As the gig economy grows, the alternative workforce is going to need new support systems

Joe Procopio
Jul 22 · 7 min read

Much of what you hear about the work habits of millennials isn’t always true, but one trend is becoming increasingly clear: They don’t want their parents’ career.

A growing number of all these side-giggers are stringing together one or more part-time jobs into one full-time, portable, and flexible job. If that trend holds, the gig economy will have as big an impact on our daily lives as mobile devices had on computing (or apps, in a word).

Look at how the app trend unfolded. The short view on apps was social, gaming, and entertainment. The long view was the availability of individualized computing power on a person at all times. Once we jumped from the short view to the long, let’s say 2010 or so, the possibilities and opportunities in that market exploded. That’s where the money was made, good or bad.

The short view on the gig economy is driving for Uber on the side. The long view is the ability to work when you want, for who you want, for as long as you want. Millennials love this idea. Hell, my generation (X) loved this idea, but millennials believe in it strongly enough to live it.

With that in mind, existing businesses, especially startups, need to start taking this trend seriously.

I work daily on a startup making a huge outlay into the support structure for this alternative workforce, and I advise a couple other startups who are doing roughly the same thing in different industries. One pattern I’m starting to see is the value of these support systems lies not in dominating a niche industry, much as Amazon’s fortunes didn’t lie in books and CDs. Rather, the true value is in accommodating career portability, the ability jump from job to job like adventure to adventure.

Career portability is coming, and there’s a possibility it evolves from outlier to accepted standard within the career-span of the millennial generation.

A generation that, by the way, recently became the largest in the workforce.

Self-Employment as a Standard

According to the Wall Street Journal, as told by Deloitte, “Self-employment in the United States could triple to 42 million workers by 2020, and 42 percent of those people are likely to be millennials.”

Millennials are not only more likely to be self-employed, but the percentage of income they receive from alternative employment is staggering, to say the least.

“Between 2003 and 2015, the proportion of individual income that the millennial generation received from contract work increased from 57 percent to 72 percent.”

A lot of that had to do with higher unemployment early in this decade, but even as traditional job prospects improve, that percentage continues to increase. That said, the gig economy is still in a fledgling state, because it’s still very much set up to be the side-gig economy.

“The proportion of income millennials derive from the gig economy may be increasing, but in general, these workers have consistently lagged peers when it comes to total income earned overall. Hiring a contract worker rather than a full-time employee can save organizations up to 30 percent in labor costs; people who leave the gig economy frequently cite insufficient pay as their reason for doing so.”

That phenomenon is causing all kinds of issues, such as heat coming to Uber and Lyft as their drivers face increasing difficulty stringing together a living off Uber and Lyft. This is because, in my opinion anyway, Uber and Lyft were never intended to be full time gigs.

So how do we bridge the full time gap? The answer is probably in that 30% of labor cost savings.

The Solution is More Hours (For Now)

More recently, the gig economy income numbers have actually changed in a positive way. The amount of money generated by the alternative workforce is growing faster than the rest of the economy.

“In 2015, the general millennial population enjoyed a significant increase in median income, but contract workers in this group saw an even bigger jump — to $38,000, up from $30,720 in 2013”

As an entrepreneur and a data scientist, my hypothesis is that the likelihood of alternative employment catching up with the income potential of traditional employment is a curve that spiked, then found a bottom, and is now searching for equilibrium. That equilibrium represents opportunity.

I believe in the short term, the increase in income was due to the number of hours alternative employment could offer as more opportunities came online. Today, the tipping point when a gig goes from job to career opportunity is becoming more and more reachable. In other words, we’re getting closer to gigs offering the kind of hours that used to only be available to full time workers.

And when you think about it, traditional workers usually only work a percentage of the 40 hours a week they’re being paid for anyway.

Working Smarter, Not Harder (or Longer)

The long term fix isn’t sustainable hours though, it’s sustainable output.

The transition that needs to continue happening in gig economy startups is to stop thinking about payment in per-hour earnings and start thinking about payment in terms of output vs the generation of revenue. The gig economy works when its built on the notion that hours are a negative (they cost money) and output is a positive (it brings revenue).

And this is a problem that software and data can fix. It’s as simple as patching the peak earning potential of one or more side-gigs into one full-time gig, but with all of the security (think healthcare benefits), growth (think job training and certification), and longevity (think portable, simple retirement plans) that any cube dweller at Oracle gets.

The solutions lie in replacing “middlemen” with “middleware,” enabling and automating trust in quality, and making job benefits portable by untying them from a single employer.

Independence in the Workforce Meets Independence in Lifestyle

Here’s another cliche that’s being shedded as millennials age — Millennials are finally leaving their parents’ house. But this was never about work ethic so much as it was how they view work and career.

In other words, Millennials aren’t chasing the American dream the way the Boomers defined it and the way it failed for most of Generation X. They’re not graduating college in four years and getting married by age 25 and buying their starter home in the suburbs and having 2.3 kids.

They’re kind of carving their own path.

This is showing up in the numbers. According to BLS data, “At age 21, all the millennials surveyed were contributing approximately 20 percent of their combined household earnings. Over time, however, that changed. At age 33, members of the general millennial population were contributing approximately 57 percent of overall household earnings.”

A lot of the struggles Millennials face — huge college debt, lack of entry-level job availability, over-priced housing, and more — are probably due to the fact that they’re reinventing their career paths within an infrastructure that’s still somewhat based in the 1960s, when we worked for a single company for 40 years and then retired on Social Security and maybe a little nest egg.

Those struggles are leveling off now, another huge area of opportunity.

Accommodating the Knowledge Worker

Another trend in the workforce that’s just starting to take hold is that the value of the worker is again being redefined by technology. White collar jobs are being hit by automation, and job success now ultimately lies not in being able to obtain information, but knowing what to do with it.

Think about how automation impacted manufacturing starting roughly 50 years ago. Those factory robots evolved from tool to threat over time, and now the average blue collar job is around 90% automation, 10% human input. This happens. It’s a side effect of progress.

We’re seeing that evolution from tool to threat in white-collar positions now, where automation and artificial intelligence are creating a split between white collar workers and knowledge workers — or those who manage information and those who make decisions based on information.

In those white collar positions, automation to human need is now roughly 40/60. With knowledge workers, it’s about 10/90, and that 10 is going to take some time to grow, because while AI will be the threat there, that threat is still a ways off. For now.

The opportunity lies in the fact that our education system doesn’t have the infrastructure to retrain blue collar or white collar workers into knowledge workers. It seems like the choice for most young people is either no college or $100K-a-year college.

But the Internet is an infrastructure waiting to accommodate continuing education for knowledge workers. And that’s where the opportunity is, not as an education replacement, but as an education disruptor. The goal isn’t to hand out degrees for students to land 40-hour-a-week jobs at Boomer-founded companies. It’s something different.

Startups Supporting Startups

One end game of knowledge worker support is in startup itself, when we think of startup as the ultimate gig economy position. For example, it doesn’t matter at all how many hours you work at your startup, your income isn’t going to increase until your output does. In that sense, startup is the perfect alternative employment.

We’re just now exploring the cusp on startups springing up to support more startups. We already see this in platforms like Shopify. The next level is a plethora of automation platforms that build everything from customer audiences (from MailChimp to HubSpot), to products (PhoneGap to Xamarin), to delivery systems (Amazon to Apple to Patreon).

There’s a ton of opportunity here in supporting startups, not at the investment and incubator level, but more where the rubber meets the road. To borrow another stupid cliche, it’s the difference between handing someone a can of tuna and teaching them to fish.

Joe Procopio

Written by

I’m a multi-exit, multi-failure entrepreneur. Building Spiffy, sold Automated Insights, sold ExitEvent, built Intrepid Media. More about me at joeprocopio.com

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