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Crowdstaffing featured as Rising Star and Premium Usability HR platform in 2019

Crowdstaffing has earned the prestigious 2019 Rising Star & Premium Usability Awards from FinancesOnline, a popular B2B software review platform. This recognition is given out annually to products[...]

May 13, 2019

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How Clinton, Trump and MSPs Could Shape the Future of Gig Talent

The Republican National Convention just came to a close, and the predominant theme of the event (though it was often derailed by other issues) was “Making America Work Again” -- work in the sense of jobs, not necessarily governance. The economy’s recovery from the crippling recession of eight years ago has been anemic. Presidential candidates in both parties are putting the challenges of employment at the forefront of their presentations. The future of gig talent is a pronounced topic of discussion. Yet there remain countless questions that must be addressed. Despite anecdotal cases, labor regulators and economists can’t agree on how to define the gig economy. They cite the absence of systematic evidence to show the true number of participants and how they perceive their jobs. The most pressing matter for legislators centers around independent contractor compliance. Let’s look at each candidate’s position on this new workforce arrangement and the influential role MSPs could play.

The Gig Economy is Real, We Just Need to Define It

Since 2000, the labor force participation rate has spiraled downward in a fairly dramatic fashion. The dawn of the Great Recession accelerated that descent. During the economic crisis, with its cutbacks and layoffs, countless professionals found themselves displaced and marginalized. Many simply stopped searching for work, despite their eligibility and qualifications. Ultimately, the situation became fertile ground for sowing the seeds of the gig economy. At first, many workers turned to gigs as a way of securing an income flow, or what labor regulators refer to as “involuntary part time.” As the sharing economy began to mature and present real opportunities, skilled professions chose independent freelancing over full-time roles.

Over the past few months, we have seen upticks in labor force participation and job growth from the reports issued by the U.S. Bureau of Labor Statistics (BLS). The gig economy is part of that increase. It’s also different than the type of contingent work the government has monitored before.

In its 2015 report, “Contingent Workforce: Size, Characteristics, Earnings, and Benefits,” the Government Accountability Office (GAO) writes:

“The size of the contingent workforce can range from less than 5 percent to more than a third of the total employed labor force, depending on the definition of contingent work and the data source... However, no clear consensus exists among labor experts as to whether contingent workers should include independent contractors, self-employed workers, and standard part-time workers, since many of these workers may have long-term employment stability.”

There are many interesting statements here. Independent contractors, self-employed workers and freelancers have some likelihood of “long-term employment stability.” So, the gig economy has great potential. The rise of this non-traditional employment population has also caused labor regulators to reconsider the idea of contingent talent. The GAO goes on to call agency temps, direct-hire temps, on-call workers and day laborers the “core contingent” workforce.

It’s apparent that new classifications of contingent talent are emerging, and that the government is struggling to track, measure and categorize them. There’s also the challenge of unleashing the power of the gig economy without running afoul of employment misclassification, compliance, taxation, benefits, legal protections and a host of other issues. Gig economy talent are most often characterized as independent contractors. As anyone in the staffing industry knows, utilizing ICs can feel like an uneasy swim in gray waters. Yet the number of 1099 forms filed with the IRS keeps climbing.

Whichever candidate commands the White House, the question of figuring out the gig economy will be waiting on the Oval Office desk.

Where the Candidates Stand on Gig Talent Issues

Hillary Clinton

Hillary Clinton, the Democratic nominee, has been vocal about the topic. On several occasions, she’s criticized and spoken out against businesses that misclassify workers as independent contractors to circumvent regulations and costs. In a recent Washington Post article, Clinton vowed to “crack down on bosses who exploit employees by misclassifying them as contractors or even stealing their wages.”

Uber and similar companies have capitalized on the digital economy to pioneer a new method of service delivery. They warrant a lot of praise from politicians, including Clinton. Although she attempts to align herself with those who want to propel innovation, she also strikes a tough stance on regulation. The question, to paraphrase the Washington Post, comes down to this: Are independent gig workers really micro-entrepreneurs and therefore independent, or are businesses engaging in a massive tax dodge by classifying them as such?

“This on-demand, or so-called gig economy is creating exciting economies and unleashing innovation,” Clinton said. “But it is also raising hard questions about workplace protections and what a good job will look like in the future.”

On the issues section of Clinton’s website, she posts a number of proposals aimed at creating a fair yet competitive workforce for the new economic realities. Some examples include:

  • Paid family and medical leave benefits, funded by taxes rather than employers
  • Debt-free college education
  • Workforce skills and job training
  • Incentives and tax relief for small businesses and entrepreneurs, which would include independent contractors
  • Employer profit-sharing programs
  • Revised labor and worker rights for the new era

Donald Trump

Republican nominee Donald Trump has not directly addressed the gig economy or the matter of employment classification. He posits himself as becoming the “greatest jobs producer” of all time. During his campaign rallies, he has highlighted several elements of his job growth plan.

Trump mainly emphasizes his commitment to revitalizing and reinvesting in American manufacturing. During his campaign in Pennsylvania, he told the audience, “America has lost nearly one-third of its manufacturing jobs since 1997 -- even as the country has increased its population by 50 million people.”
Trumps attributes the problem to overseas outsourcing, empowered by the North American Free Trade Agreement and China’s entry into the World Trade Organization.

  • Trump says he’ll withdraw the United States from the Trans-Pacific Partnership (TPP).
  • Trump seeks to eliminate “wasteful rules and regulations which are destroying our job creation capability.”

Most of Trump’s positions involve a way to curtail offshoring. For freelancers and independent contractors, there could be advantages. In the scenario Trump envisions, gig workers would have less competition for projects if cheap overseas outsourcing were somehow eliminated. It’s difficult to gauge the impact of Trump’s removal of “wasteful rules and regulations.” On one hand, independent contractors may benefit from an overhaul of existing standards. On the other hand, Trump’s opponents fear, he could threaten to destroy the protections that workers currently have.

Perhaps the biggest benefit for gig talent would come from Trump’s 15-percent corporate tax rate for all businesses. As Nancy Collamer explains in her insightful Forbes article, “Under the Trump tax plan, while a worker earning more than $50,000 as an employee would be taxed at either 20 or 25%, that same person would owe a 15% tax rate as an independent contractor.”

The Role of MSPs and Staffing Experts

Regardless of their ideological positions, politicians today understand the need for a new social contract and revision of outdated standards. However, waiting for lawmakers to institute change is a slow process.

A more immediate solution could easily come from MSPs willing to expand their roles and their domains. As the workforce becomes more blended, more nuanced and more shaped by talent who want their independence, MSPs could prove instrumental as shepherds of these large, diverse flocks. They have the experience, resources, tools and best practices to identify new needs across the enterprise, access and entice the right talent, maintain compliance among all the different categories, ensure operational and cost efficiencies, and champion the autonomy of today’s freedom-loving talent.

MSPs already have years of expertise designing and overseeing independent contractor engagements, including onboarding, ongoing administration, billing and invoicing, and mitigating clients’ exposure to compliance risks. They handle performance the same way they would with any outsourced service provider or supplier -- in relation to agreed upon contractual obligations and service level agreements.

  • MSPs can design an environment for independent contracting that focuses on standardization, consistency and compliance.
  • MSPs can build document management portals, maintained in a controlled environment.
  • MSPs limit any perceived managerial roles with independent talent:
    • Administration and onboarding procedures are performed by the MSP.
    • Communication remains exclusive to contractually bound milestones, deliverables and Statement of Work (SOW) commitments -- not employee related issues such as attendance, timekeeping, hourly productivity checks, etc.
  • MSPs act as a payment processing agent between the independent contractor and the client, with terms that are clearly outlined upfront in Professional Services Agreements (PSA) and SOWs. The billing structures are negotiated to ensure that financial control factors are adhered to.
  • MSPs restrict the inclusion of independent contractors in company functions unless absolutely necessary to the work as contractually stated.
  • MSPs direct all HR related information to the independent contractors.
  • MSPs ensure that the use of independents occurs for specific, specialized work only, such as projects with start and end dates that full-time employees are not performing.

Whatever the outcome of the presidential election, we in the workforce industry must strive to preserve and champion the independence for which many of today’s talent are fighting. And we have the know-how, the expertise and the voices to do so while protecting the autonomy and security of the organizations we support.

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