Institute For The Future

It's not about Uber: Beyond the W-2 vs. 1099 debate

Article by Marina Gorbis and Devin Fidler
Originally appeared on Re/Code on June 19, 2015

Following the Second World War, the anthropologist Margaret Mead famously wrote:

"All of us who grew up before the war are immigrants in time, immigrants from an earlier world, living in an age essentially different from anything we knew before."

Today many of us feel like immigrants again, as the very underpinnings of our society and institutions—from how we work to how we create value, govern, trade, learn, and innovate—are again being profoundly reshaped.

The recent ruling by the California Labor Commission that an Uber driver should be classified as a W-2 employee, not an independent contractor, highlights the strange new landscape we are in. The issues it highlights, however, go well beyond Uber. They force us to confront the challenges of transition to the new reality of work. And the danger is that we will use old classifications, like W-2 and 1099, to solve problems that are unique to this new landscape, laying groundwork for polarization and years-long legal battles. More importantly, we may miss a once-in-a-century opportunity to address long-standing inequities and build a labor economy for the future that is fair, creative, and suited to the tasks of the 21^st century.

There’s no argument that the current on-demand economy is highly challenging. Whereas a decade ago, workers in the U.S. and Europe worried about jobs being outsourced overseas, today’s companies such as Upwork and Bench.co can assemble teams “in the cloud” to provide sales and customer support, help with editorial work, conduct research, and perform many other tasks. New digital platforms are beginning to act as real-time global online staffing agencies, but staffing agencies that bridge borders and integrate the global workforce at levels never seen before. Meanwhile, coordination platforms like Uber and Shyp, are multiplying almost daily, powered by smart synchronization algorithms that can route tasks to those who are best qualified and available to perform them. Together, these platforms are breaking down jobs into tasks that are accomplished not by traditional employees but by armies of people willing to work on demand, efficiently organized to produce and deliver products and services with convenience and at speeds never seen before. They are reinventing the meaning of jobs as we’ve known them.

As new forms of work and value creation begin to take shape, we find ourselves at a threshold moment. We are poised, perhaps, to have the wrong conversation in our public media and policy circles. Our human temptation when confronted with a new landscape, a new territory, is to judge what we don’t yet understand by old measuring sticks. The California ruling is an expression of this. It forces this new category of workers into a familiar framework—1099 vs W2. However, they do not neatly fit into either one. Many of them work on multiple, sometimes competing, platforms (many Uber drivers also drive for Lyft and combine this with other on-demand work). Based on our ethnographic research, most of these workers value flexible schedules. Some, particularly artists and musicians, decide to work for a few months and then take a break and focus on their craft. Imagine having to hire and lay off people several times a year. Finally, new platforms could potentially improve access to work for millions of people, as recent McKinsey study points out. While some of the platforms do not require high skill levels or provide high pay, increasingly this new mode of working is expanding to higher skilled occupations, e.g. accountants, doctors, financial planners, and others. It is precisely the flexibility and accessibility of the new work styles that make them so attractive to so many people.

Clearly we need to ensure that this new category of workers enjoy fair wages and the benefits of the social safety net. However, such protections and benefits should fit the new work realities. The emerging work landscape calls on us to re-think traditional notions of work, jobs, and the social safety net. One of the difficulties in thinking about the future is that we often view arrangements and concepts we have grown up with—that is, those within a lifespan—as immutable. We tend to think that what we know and have direct experience with is the only way things work, the only way to organize our society. The new reality will be different and rather than applying old standards, we need to understand the future on its own terms. Specifically, we need to understand the internal logic of the new platforms, the labor economics that drive them, the design elements that could maximize their positive aspects, and the full array of challenges and opportunities they represent. Now is our moment to step up to the biggest design task the world has ever undertaken: to blueprint for people who work and indeed to rethink the future of work itself.

Ensuring economic and regulatory infrastructure to enable sustainable livelihoods for citizens is arguably one of the most urgent national issues of our time. Today we have a choice: we can be thrown into the new world of work as castaways, naked, dazed, and ill-equipped to cope with the new hostile landscape. Or we can arrive as enlightened immigrants, open to the new opportunities and ready to learn the new culture.