Microsoft, The Changing Nature of Work, the Workplace and Jobs

Until recently, most people worked in traditional employer-employee relationships at specific work-sites: offices, factories, schools, hospitals or other business facilities. This traditional model is being upended as more people are engaged through remote and part-time work, such as contractors, or through project-based employment. Some studies have noted that between 2005 and 2015, the number of people in alternative work relationships — which include contractors and on-demand workers — increased from 10 percent to 16 percent accounting for nearly all net job growth during that period. A recent study by the McKinsey Global Institute concluded that “the independent workforce is larger than previously recognized” with up to 162 million people in Europe and the United States — 20 or 30 percent of the working-age population — engaged in some form of independent work. For more than half of these individuals, independent work supplements their primary source of income.

These alternative work arrangements are fueled by advances in technology. Perhaps the most notable trend in this regard is the rise of the on-demand economy. At its core, the on demand economy refers to working arrangements in which people find work through online talent platforms or staffing agencies, performing tasks for a wide variety of customers. According to the McKinsey Global Institute, 15 percent of independent workers use digital talent platforms to connect to work. Researchers at Oxford University’s Martin Programme on Technology and Employment estimate that nearly 30 percent of jobs in the United States could be organized into task-based work within 20 years. The on-demand economy presents enormous opportunities for workers and businesses. McKinsey estimates digital platforms that match workers with opportunities could raise global GDP by as much as 2 percent by 2025, increasing employment worldwide by 72 million full-time equivalent jobs. Here is just a partial list of the potential benefits of the on-demand economy:

• Engagement in on-demand work through digital platforms allows jobs to come to workers, rather than forcing people to migrate to available work. This helps workers who live in areas where job opportunities are limited and enables companies to access a wider talent pool.

• According to the Hamilton Project, more than 70 percent of labor force non-participants report that care-giving, disability or early retirement keeps them out of the workforce. The flexibility of on-demand work reduces the barriers that traditional employment models present. According to a survey by the Pew Research Center, nearly 50 percent of on-demand workers report a “need to control their own schedule.” Another quarter said there was a “lack of other jobs where they live.”

• The on-demand economy offers more opportunities for part-time labor. Today, many workers prefer the flexibility of part-time work to full-time employment. For millennials, flexibility, work/life balance, and the social impact of their work can be more important than a high salary or a full-time career. And many baby boomers are choosing to work later in life, often through part-time work.

• The on-demand economy allows businesses to engage workers on a short-term basis, facilitating business agility and reducing long-term staffing costs. The on-demand economy can be particularly helpful to small businesses that cannot afford a large full-time workforce but can get work done through targeted on-demand engagements. Costs can be reduced further by recruiting freelancers through on-line platforms that feature competitive bids for projects.

• The on-demand economy can provide companies with access to skills they do not have in-house. Hiring freelancers enables employers to find individuals with specific skills and engage them on an as-needed basis.

• The on-demand economy provides access to supplemental income. For instance, the on-line platform Teachers Pay Teachers includes an on-line marketplace where teachers buy and sell lesson plans and other educational resources. While the on-demand economy has the potential to promote greater labor force participation, many concerns have been raised about its impact on working conditions and worker protections. Some of these concerns include:

• Because the on-demand economy is so new, it is stretching the bounds of existing regulations relating to worker protections, including child labor laws and minimum wage requirements. While some on-demand digital platforms offer worker protections, others have taken the position that even baseline worker protections do not apply to the on-demand labor model.

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