Advanced Markets for Irregular Employment

Business case

Screen Shot 2018-08-09 at 16.54.33Irregular workers aren’t reflected in official data or targets. But adapting employment services to this eruption in labor markets can be cheap with quantifiable benefits.

 

What does it cost? What’s the return?

It’s a chicken-and-egg: Better data on irregular employment is needed to justify launching an improved marketplace. But there won’t be deep, verifiable, data without a more comprehensive market. So, we suggest incremental steps to an understanding of local possibilities/challenges. Doing this unearths the best current data.

First step towards possibly supporting the irregular workforce can just involve convening labor market stakeholders. How ready are key employers, public sector bodies and intermediaries to catalyze any local service? Are there initiatives, pain-points or champions that could easily kickstart a better market? The return on a few hour’s work to put together a roundtable should be a first assessment of local appetite for action.

180207 stuckOptions can then be considered. There are small-scale interventions with traditional cost/benefit analysis: Teach X people how to market themselves as gig workers at $Y each to see an income gain of Z%. But how to analyse a more fundamental, sustainable, scalable option like initiating a local CEDAH (Central Database of Available Hours)?

A small project team can fully research readiness among potential market participants. Realistic messaging de-risks the project: “We are not committing to launch, we are exploring launch”.Only if everything required for a robust, financially-sustainable, organically-growing, local market is in place, might a platform get turned on. Doing this work can produce defensible estimates for savings/growth generated by launch.

What’s the charge for setting up a market? The tech. that came out of UK government programs is in a non-profit to be open sourced. But there are operating costs for any secure, maintained, system. One criteria for launch could be that there must be enough spend committed to the local market for it to fund itself, and some oversight, with perhaps a 2.5% charge built seamlessly into the price of each hour sold.

These are some issues where it’s worth looking at the returns from a successfully launched CEDAH:

 

 

Expanding a tight labor market

Screen Shot 2018-08-09 at 16.55.46However low official unemployment falls there will be many thousands of extra hours in your area that people wanted to work today. 52% of America’s workers seek about 20% more work. 70% of those out of the workforce have medical or care-giving commitments that constrain their availability.

What would follow if employers had visibility and immediate access to these currently hidden hours? How could pinpoint data be used to allocate training dollars?. Can likely growth in labor market participation and benefits of removing brakes on business expansion be quantified?

 

While employment is buoyant, a CEDAH can be constantly attractive to fringe workforces. Seeking a few hours extra work this evening? If you choose to access them effortlessly in a broad, deep, official local market you will have connected into workforce services. If you otherwise would have worked illegally or stayed at home, what’s that done for your future earning potential?

Being plumbed into an official channel could be decisive when the economy turns. Your previously full-time employer may let you go, but they could be amenable to buying your hours at times of need. If they do it through the official market, a range of interventions to cross-train, expand exposure to relevant employers or provide backstop work could be on hand. Again, these scenarios can be evaluated.

 

 

Local resilience

Some outputs of a local market that could be quantified within a “market making” project:

  • Out of the shadows: California alone loses $8.5bn a year in tax from unreported wages. Figures like this can be mapped onto the potential CEDAH’s area. Even though building tax/benefits into transactions, could a new market compete against complexities and risks for both sides of illegal working, if it attracted, say 30% of shadow activity that was only off the books for lack of convenient legitimate channels for labor, what would be the tax gain?

shadow workers

  • Employer attraction: Vying to be the site of a new distribution hub? City officials might show today’s local CEDAH data; How many hours of top-up warehouse workers are available and willing to work at that location? With what skills? Where’s the adjacent pools of provenly-reliable workers ready to be cross-trained? Access to top-ups could be pivotal in attracting businesses that also create jobs. What’s that worth to the local economy?

 

  • Disaster response: Immediate access to thousands of local people’s hours with visibility of skills, experience and terms of work could be invaluable if hurriedly staffing up to search, evacuate, contain or repair areas hit by crisis. Assuming that workforce already exists, what’s the bottom line on faster mobilization?

 

  • Welfare off-ramp: Getting a traditional job can be terrifying, or impossible, for people with complex life circumstances. But an hour or so’s work this afternoon, maybe a few more hours later in the week, perhaps a full day when they’re ready? Can this humane progressive transition into work significantly help the journey to self-reliance for a reasonable percentage of claimants?

 

  • Personal support: Access to child minders, home health aides or workforce navigators are crucial for some people’s ability to work. A better market makes them a more realistic option. Can that additional economic activity be scoped?

 

 

Business Case for workforce boards

Screen Shot 2018-08-09 at 16.46.51America’s public workforce boards typically have the relationships, stability, neutrality and operating expertise required to extend employment services to irregulars.

But boards are railroaded by 6 federal performance metrics constructed around twentieth-century models of employment. A Government Accountability Office report found another problem with supporting “gig workers”; the challenges of gathering data on outcomes.

A mature CEDAH of course instantly solves the data shortfall. How can it produce outcomes aligned with targets?

 

Federal funding

Can mainstream funds for workforce development assist irregular workers? Alignment with three indicators is worth examining:

  • Employer engagement: Only 36% of non-college employers are reported to use workforce services. One state board recently surveyed employers on what they wanted; only 65% said traditional employees. There is a world of organizations using non-standard labor for whom workforce boards currently lack relevance. Get the CEDAH launch right and their repeat use will show immediately.

180207 workforce

  • Credentials: If digital badging and employer induction
    s are counted, a CEDAH should have people who prove reliability attracting training and progressing.

 

  • Progression: Some irregulars want a job and a CEDAH could certainly be the route. But there is also self-employment. Some states, led by Florida, allow a person to declare themselves self-employed without having to incorporate when counting progression off support. Someone working for a portfolio of organizations in a CEDAH could easily attain this target.

 

180207 talentMore broadly, a business case can be built around target groups that the CEDAH puts on a pathway to jobs. Youth will be comfortable with platform-intermediated employment and often favour flexible work, disabled people may need to work in very controlled ways, veterans can be offered progressive routes into obvious-fit sectors with fluid needs; security, logistics, catering, driving.

 

Other funding

If a Governor, Mayor or philanthropy funds a CEDAH, they could impose targets measuring outputs specific to the irregular workforce:

  • Utilization: What percentage of hours offered are being booked by employers?
  • Labor Market entry: How many work-seekers couldn’t work other way? What’s the aggregated trajectory for those tagged as new to the workforce?
  • Progression: On average, what’s the trend for workers’ income, rate of adding skills and hours worked each week?

Obviously targets can be confined to sub-sets of work-seekers: “I want a 30% increase in single-Moms’ rate per hour in the east of the city by Christmas”.

 

180207 50%Compelling factor for business cases

Nobody expects irregular employment to go away. Initiating a fair, sustainable model is probably a “when?” not an “If”.

 

Market making