Workforce Training: DOL Can Better Share Information on Services for On-Demand, or Gig, Workers
Released: 2017-10-26T00:00:00

Letter

Background

Currently there is no universally accepted or official definition of the gig economy or gig workers. The characteristics of gig workers that we focus on in this report (self-employed individuals who perform single projects or tasks on demand for pay) share some characteristics with self- employment as it is understood by other federal agencies, but our characterization does not directly align with those agencies’ views. Although other definitions have been used to measure the number of gig workers, our focus was on the non-occupational skills and training needed by workers who participate in gig work. We characterized gig workers as being self-employed and who participate in gig work part-time or full-time. However, not all self-employed individuals are gig workers. For example, we did not consider self-employed individuals who own their own storefront business, such as a restaurant owner, as gig workers because they do not generally work on a project basis. However, our characterization would include a caterer who works on a project basis with multiple clients. At the same time, however, we excluded project- based workers who are not self-employed, such as those who are employees of a staffing agency.

The Public Workforce Development System

As the centerpiece of the federal government’s workforce system, the purposes of WIOA include the following: (1) provide individuals, particularly those with barriers to employment, increased access to and opportunities for employment, education, training, and support services to succeed in the labor market; (2) provide America’s workers with the skills and credentials necessary to secure and advance in employment with family-sustaining wages; and (3) provide activities through the state and local workforce development systems to increase the employment, retention, earnings, and economic self-sufficiency of participants; among other purposes. Programs administered by DOL and Education provide services such as job search assistance, career counseling, occupational skills training, classroom training, and on-the-job training. In addition, WIOA provides for a workforce system that is accessible to all job seekers to make it easier for them to access the services they need to obtain skills and employment. Basic career services include eligibility determinations, initial skill assessments, and program referrals. WIOA also provides for state workforce development boards (state boards) to help oversee a system of over 550 local workforce development boards (local boards) that, in turn, deliver services through a network of over 2,400 American Job Centers. Under WIOA, state and local boards have the flexibility to respond to the needs of their local labor markets, which they do, in part, through the analysis of local labor market information.

Federal funding under WIOA for core programs is allocated to states using statutory formulas that, in part, generally reflect state and local unemployment data. According to DOL, in program year 2017, total appropriated funding for activities related to Adult and Dislocated Worker programs and Wagner-Peyser Employment Services was more than $2.7 billion. Local boards may also leverage other funding sources, such as DOL discretionary grants and state and local government funding, among other sources.

WIOA included new performance measures for states and local areas generally related to participants who exit WIOA programs. These include the percentage of participants employed in unsubsidized employment in the second and fourth quarters after program exit, and median earnings in unsubsidized employment in the second quarter after exit, among other measures. Generally, performance outcome targets are negotiated between DOL’s regional offices and state workforce boards and take into consideration the characteristics of the job seekers being served as well as the local labor market conditions. Both states and local areas are subject to certain consequences for failing to achieve their negotiated targets. To support performance outcomes, states must use, consistent with state law, quarterly wage records to verify participants’ employment and earnings. States typically satisfy this requirement by using their Unemployment Insurance (UI) wage record data. Earnings from self- employment, however, are generally not included in state UI wage records because self-employed workers are not considered to be in employment that is covered by the unemployment insurance system. In these cases, boards are allowed to use supplemental wage information— for example, case management notes, administrative records, and surveys of participants, among other things—to support employment and earnings outcomes.

DOL has long encouraged workforce boards to provide entrepreneurship and self-employment training by funding several projects and grants to demonstrate the role of the workforce development system in this area (see table 1).

DOL also provides technical assistance to workforce boards through online training, other training events, and its WorkforceGPS website. WorkforceGPS is an interactive online platform designed to build the capacity of the public workforce system through knowledge sharing. It offers resources, peer-to-peer connections, and supplements other technical assistance efforts.

SBA Programs That Provide Assistance to the Self-Employed, Including Gig Workers

SBA also has programs that provide support and training to self- employed workers, including the following:

Small Business Development Centers (SBDCs) – SBDCs, with more than 900 service delivery points, provide training and technical assistance to current or prospective business owners.

SCORE Association – SCORE is a nationwide, nonprofit organization of working and retired business executives who donate time to counsel and provide workshops for small business owners.

Women’s Business Centers (WBCs) – WBCs are a national network that provides educational resources to help women start and grow successful small businesses.

Studies of Gig Workers Suggest They Differ on Multiple Characteristics, and Stakeholders Describe Key Benefits and Downsides to Gig Work

Studies of Gig Workers and the Types of Work They Perform Suggest They Differ on Multiple Characteristics

Because there is no universally accepted definition of gig work, characteristics of individuals engaging in this work and the types of work they perform depend on how this population is studied. Each of the three quantitative studies we reviewed defined their population of workers, type of work performed, and time frames of work performed differently. Therefore, each study provides a snapshot of this emerging area, and their results are not directly comparable (see table 2).

According to the studies we reviewed, up to about 40 percent of workers engaging in online gig or informal work were 34 years old or younger. The JPMorgan Chase Institute (JPMorgan Chase) study found that 43 percent of account holders participating in online labor platforms were 18-34 years old. The Pew Research Center study found that an estimated 42 percent of gig workers were 18-29 years old, whereas 19 percent of participants were 50 years old or older. Similarly, the Federal Reserve Board (Federal Reserve) found that an estimated 41 percent of those completing tasks through online platforms were under age 30.

The JPMorgan Chase and Pew Research Center studies found online gig workers to have relatively lower incomes. Specifically, the JPMorgan Chase study found that their bank account owners who earned income through online labor platforms from October 2012 through September 2015 had lower median monthly incomes ($2,514) than the JPMorgan Chase study population labor force at large ($3,351). The Pew Research Center study had similar results with an estimated 49 percent of online gig workers making a family income of $30,000 or less annually, whereas only 14 percent of those made $75,000 or more. On the other hand, the Federal Reserve estimated that almost half (about 45 percent) of those completing online tasks through websites had an annual family income greater than $75,000.

Some individuals who participate in gig work are also engaged in other employment or are students. According to the Pew Research Center study, an estimated two-thirds of online gig workers indicated that they were employed either full- or part-time in another position, and 23 percent were enrolled as either full- or part-time students. The Federal Reserve study estimated that approximately half of those performing online tasks through websites reported that they were also paid employees, with about an additional 10 percent reporting that they were self-employed.

Types of Work

According to the studies we reviewed, gig work is performed in a range of occupations, and at various skill levels. The Pew Research Center study reported that the types of work found through online platforms varied between physical tasks, simple online tasks, or relatively complex tasks. For example, according to the Pew Research Center, the estimated 8 percent of Americans who earned money in the last year through online job platforms performed at least one of the following tasks: online tasks through digital job platforms, such as data entry or taking surveys (an estimated 5 percent); ride-hailing services (an estimated 2 percent); and shopping for or delivering household items, or by cleaning or doing laundry for a client (an estimated 1 percent each); and other types of work taken on through online platforms (an estimated 2 percent). This work ranged from relatively basic tasks, such as moving furniture or working as a parking lot attendant, to more highly- specialized work, such as providing legal services, manuscript editing, or IT consulting.

According to three researchers we interviewed, recent attention has been paid to online gig work, but a larger number of individuals are participating in offline gig work. The Federal Reserve examined characteristics of survey respondents who engaged in various types of online and offline gig work. Online gig work included completing tasks that were identified or mediated through online platforms. Offline gig work included house cleaning, house painting, yard or landscaping work; babysitting and/or child care services; and personal services such as picking up dry cleaning, providing moving assistance, and dog walking; among other services.

Worker Motivations

Workers’ motivations for engaging in gig work included filling gaps in income and accommodation of work schedule preferences, according to the two studies for which we obtained survey results. The JPMorgan Chase study reviewed the bank deposits of individuals in the months that they were actively participating in online platform work. This analysis found that earnings from online labor platforms tended to offset dips in other sources of income; therefore, the researchers suggested that individuals used earnings from the online labor platforms to substitute for reductions in other sources of earnings and in periods where workers were between jobs. Although JPMorgan Chase found that online gig work sometimes substitutes for other income sources, it also noted that these deposits contributed a sizeable portion of their income—on average, 33 percent of total monthly income in months they were active on the platform—but were secondary to other income sources deposited to their accounts. The study noted that although the number of people participating in online gig work has increased, workers’ reliance on income from this work has remained stable over time both in terms of the fraction of months when workers participated and total income earned.

The Pew Research Center study found that providing workers with something to do in their spare time and filling in gaps in income were top motivations for online gig workers. About 42 percent of gig workers said they use online platforms for fun or something to do in their spare time, whereas about 37 percent said this work helps fill in gaps or fluctuations in income.

The Pew Research Center study also estimated that income earned from online platforms was essential or important to approximately half of workers, and these workers tended to have lower levels of household income and education. Of the estimated 8 percent of survey respondents who said that they earned money in the last year from online platforms, approximately 56 percent reported the income was essential or important to their overall financial situation. Of those, an estimated 45 percent said that they use online platforms because they need to be able to control their schedule due to school, child care, or other obligations. About a quarter also said they use online platforms because it is fun or for something to do (about 28 percent), because there is a lack of other jobs where they live (about 25 percent), or to gain work experience they can take to other jobs (about 24 percent).

Another study, conducted by the Institute for the Future (IFTF), provides a different perspective on the characteristics of online gig workers using a qualitative analysis of interview responses to develop profiles of gig workers and their motivation. From those interviews, IFTF developed seven archetypes to describe different types of gig workers, such as workers wanting to build their own business and maximizing online platforms to do so; those navigating a life transition; or those optimizing income on a day-to-day basis (see app. II).

Different Stakeholder Groups Described Many of the Same Key Benefits and Downsides to Gig Work

Key Benefits

The different stakeholder groups we interviewed described many of the same benefits to participating in gig work. All stakeholder groups mentioned the following: flexibility (e.g., to work around other responsibilities, such as childcare); autonomy (e.g., ability to set own hours and be “own boss”); income (e.g., supplemental or to fill in between jobs); and the ability to help build a business, a resume, or experience.

Most stakeholder groups also mentioned the following: low barrier to entry; and the ability to pursue a passion.

All of the gig companies we interviewed said flexibility or autonomy, or both, were benefits. Specifically, one company official said gig workers have the opportunity to be self-starters, determining when and where they want to work. Another company official said that the income provides workers the freedom to leave another job or make ends meet if they are laid off. Workers in three of our discussion groups also mentioned the benefits of flexibility and autonomy. Specific benefits mentioned by workers included being able to work on their own schedule, having control on pricing their services, and working from where they want.

Flexibility and Autonomy Are Benefits of Gig Work “I have a young family and need the extra cash. I find using an online platform more convenient than word of mouth. would like to use opportunity to become entrepreneur. I want to be my own boss 24 hours a day.”

According to local workforce board officials we interviewed, the flexibility and autonomy of gig work may be especially beneficial for some types of workers. For example, officials from 8 of the 11 workforce boards said workers who might benefit most from gig work include those who need flexible schedules, such as students who are going to school or are enrolled in training, and those with care-taking responsibilities.

Gig work can also help workers develop job-seeking skills, provide work experience, or fill in gaps in resumes, according to officials from 10 of the 11 local workforce boards we interviewed. Specifically, a local board official said traditional companies do not like to see employment gaps; therefore, the board encourages its clients to pursue consulting or volunteer work so that there are no gaps on their resumes. The official added that gig work through short-term contracts is often viewed by traditional employers as valid employment and could provide the necessary work experience to help individuals secure more permanent, full-time work if desired. Moreover, another board official said that certain types of gig work could help workers enhance their capabilities—for example by helping them better understand how a business runs and become more entrepreneurial with better self-employment skills.

According to 9 of 11 local workforce board officials we interviewed, gig work could also be beneficial for people for whom traditional work may present challenges, such as individuals with disabilities, ex-offenders, low-income workers, or those who are unemployed or underemployed. For example, officials from one local board said gig work benefits harder- to-serve populations because it allows them to earn income while going to school and by working from home.

Key Downsides

The different stakeholder groups we interviewed also described many of the same downsides to participating in gig work. All stakeholder groups mentioned the following: lack of financial security; lack of benefits; and increased risk that arises from increased liability and high rate of failure in self-employment, among other reasons.

Many stakeholders also mentioned the following: lack of stability; and challenges to running a business that include not understanding the responsibilities of being self-employed or the length of time it can take for a new business to become profitable, or not finding the necessary capital.

Officials from 10 of the 11 local workforce boards we interviewed said that a lack of financial security was a downside to gig work. Specifically, workers may have difficulty earning enough to achieve self-sufficiency, have unpredictable or low income, or experience a high rate of failure with self-employment. Further, officials from one board that works with short- term contractors in the information technology field said it can be challenging for U.S. workers to make sufficient pay from work obtained through professional online platforms because workers face global competition from those in other countries who are willing to do the same work for less pay. Similarly, lack of financial security was a concern among workers in three of our four discussion groups who said low or unpredictable income was a downside, and this factor was also mentioned by two of the gig companies we interviewed. workers said they have performed work using an online platform for which they did not receive payment.

All stakeholder groups we interviewed said the lack of employer-provided benefits—such as health insurance, unemployment insurance, vacation pay, and sick pay, among other benefits—was a downside to gig work. Specifically, one official who provides training to entrepreneurs said it is difficult for gig workers to project how much their health care will cost and consequently how much they need to work to cover those costs. “Clients get savvy and cancel on the work. clock in and out on your mobile device but if a customer complains the company will cancel payment from that job. Do a 4-hour job and then not get paid because customer complained that some task did not get done.” — Gig worker who arranged to perform housekeeping services through an online gig company Lack of Benefits for Gig Workers “Lack of health insurance possibly keeps workers who want to be in the on-demand economy in a job they do not like. This lack of available health insurance hinders the entrepreneurial spirit and has an effect on workers’ risk tolerance.”

Four of the six stakeholder groups we interviewed said a lack of knowledge about running a business was a challenge to working in the gig economy. This knowledge is important because according to one stakeholder we interviewed, drivers for ridesharing companies are building their own business, but some do not realize the consequences of engaging in this type of work. Further, officials from one local workforce board said because barriers to engaging in gig work are low, workers may enter into this type of work before knowing how to manage their self- employment or understanding its ramifications. Officials at two other local workforce boards also said gig workers may not understand that they may face a longer period of time than expected to become successful entrepreneurs or face challenges obtaining capital needed for their business.

As previously mentioned, gig work can benefit some harder-to-serve populations; however, there may be additional downsides for gig workers who lack technical skills needed to successfully execute the work or those who are low income or urgently in need of a job, according to many stakeholders. Specifically, officials from one local workforce board said there is a difference between gig work for low-skilled workers and higher- skilled workers. They said gig work is not as viable in the long run for workers who do not have the necessary technical skills. As a result, they could remain caught in lower-skilled gig work even though their ultimate goal might be to develop a career. An official from a gig company that provides professional services said workers are less likely to be successful in gig work without a specialized skill that is in demand. In addition, an official from an organization that offers information for workers providing ridesharing services said that type of gig work helps workers get by, but does not provide them with future pay raises or a career.

Federal Programs and Other Sources Offer Training in Self- Employment Skills That Stakeholders State Gig Workers Need

Gig Workers Need Self- Employment Skills Such as Customer Service, Marketing, Digital and Financial Literacy, and Legal Skills, According to Stakeholders

Stakeholders we interviewed said that gig workers need various self- employment skills. In particular, stakeholders identified soft skills, which include ability to communicate well, and other traits such as entrepreneurial spirit, tolerance of risk and uncertainty, common sense, and ethics, among others.

In addition to soft skills, stakeholders said that gig workers need business skills. These skills help them manage the functions that employers generally provide for their employees, according to one workforce board official. Business skills mentioned by stakeholders include the following: marketing/branding/having skills in the “business of you;” financial literacy/management including how to obtain benefits, and estimate costs and price services; digital literacy; and understanding legal rights and obligations including how to write and read contracts.

Some of the stakeholders we interviewed said that gig workers need to understand their tax responsibilities. In more traditional employment, employers are generally responsible for withholding employment taxes— such as income tax and Social Security and Medicare taxes—for their employees. According to the Internal Revenue Service, however, gig workers, by virtue of being self-employed, must track their income and expenses, determine if they must pay quarterly estimated taxes, and know how to file their annual return. However, not understanding the responsibilities of their self-employed status could mean that gig workers will not be compliant with tax law. In the past, we reported a lower level of tax compliance by self-employed individuals than by employees. Even workers who understand that they need to pay their own taxes but then fail to plan appropriately could face paying a large amount in taxes at the end of the year. One official at a gig company said that someone earning $60,000 to $80,000 a year, with no taxes withheld, may find it challenging to pay those taxes when they are due.

In addition, some gig workers might not be aware of these responsibilities because they consider themselves employees of the gig company, according to two stakeholders. For example, a gig company official said that some of its gig workers have asked to speak to the company’s human resources manager when they have an issue even though the company considers them to be self-employed business owners. The official said the company has to remind these workers that they are not represented by the company’s human resources department. Further, the Pew Research Center study found that an estimated 26 percent of gig workers who used online platforms considered themselves to be employees of the platform they used to find work. Moreover, the study found that workers who reported that income from gig work was ‘important’ or ‘essential’ were much more likely to view themselves as employees.

Some stakeholders also said marketing was an important skill. According to a gig company official, marketing helps workers grow their business to the point where they can spend more time engaged in income-generating work than trying to find additional clients. Gig workers need to understand they are selling their skills, or, in other words, are in the “business of you,” and how they present themselves online can affect their opportunities, said one official from an organization that helps low-income workers navigate the gig economy. Accurate cost estimating and pricing were also considered to be important. A gig company official said that pricing is a skill that involves including all expenses, while leaving room for profit and accounting for some risk.

Not all workers may be suited for gig work even when provided training in these skills, according to officials from one workforce board. Using a DOL Workforce Innovation Fund grant, this board provided a program to help workers become self-employed and engage in gig work. Board officials said about 30 to 50 percent of the participants leave the program because they decide that this type of work is not for them. These officials said they consider this a positive outcome because the training helps participants recognize the challenges of self-employment before taking steps that might have long-term consequences, such as using their life savings to start a business.

Selected Workforce Boards and SBA Programs Provide Self- Employment Skills and Training for Gig Workers Based on Perceived Local Area Needs

The 11 local workforce boards we interviewed all served gig workers in some way. In some cases, local workforce boards directly provided services to gig workers, and in other cases they indirectly provided services to gig workers through efforts that more broadly targeted workers in specific sectors or who were engaged or interested in self-employment (see fig. 1). Direct services ranged from recruitment to career services, including providing job coaching and workshops on finding gig work and developing self-employment skills. Overall, officials from 9 of the 11 boards described these efforts as responses to perceived needs in their local labor markets.

Among the selected boards that offered workshops, several covered similar information related to self-employment. The most common topics included (1) marketing strategies, such as the use of social media; (2) financial management, including pricing and tax implications; and (3) the basics of contracting. In addition, one of New York City’s workshops provided information on the legal aspects of participating in gig work, and Gainesville’s provided information on obtaining work through online platforms.

Selected boards also provided indirect support services that were not specifically targeted to gig workers but served populations that could include them. For example, Miami’s construction sector initiative did not specifically train workers for gig work, but the skills it supported could be applied to gig work in the construction industry, according to officials. The Seattle board provided self-employment workshops on starting or growing a small business and marketing that were not specifically designed for gig workers but could help them obtain gig work, or involved skills that are transferable to gig work, according to board officials. Furthermore, Seattle has a tool that can help individuals determine how much income is needed to be self-sufficient in their local area, which could also be helpful for individuals engaging in gig work.

The selected boards’ activities varied in the degree to which they focused on those enrolled in WIOA programs. Some board activities, such as recruitment events for ride-sharing services in Chicago and Dallas, were open to the community, including WIOA participants. In Chicago, the workforce board recruited job seekers for a ridesharing company, and some of them then used this work as an income source while they received WIOA services, scheduling it around their WIOA training activities, according to board officials. In Northern Virginia, by contrast, all participants in the board’s self-employment initiative were enrolled in WIOA.

Boards varied in their practices for listing gig work at job centers. Officials from five local boards said that their job centers could list opportunities with gig companies, but they were not always sure if the job centers did so. State and local board officials in two states, however, cited federal and state provisions as the reason why they required a traditional employer-employee relationship to list jobs at their job centers. DOL officials said that the department does not set requirements for the types of jobs that states can post in their job centers, other than certain nondiscrimination requirements. They said that states might impose their own limitations, but most states aim to increase the number of businesses listing jobs with their job centers.

While officials from all local boards that we interviewed said they provided services to gig workers either directly or indirectly, some nonetheless raised concerns about placing job seekers in gig work, questioning the appropriateness of this type of work under WIOA. Specifically, officials from some local boards said they saw their primary mission under WIOA as helping job seekers with barriers to employment find traditional work rather than task- or project-based work that may lack benefits or job security. Additionally, an official from one local board said that using WIOA training funding for services for gig workers would not be a good use of taxpayer dollars because the ultimate goal for job seekers is permanent employment. In addition, officials from five local boards noted that their staff may not be prepared to share information about gig work opportunities or may be uncomfortable doing so. Because of these concerns, officials from one state and one local board said that serving self-employed workers would require a change in “mindset” on the part of the workforce system as local boards may be cautious about offering such services.

Officials from other boards, some of which were not included in our analysis of board services for gig workers, expressed interest in studying the gig economy. For example, in November 2016, the San Diego board published a report examining opportunities and challenges associated with the gig economy, including skill and training needs and the potential role workforce boards could play. Furthermore, state boards are also interested in issues facing gig workers. In response to this interest, the National Governor’s Association has convened a group of states interested in the gig economy, including officials from several state boards, according to an association official.

The SBA also provides self-employment services for workers, including those who engage in gig work. SBA serves the self-employed through its SCORE mentoring program, Small Business Development Centers, and Women’s Business Center program. A SCORE association official said that the association is developing personal branding webinars that could appeal to gig workers, reflecting a potentially growing need for services. Officials at two Small Business Development Centers and a Women’s Business Center said that the centers provide workshops, counseling, and referrals at no or low cost and are serving gig workers. The workshops cover topics such as: business plan development; marketing; financial management, including taxes; and social media.

Nongovernmental Sources Such as Worker Organizations and Some Gig Companies Also Provide Information on Self-Employment

In addition to governmental programs, information on self-employment skills for gig workers is provided through self-employment workers’ associations and some gig companies. Specifically, officials from an association for self-employed workers said that they provide their members with information on non-occupational skills. They said that they also host experts on topics such as how to manage episodic income, file taxes, market their services, and negotiate with clients. Officials from another group serving self-employed workers said their efforts mostly focus on filing taxes and the information is provided through webinars and in-person seminars. Concern over the tax challenges of self-employed workers prompted the group to partner with a university-based tax policy center to study the issue.

Three of the six online gig companies we interviewed also said that they provide some information on non-occupational skills to their gig workers.

For example, an official at one company said that their online platform has a learning center to help gig workers offering services through the platform understand common business issues, such as marketing. This learning center also includes a forum where gig workers can post questions, share advice, and network with each other. Officials at an online platform company that allows professional gig workers to access and perform projects said that they provide information on pricing and tax filing as well as a suite of business tools to help these gig workers track tax payments and number of hours billed. Company officials said that they provide this service to address gaps in information that hindered these workers in the past, such as documenting a steady income for the purposes of obtaining a mortgage. An official at a ridesharing company said that it has partnered with other organizations to provide information to help drivers, for example, by helping them understand their tax filing obligations and save for retirement. Nongovernmental organizations have also played other roles in supporting training for gig workers. For example, in New York City’s initiative, partners such as the Writer’s Guild of America, East and Brooklyn Workforce Innovations helped recruit writers for the board’s training programs. These programs integrated workshops on financial management, marketing and sales, as well as the legal aspects of gig work for workers in the media and entertainment sector, according to local board officials.

Federal Agencies Are Collecting Data on the Gig Workforce, but Information on Promising Practices Is Not Readily Available

Federal Agencies Are Collecting Information, but DOL Has Not Fully Incorporated Gig Work into Its Promising Practices Database

Several federal agencies responsible for data on the workforce and the economy have ongoing efforts to collect and study data about gig work as part of their respective missions. These efforts include:

Bureau of Labor Statistics (BLS): For the first time since 2005, BLS conducted a survey of contingent workers in May 2017 in an attempt to better understand workers engaging in alternative forms of work. In addition to the questions asked in previous years, the survey added four new questions on whether workers performed short, paid tasks in the previous week that were arranged through an online platform. While the 2017 survey data are expected to provide a more refined picture of such work arrangements than was previously possible, BLS officials said that those data will not be available at the state and local level because of the small sample size. In addition, BLS has a Career Outlook website on gig work that provides information about the prevalence of gig workers and their occupations, among other information.

Department of Commerce: The Commerce Department also issued a report on online platforms that allow gig workers to access projects or tasks. The report used publicly available data to assess the size and scope of platform transactions and examine the potential effect on consumers and workers.

Census Bureau: Within the Commerce Department, Census Bureau (Census) officials collaborated with researchers from the University of Maryland to study the gig economy by comparing Internal Revenue Service (IRS) self-employment tax data and BLS self-employment household survey data from 1996 through 2012. According to Census officials, they are undertaking this research to better understand why IRS data suggest long-term growth in self- employment while BLS data suggest little or no growth.

Federal Reserve Board: As discussed previously, the Federal Reserve Board studied online and offline informal work that took place over a 6-month period to examine participant motives and attitudes. Federal Reserve officials indicated they will continue to annually monitor the enterprising and informal work activities of the U.S. adult population in the Survey of Household Economics and Decisionmaking (SHED) publication and public data posting.

Despite these efforts to better understand gig work at the national level, selected state and local workforce board officials said that they lacked local labor market data on gig workers and that it would be helpful if DOL shared information about other boards’ efforts to serve these workers. Officials from all of the state boards we interviewed said that they lacked labor market information on gig workers. An official with one local workforce board said that getting good, reliable data about who is looking for gig work is a challenge. If boards do not have these data, it could be difficult for them to determine the prevalence of gig workers in the local labor market and to design services for them. Officials from the local workforce boards that undertook specific efforts to serve gig workers said that they did so because they perceived that gig workers were important to the local labor market (e.g., technology workers in San Francisco and media and entertainment workers in New York City) or because the local area faced high levels of unemployment and under-employment (e.g., Gainesville, Florida). Officials from most local boards we interviewed said that their job centers had not necessarily seen much interest in gig work, which, in their opinion, could be a reflection of the fact that clients are typically seeking traditional employment, are unaware of the gig economy, or may not see job centers as the appropriate place to obtain gig work, among other reasons. DOL officials that said gig work may be part of “in-demand” jobs in multiple sectors and BLS is considering how to quantify this work; however, to date, data in this area are limited. Given these challenges, officials at all state and local boards we interviewed said that it would be helpful if DOL shared information about other boards’ efforts to serve these workers.

DOL disseminates information on promising practices, but boards may not be readily able to find information related to gig workers. Federal internal control standards state that agency management should analyze information related to achieving agency goals and communicate that information to external parties. To communicate with the public workforce system and develop its capacity to implement innovative approaches, DOL uses a portal, known as WorkforceGPS, which includes information from program evaluations and communities of practice for those interested in specific topics, among other resources. However, finding information in WorkforceGPS that is relevant to gig workers requires multiple searches and does not consistently yield relevant results. When we conducted a search of the portal, we found relevant documents under terms such as “self-employment” and “entrepreneurship,” but did not consistently find those same documents under search terms such as “gig,” “on-demand,” and other related terms. Given that online gig work is an emerging area for researchers and policymakers and there is no universally-accepted definition or term used to describe it, some workforce boards may not associate gig work with self-employment and know to search for information under that term unless a specific reference is provided. Linking “gig” and related terms to self-employment may be particularly important because DOL officials indicated that recent and soon-to-be issued evaluations from self- employment initiatives funded through the Workforce Innovation Fund grants may yield information relevant to gig workers. Furthermore, although WorkforceGPS includes several communities of practice, it does not currently include one on gig workers. Helping workforce boards easily find and share promising practices relevant to gig workers would allow them to fully and efficiently be able to help individuals who want to engage in this type of work.

Workforce Boards Said They Face Challenges in Reporting and Documenting Performance Outcomes for Gig Workers

Documenting employment and earnings outcomes for gig workers may be challenging for workforce boards. When participants are enrolled in WIOA programs, workforce boards are required to document and report participants’ employment and earnings outcomes. However, unlike Unemployment Insurance (UI) wage record data used to verify outcomes for those placed in traditional employment under WIOA, supplemental wage information, used to verify these outcomes for gig workers, may be challenging for boards to obtain. verify outcomes. Officials from seven local boards that provided services for gig workers and three state boards also said that the requirements to document employment and earnings outcomes are a disincentive to serving those workers. In addition, officials from three state boards said that, because of the challenges in obtaining supplemental information, outcomes of self-employed workers, including gig workers, are not included in the performance reports that their states forward to DOL, with officials from one state specifically pointing to cost and data reliability issues.

American Job Center Director in San Francisco and local workforce board officials in Seattle and Dallas. | GAO 17 561.

In December 2016, DOL issued additional guidance stating that under WIOA, states may continue to support outcomes using supplemental wage information. However, if states use supplemental wage information to verify employment, they must also use it to verify earnings outcomes, a change from prior DOL policy. DOL officials said they did not believe the new supplemental wage information requirements would limit boards in serving self-employed workers. Rather, using supplemental wage information to verify employment and earnings outcomes holds boards accountable while allowing them to receive credit for assisting self-employed workers, according to DOL officials. They also said that workforce boards asked for updated guidance on using supplemental information on serving self-employed workers, which would include gig workers. In June 2017, DOL issued guidance on the use of supplemental wage information, which stated that worksheets, signed and attested to by program participants, is one acceptable type of documentation for self- employed workers.

Conclusions

While gig work is not a new phenomenon, the advent of online platforms has made this type of self-employment more readily accessible, possibly for the first time, for many individuals who are seeking new career opportunities or supplemental income. On the one hand, this newfound access to gig work can help individuals across many industries, skill levels, and motivations seek and earn extra sources of income. On the other hand, some of these individuals may not be aware of its risks, such as financial insecurity and lack of benefits, and responsibilities, such as tax implications.

Easier online access to gig work is relatively new, but federal agencies such as DOL and SBA have had ongoing programs designed to assist people with the challenges of self-employment, such as marketing, pricing, and tax implications. In recent years, DOL has funded several grants and programs to gather information specific to improving self- employment programs. However, DOL’s system for receiving and sharing data with workforce boards, WorkforceGPS, does not consistently link relevant resources for these workers to terms that are currently being used to describe the gig economy, such as “gig.” Although there is no universally accepted term or definition for this type of work, WorkforceGPS’s organization of information under topical headers does not capture the connection between gig work and self-employment, making this information less readily available. Therefore, local boards that want or need to help gig workers may have limited knowledge of how or where to find federal resources or may not know that they exist. Further, boards could benefit from other boards’ experiences in this area. Cross- referencing common terms for gig work with existing promising practices related to self-employment or establishing a community of practice could help boards share relevant information. This is especially important now that evaluations from DOL’s Workforce Innovation Fund grants on self- employment have been recently released and could be instructive. In addition, while helping individuals obtain gig work is not the mainstay of the nation’s workforce system, some local boards have nonetheless attempted to serve these job seekers as the gig economy continues to evolve and in instances where such workers are a salient feature of the local labor market. For these particular boards, promising practices on documenting employment outcomes, for example, could lessen the challenges they face in reporting performance outcomes for gig workers served.

Recommendation for Executive Action

The Assistant Secretary, Employment and Training Administration, should take steps to help workforce boards readily find and share information on promising practices related to serving gig workers by, for example, cross referencing promising practices on self-employment and other relevant practices in WorkforceGPS with terms commonly used to describe the gig economy, by creating a community of practice on this topic, or other mechanisms, as appropriate. (Recommendation 1)

Agency Comments

We provided a draft of this product to the Department of Labor (DOL) for comment. In its comments, reproduced in appendix III, DOL agreed with our recommendation. The department stated that it will continue to explore the dynamics of the gig economy and make resources available to the workforce system, employers, workers, researchers, policymakers, and others. DOL also provided technical comments, which we incorporated as appropriate. We also provided a draft of this product to the Departments of Commerce and Education and the Small Business Administration, but they did not have comments. In addition, we provided relevant report sections to the authors of the studies included in our report for their technical comments.

As agreed with your office, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days from its issue date. At that time, we will send copies of this report to the appropriate congressional committees; Secretaries of the Departments of Commerce, Education, and Labor and the Administrator of the Small Business Administration; and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me at (202) 512-7215 or brownbarnesc@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix IV.

Appendix I: Objectives, Scope, and Methodology

We examined (1) what is known about the characteristics of gig workers and the work they perform, including its benefits and downsides; (2) the non-occupational skills and training stakeholders indicate are needed by gig workers and how they are provided; and (3) the challenges, if any, that select federal agencies and workforce development boards cite in providing supports for gig workers.

To address our research questions, we: 1. reviewed relevant federal laws, regulations and guidance; 2. conducted a review of relevant literature; 3. reviewed DOL’s technical assistance website and federal internal control standards that address communication with external parties; and 4. conducted interviews with federal agencies, state agencies, local workforce boards, gig workers, gig companies, and researchers and other stakeholders.

We conducted this performance audit from February 2016 to September 2017 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Review of Federal Laws, Regulations, and Guidance

We reviewed the Workforce Investment Act of 1998 (WIA) and the Workforce Innovation and Opportunity Act (WIOA) to identify changes in performance accountability requirements between the two laws. We also reviewed regulations from the Departments of Labor (DOL) and Education implementing WIOA and DOL Training and Employment Guidance Letters related to performance measures and self- employment, to determine outcome information reporting requirements and the guidance DOL has provided to assist boards in submitting documentation.

Literature Review

To address our first and second research questions, we conducted a literature review to identify key government, industry, and academic studies examining the gig workforce, which we characterized for the purposes of this report as single projects or tasks that a self-employed individual performs on demand for pay. Our characterization included both online and offline gig work. We searched relevant databases, such as ProQuest Research Library, Academic OneFile, Scopus, and SocSci Search to identify reports, dissertations, web references, working papers, and journal and magazine articles studies from 2010 to the present. In order to identify a wide range of studies, we used search terms including: gig economy, 1099 economy, on-demand economy, sharing economy, and informal work.

Our literature searches generated 383 references. In addition to the sources identified through literature searches, we also reviewed studies recommended by federal agencies, experts and internal and external stakeholders. We excluded from our review a total of 330 studies that were published prior to 2010 or did not pertain to our scope, such as those that primarily (1) examined worker classification issues or worker benefits and protections; (2) did not examine gig workers who were self- employed or included workers providing goods or capital assets where the information on workers providing labor services could not be broken out separately from those providing goods or capital assets; (3) included non-U.S. workers; or (4) focused on too narrow of a subset of the gig worker population (i.e. immigrants or workers only in a particular geographic region or occupation).

We conducted detailed reviews of the nine studies that met these initial screening criteria. Our reviews involved an assessment of each study’s research methodology, including its data quality, research design, and analytic techniques, as well as a summary of each study’s relevant findings and conclusions. We also assessed the extent to which each study’s data and methods were appropriate to support its findings that we included in our report. In addition, we conducted interviews with the studies’ authors, as necessary, to gain a better understanding of their methodology and findings. Through this process, we identified and reviewed four key studies that met our topical and methodological criteria.

Search of DOL Technical Assistance Website

To address our third objective, in March 2017 we searched DOL’s technical assistance website portal, WorkforceGPS, using terms related to gig work and reviewed federal internal control standards to assess how information related to gig workers was being communicated to workforce boards. Specifically, we searched the WorkforceGPS portal for terms related to gig work to determine if those searches would result in documents that could help workforce boards serve gig workers (e.g., documents related to self-employment). We searched on the following terms: “gig,” “on-demand,” “freelance,” “independent contractor,” “self- employed,” “self-employment,” “contractor,” “unincorporated self- employed,” “project-based,” “nonemployer,” “sharing economy,” “platform economy,” “digital economy,” “1099 economy,” and “entrepreneurship.” We selected these terms because they reflect common terms used within literature and by researchers and other stakeholders we interviewed to describe gig work. We reviewed the results of these searches and documented those that did not return any documents. We also reviewed the communities of practice list within WorkforceGPS.

Interviews and Site Visits

To address all objectives, we conducted interviews with officials at DOL, including officials of the Employment and Training Administration— headquarters and regional staff—and the Bureau of Labor Statistics; the Department of Education; the Department of Commerce, including the Census Bureau; and the Small Business Administration. We also interviewed officials of the Federal Reserve Board about related research efforts.

State and Local Workforce Development Boards We conducted semi-structured interviews with officials at 11 local workforce development boards in 9 states to identify efforts to serve gig workers (see table 3). Local boards were selected based on a range of criteria, including information collected during initial interviews with DOL and local board officials and industry groups, a private sector report with information on cities with the largest percentages of workers with income from online platforms, and other relevant documents, including our past work on local workforce boards. Of the 11 local workforce boards we interviewed, we visited five—Chicago, Illinois; Gainesville, Florida; San Francisco and Sunnyvale, California; and Vienna, Virginia. Overall, in selecting the boards that we visited in person, we considered factors such as the potential volume of gig workers in the local area; the range of board services provided to gig workers; the opportunity to learn about different forms of gig work (i.e., both online and offline gig work); the role that DOL grants may have played in supporting boards’ efforts to serve gig workers; and opportunities to interview gig workers and gig companies. In these locations, we also interviewed American Job Center directors to examine issues related to gig workers at the service delivery level. In our interviews with local boards, we asked about relevant services for gig workers, non-occupational skills and training, and the benefits and downsides of gig work. Our findings from these interviews cannot be generalized to all state or local workforce boards.

In addition, we interviewed another workforce board, the San Diego Workforce Partnership, about a report it prepared on gig workers, Gig Economy: Special Report (San Diego, California: Nov. 2016). That interview was limited to the report’s methodology and recommendations and did not address issues related to the skills and training needs of gig workers or the benefits and downsides of gig work.

In addition, in almost all states where we interviewed local workforce boards, we conducted phone interviews with state workforce boards, state workforce agencies, or both. In our interviews with state agencies, we asked about issues associated with reporting performance outcomes for gig workers and sources of labor market information related to gig workers, among other things.

In four of the locations we visited—Chicago, Illinois; Gainesville, Florida; and San Francisco and Sunnyvale, California—we held discussion groups with gig workers to obtain their perspectives on gig work. The discussion groups included gig workers—a total of 15 workers across all groups—who had obtained work through online platforms, as well as those who provided gig services offline. The services they offered varied from housecleaning, household repair, delivery, and ridesharing, to professional services such as consulting and software development. In each location, we provided participant selection criteria to local board officials who then recruited workers for the groups. Specifically, we requested that the workers be participating in or seeking gig work and be current or recent clients of the workforce board.

The discussion groups, which we conducted from July through October 2016, involved structured small-group discussions designed to gain more in-depth information about specific issues that could not easily be obtained from another method, such as a survey or individual interviews. Our discussions included multiple groups with varying characteristics but some similarity on one or two homogeneous characteristics, in this case, experience in the gig economy.

Additionally, we conducted interviews with select companies that hire gig workers. These companies included both online platform companies and companies and organizations that hired gig workers offline. We selected online platform companies from a private-sector database of such companies and interviewed the database creator to assess the process used to compile it. We interviewed online platform companies that reflected a range of services that gig workers provide, such as in the areas of transportation, food and goods delivery, and professional services. The offline companies and organizations we interviewed included those in food services, construction, a manufacturing incubator, and non-profits that serve ex-offenders and workers with disabilities. We interviewed gig companies about the non-occupational skills and training needed by gig workers, and the benefits and downsides of gig work.

We also conducted interviews with 30 non-federal researchers and other stakeholders. We identified these interviewees through our literature review and recommendations from experts and internal stakeholders. We interviewed these researchers about studies they had conducted on gig workers and about gig work in general, specifically the non-occupational skills and training needed by gig workers, and the benefits and downsides of gig for workers. The individual researchers and research organizations we interviewed included:

Alan B. Krueger, Professor of Economics and Public Affairs, Princeton

Andrew Reamer, Research Professor, The George Washington

Annette Bernhardt, Senior Researcher, Center for Labor Research and Education, University of California, Berkeley;

Aspen Institute, Future of Work Initiative;

Lawrence Katz, Professor of Economics, Harvard University;

Marina Gorbis, Executive Director, Institute for the Future; and

Penn Schoen Berland.

We also interviewed other stakeholders to obtain a range of perspectives on gig work, and to supplement the information obtained through our gig worker discussion groups by obtaining the perspectives of other entities, some of which represent, advocate for, and share information with gig workers. The other stakeholders we interviewed included:

American Association of Community Colleges;

Center for Regional Economic Competitiveness;

Economic Policy Institute; Institute for Work and the Economy;

Labor Market Information Institute;

National Association for the Self-Employed;

National Association of State Workforce Agencies;

National Association of Workforce Boards;

National Employment Law Project;

National Governors Association;

Renaissance Entrepreneurship Center, Women’s Business Center,

Small Business Development Center of San Francisco;

The Gig Work Project;

The Rideshare Guy blog;

The Workers Lab;

Walter & Elise Haas Fund; and

Washington State University, Washington Small Business Development Center.

Appendix II: Archetypes of Online Gig Workers as Described by the Institute for the Future, 2016

Appendix III: Comments from the Department of Labor

Appendix IV: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the contact named above Andrew Sherrill (Director), Clarita Mrena (Assistant Director), Meeta Engle (Assistant Director), Amy Anderson, Christopher Morehouse, Derry Henrick, Amy Sweet, Holly Dye, Philip Farah, Alexander Galuten, Kirsten Lauber, Serena Lo, Anna Maria Ortiz, and Mimi Nguyen made significant contributions to this report. In addition, key support was provided by Nora Boretti, Elizabeth Curda, Julianne Cutts, Clifton Douglas, Adam Gomez, Charlie Jeszeck, Yvonne Jones, Michael Kniss, Benjamin Licht, Karen O’Conor, William Shear, Almeta Spencer, Tom Short, and Ariel Vega.

Related GAO Products

Contingent Workforce: Size, Characteristics, Earnings, and Benefits. GAO-15-168R. Washington, D.C.: April 20, 2015.

Workforce Investment Act: Local Areas Face Challenges Helping Employers Fill Some Types of Skilled Jobs. GAO-14-19. Washington, D.C.: December 2, 2013.

Entrepreneurial Assistance: Opportunities Exist to Improve Programs’ Collaboration, Data-Tracking, and Performance Management. GAO-12-819. Washington, D.C.: August 23, 2012.

Workforce Investment Act: Innovative Collaborations between Workforce Boards and Employers Helped Meet Local Needs. GAO-12-97. Washington, D.C.: January 19, 2012.