Union and Sara and her team as we
try hard to think in New York City what it looks like to
build out the new structures and rights. We’re working hard on a
right to timely payment. We’re getting set to extend the
New York City Human Rights law, so its employment
protections clearly cover freelancers and
independent contractors. We’re thinking about
benefits funds. We’ve been doing some
thinking about mortgages. We’re working on it. And I will say, we think
about that work together. We’re also doing,
for shift workers, pushing for advanced
notice of schedules and a whole set
of things that’ll also make that work
more plausible to build a living around. It’s hard to get
people together around, and I feel like there’s really– some of it is just
logistically difficult. If you’re going to set
up a portable benefits fund for drivers,
first is like, how long do you have before
the driverless cars? But even just in a
more practical way, do you want a social
insurance fund that looks like unemployment
insurance and is pooled? Or do you want a portable
benefits approach in which people put their own
money into their own accounts and can use it for things? So you just say there’s a
lot of practical issues. But I want to ask,
because we’re at ILR, and I know Sara has done
a lot more work and a lot more thinking about
the labor union issues. I just want to ask her to
say a little more about that. One of the challenges
at the moment is that the
organized labor world is grappling with
these questions in lots of different ways. And you’ve seen some
conflict between unions, partly because they may
represent incumbent workers whose jobs are
threatened by the way that the economy is
shifting, partly just through different approaches– how traditional, how creative. And you’ve managed
to build a lot of really good relationships
despite pushing hard into new space. And I just wonder, since
we’re at the ILR school, if you could say a
little more about how you’ve done that, where you
think those opportunities– because I do think, unless we
can build a political movement that bridges between
lower wage workers, more traditional workers,
workers in unions, and the growing freelance
and independent economy, that would help us a lot in
having the space to do some of this policy experimentation. SARA HOROWITZ: Well, having
taken three semesters of labor history, let me– I just cannot resist saying,
what is very interesting about the National Labor
Relations Act– someone tell me the
exact date. ’34? ’34? LOUIS HYMAN: Yes. SARA HOROWITZ: No. What was it, Evan? It was like ’34, ’35. OK, so there were these– LOUIS HYMAN: That’s
good enough for my exam. Please, go ahead. SARA HOROWITZ: One of the things
that was really interesting is actors– there still were
actors back then, and they still worked gigs. Maybe they worked on Broadway. Maybe they were doing– I don’t know if
they had stand-up. But you could just
imagine they were doing all sorts of different things. LOUIS HYMAN: Vaudeville. SARA HOROWITZ: They
were doing Vaudeville. So they were really
independent contractors. If we were going back
in 1930-whatever, we would say, OK, they’re
independent contractors. Ditto the building trades. If you were a carpenter,
you did your job as a carpenter or
an electrician. You did your thing. You were done with that gig,
and you went to the next thing. But the law said that the
only people who could unionize were employees. So we said, OK, you know what? Everybody’s an employee. Good for everybody. So literally, now, when
you go to do a voiceover, and you’re a voiceover
artist for two hours, you literally get a
W-2 for two hours. And we built the system to
enable that, but really, we’re having the same discussion now
that we did then, and we really [? saw ?] that. And then just a little
interesting tidbit is that the entertainment
unions really had a hard time getting the big
studios to recognize the union. Do you know what union came
out in aid of the entertainment unions to make it happen? Can you guess? AUDIENCE: [INAUDIBLE]. SARA HOROWITZ: How’d you know? So the Teamsters–
what did they do? AUDIENCE: I know
it’s the Teamsters. I know what they did, trying
to organize [INAUDIBLE].. SARA HOROWITZ: Yeah, so
the Teamsters in the ’30s came out and wouldn’t allow
any production to happen, because they wouldn’t deliver
anything, and so in support of the entertainment union. So why do I say that? Because I think we’re in
exactly the same position, but in the reverse, where
we’re trying to say, if you keep saying
that everybody has to be an
employee, then we have to really change a
lot of laws and norms, or you have to just let
independent contractors unionize. And then we will have parity. But it gets to the same problem,
which is the traditional labor movement understandably feels
like once you open the door, it’s all over. I just think that’s a tremendous
mistake, because, again, if you think about
the big strike, do you remember
Verizon last year? They were the Communication
Workers Union. Might want to know they started
out as a company union, which meant the company
started them to avoid having a quote, “real union.” And they then built
up over the decades. So I think you organically
let people organize, and you give them that space. And I think the only way
that that’s going to happen is if freelancers start
to mobilize politically and are just able
to win that right. BRAD LANDER: Can I
ask one follow-up? LOUIS HYMAN: Sure. BRAD LANDER: Because
I think, actually, you just poked at something
that I think is one really interesting question. And Seattle’s the
one place that has passed [? a naming ?]
legislation to let drivers organize, but they did it on an
enterprise bargaining system, still assuming the
employer is Uber or Lyft. And there were some people
pushing for something more like what the entertainment
unions or the construction unions have, which
is essentially sectoral bargaining, the Taxi
and Limousine Commission, essentially, being the target. And that’s one
interesting debate that’s going to evolve here is how we
think about different models. But those are two more
sectoral and more– SARA HOROWITZ: In
Sweden and Scandinavia, they don’t have the
union shop, which means you don’t have to
join a union after a set period of time. It’s all voluntary. And they have 65% union density. And the reason is because the
union provides so many services and things that you
would need and bargaining that you’d be insane
not to be in the union. And that, I think, we should
take the handcuffs off of labor and let labor start providing a
lot of things that people need, and then a lot of people
would want to be in unions. So I actually think that
should be the quid pro quo, and let unions do
a lot more things. LOUIS HYMAN: Thank you. AUDIENCE: Yeah,
almost a follow-up to Brad’s question, which
I think was well-phrased. So Sara, this kind of idea of
the portable benefits package and the idea of getting
people into unions, especially on the freelance side– I’m curious to hear Stephane’s
take as the marketplace and understanding kind
of that 21 kind of rule or the economic realities
rule and how we define the classification structure. Who’s contributing to
the portable benefits package, for one? Is it just the freelancer? Is it the end client, or is it
the marketplace in the middle? And then how do you determine
what structure classification they fall into? In a utopian world, in
theory, how would that work? I know we’re not going
to have any hard answers. STEPHANE KASRIEL: Yeah. So let me start maybe by
saying that this study here is about freelancers
in America in general. You’re asking me about
our company, right? Upwork focuses on fairly
high end knowledge work. It tends to be– I mean most of– more than 50% of our business
is software developments. So really, what these guys want
is to make a lot more money. Like if I get like really
good software engineers, when they go work at a
traditional employer, exceptions being
Google and Facebook, who are really paying
people a fortune, but they work at a
traditional employer. They’re stuck by the salary
grade that HR has defined. And yet there is
a huge difference between a mediocre
software engineer and an amazing
software engineer. And so what typically
happens– and same is true with salespeople
and designers and a lot of this knowledge work. So typically, what
ends up happening is the really good people,
after awhile, realize, hey, I’m kind of
getting screwed here. Really, I should
become independent, and I’d be much better off. So I hear this whole
debate, and I completely have sympathy for
it, but specifically about Upwork as a
marketplace, this is not like some of the other
marketplaces that are much more
lesser skilled work, where there might
be a little bit more of a need for protection. If you asked the
freelancers on Upwork, do you do this by choice, or
do you do this by necessity– we’ve never asked the
question, but my guess is it would slant really,
really high on people doing it by choice, because these
are highly compensated jobs in the workplace, and one,
where traditionally, it’s hard to find really,
really great talents. The question about
possible benefits, I think, is an open question. I think generally,
a lot of people agree that this sounds like a
good idea, but to your point, the devil is really
in the details. And who pays what for what? And is it pooled? Is it individual? All that stuff–
I mean, one thing that does come out of this
study is when you ask people, would you rather get paid less
and have part of your earnings be taken out to
pay for benefits, or would you rather
take home more pay, and then choose your own
benefits, over 2/3 of people said they would rather
have the second. And partly, it’s just
the types of people that become freelancers
tend to be more independent, and that’s why they became
independent in the first place. They don’t really want the
system to do it for them. But they’re still
1/3 that probably do. SARA HOROWITZ: I think there
are some really tangible things that you could do. You would, number one, set up
the tax code, probably first, statewide, but
ultimately, federally. So you would say,
there’s this thing called a portable benefits
network, and then you would rate it
actuarially, and you’d say, oh, it gets a lot of people. It’s a large group. And then you would
give it tax preferences so that it could
compete in the market against the for-profit
sector, because it has like a 10% or
15% benefits edge. And then you would
start to be able to have verticals around the
benefits that people needed. So for instance, if you
look at Kaiser, Kaiser in the east coast
and the west coast, especially the west
coast, a lot of people really like Kaiser benefits, and
it was started by Kaiser Steel. And so you started out
with the large employer. They were negotiating
for steel workers. Then they started
providing the care, and then that care
was so much cheaper, so it starts lowering
health care costs, which then makes the
insurance cheaper, which then makes
the prices go down. So you start to align the
interests economically, but what you have to
do is make a decision that social
provision of benefits has to be a social
purpose endeavor. And then you set
up the structures to have an advantage
in the marketplace. And that would make
the difference, because if you’re going to
make the social purpose compete with the for-profit sector,
and the for-profit sector can go to private equity
and venture capital and get access to
tremendous amounts of money, it’s just not a fair fight,
and that group doesn’t have the same
incentive to make sure that they’re taking care
of workers in the same way that the social purpose does. But the social
purpose groups have to have competition so that
if they’re doing a bad job, they should stop doing it. So you want to make it
that workers have choice, and you want to start
setting up a hybrid system. And the role of
government, then, is, I want to be the
group that does it. Here’s the application. We’ve done the background check. Then, OK, yay,
you got the award. How’d you do? Did you do a good job? There’s like a
policing function. And then there’s a
regulating function. Then there’s a collecting
of information. Oh, this group over
here did a great job. We should be teaching
everybody what that group did. So I guess what I’m
saying is it probably starts in the tax code,
where you’ve preferred it. Then you let it grow, but you
have a role of government, where it’s somebody’s
job to care. And they have not a
policing function, but a facilitating
oversight function. LOUIS HYMAN: I
think we have time for one more question, perhaps
not about portable benefits. As important– not to disparage
that, but one more question. Anybody in the back? Anybody in the back? We’ve got anymore
questions in the back? All the bad kids
always sit in the back. OK, [? up in front. ?] SARA HOROWITZ: We’re
the most creative. AUDIENCE: Kind of a two-parter. So until we actually get to
this kind of sectoral bargaining thing, what we don’t have
in the freelance industry– I’m an artist, and I work in
the arts and design and stuff like that. What we don’t really have
is standardization in terms of pricing and compensation. And a lot of clients can
prey on that, especially for people who are just
coming out of college, really hungry for work. We have clients. We have Fiverr and
all this stuff, where people are
like really literally willing to get paid nothing just
to have the experience, which I generally think
is sort of not fair. Part of the
question, number one, is how do you propose that we
standardize things like pricing and compensation within
these freelance industries on national and
local levels, things like contracts and pricing? And the second part
of the question is related, because I
also hire freelancers. As you might imagine, I’ve had
a wide range of experiences, and some freelancers just aren’t
very good at what they do. How do I, as a client,
protect myself there? Because I can understand
the hesitation for people in these industries
saying, well, I’d rather go with this firm,
because they’re a big firm. They’re successful. That gives me some
reassurance that they’re going to do this
job, because they have a reputation at stake. If I hire Jack Smith in Wyoming,
and he disappears on me, what’s the repercussion for him? In this new world,
how do you how do you see both of
these things working, both sides of the coin? SARA HOROWITZ: You
want to grab it? STEPHANE KASRIEL: Sure. So I mean, first of
all, I think we’re living in a time of change. So I would start by
just the disclaimer that I don’t think anybody
has all the answers. And they will get figured out
over the next decades coming. I will say a few things. So one is to the point
about young graduates, I don’t think the US education
system is training people to be successful freelancers. And what I’m saying
by this is there’s a huge difference between an
employee and a freelancer, and it’s the fact that the
freelancer is an entrepreneur. It’s not good enough
to be a good designer. Your example of young kids that
graduate from design school– great, so you’re
a good designer. If you don’t know how
to market yourself, and you don’t know how to
set client expectations, and you don’t know
how to negotiate, and you don’t– like all
of the stuff that builds– you don’t know which
skills you need to acquire and how to retrain yourself
and all that stuff. These are the things that
make great freelancers. People sometimes
ask us, do you think that the world is going
towards 100% freelancing, and are companies
going to be essentially empty shells, and everybody
is going to be a freelancer? And the answer is no. A lot of people in the world–
and that’s completely fine– are not entrepreneurs, and they
should be full time employees, and companies should
continue to hire them as full time employees. And that’s totally fine. The point is for the people that
naturally are entrepreneurs, they do better as
freelancers than they would do as employees,
both personally, because it drives them insane to
have a boss who tells them what to do every day,
and financially, because if you’re really good
at doing the two sides of this, being a good designer and
being a good entrepreneur, you end up doing really
well for yourself. So I think that’s kind
of the short answer is people that are willing
to work for free will, but that’s the problem is how do
we change the college system so that people,
especially in design, where a substantial
number of young graduates end up becoming freelancers–
how do you change the classes that they take
so that they don’t just teach about design? They also teach about what
it means to be a freelancer and what it means
to be successful. So I think that would be
probably the main question. The main answer to your
question on the other side, how does a client
choose a freelancer, I would start with
saying to be honest. When you hire people
as full time employees, you make mistakes. You go through many,
many interview processes. You interview lots
of candidates, and you go through many
rounds of interviews. The reason why you do this is
because of a lack of trust. Let me just step back a few– if you don’t understand
why freelancing is growing in America
right now, there’s a theoretical
underpinning behind this, which is a Nobel Prize from
1937, Ronald Coase, going back to the history of this being he
looked at what Adam Smith would be predicting, which
is efficient markets. People negotiate
with each other. It doesn’t make sense
to hire each other. You should have everything
be done through contracts. In the ’30s, that was
clearly not the case. Big companies were growing like
crazy, and so he looked at this and said, what’s preventing
people from contracting more, and why are people
reverting to hiring more? And the answer was, lots
of transaction costs. One of these
transaction costs is the lack of trust
between the two parties. When you’re looking for a
job as a potential employee, you’re going to look at
the website of the firm, and it’s going to
say, blah, blah, blah, we have the best
employee in the world. You’re going to have
a dream job, la la la. And you don’t believe
it, because x percent of the time it’s not true. Conversely, as an employer,
you see all these resumes that are claiming incredible
amounts of talent. You also don’t believe it, and
because of this lack of trust, you end up having to go
through these many rounds of interviews. And yet, still, you
hire people, and they don’t end up working out
for one reason or another. So I think just to be fair,
yes, clients are not always happy with their freelancers. I would say managers
are not always happy with their
employees either. I think the thing
that helps, and not to sell my story in
this, but the thing that helps with
freelancing in general is you build these
reputation over time. You build a
portfolio of clients. You build these
referrals, much more so than through
traditional employment, just because in
traditional employment, you’re going to change
jobs every four years. And so unless you’re
50, and you’ve been doing this for
a while, the number of references that you
have is just a lot smaller. So really great freelancers
stand out faster than they would through
a traditional employment model, which allows
clients to be more certain and specifically in a
marketplace like us. I mean, the way it
works is pretty simple. Client rates the freelancer. Freelancer rates the clients. This happens over and
over and over again, and so the really good people
have these amazing ratings, which, frankly, allow
them to raise their rates. To your point, in
many cases, you’re willing to pay significantly
more for somebody that is lower risk and
significantly less for somebody who’s done
terrible jobs in the past. SARA HOROWITZ: I think
that it’s not an accident that so much of
gig hiring is done on platforms that are funded
by private equity and venture capital. And if you are a
business, you have to– to make those kinds of returns,
you have to get the cream. And so we’ve done a
good job at figuring out how we’re going to set up these
institutions for the people who are the most skilled or have
the ability to market themselves or connect or do whatever. But I really do think that,
again, it really goes back, I think, to a theme that’s been
running throughout this talk today, which is the secret to
being a successful gig worker is not because you are
amazing on your own. It’s the network that you
build, and it’s the network– we can stop there, and
just say, let’s just make this a networking event. We network. We trade cards, and
wasn’t that great? But really, we’re a
society of complexity. And what we’re
realizing is that when you’re talking about a
networked organization and networked society, we
have to have a government that wants to see that organization. After all, our roots
come from de Tocqueville, from this idea of
us coming together. That’s our secret
sauce as America. That’s what makes us great. And so what we
should be doing is having a government that
says, go forth, and build those organizations, and
we want to see you do that. And they will help
people find jobs, and they will help
people do this, and they will help
people do that. That’s what’s missing. We’ve got a great Silicon
Valley world going. That’s not our problem. It’s the social side. And then we can be as
innovative as Silicon Valley and watching how
people form new things. And that, to me, is going
to be the social safety net of the next era. We just have to build it. It’s not coming from Washington. It’s coming from us, and that’s
what government has to do is get out of the way. Don’t do it for us. Let us build it. LOUIS HYMAN: Wow. OK, on that note, thank
you all for coming, and I hope you’ll join us again
in the future of the Future of Work Series for more
interesting conversations that bring together
different perspectives in an [? imperial ?] context. Thank you so much, Sara and
Stephane, for coming tonight. [APPLAUSE] SPEAKER 1: This has been a
production of the ILR School at Cornell University.

2 comments on “Freelancing in America: The Present and Future of the Gig Economy”

  1. KungFuChess says:

    Nobody asked the obvious question.. what about the freelancer in India that can do the same job as well as an American for half the wages?

  2. Lucas Blinda says:

    ppl do not want to wqork at all. ppl want to earn money. In the AI dominated and fully automated future the main source of income will be dividends and having a job will be a privilege

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