How Training Gig Workers Can Increase Financial Stability: A Pilot Review (Part 2)

Summary: This post is part of a series on the future of work from Tech4america. It summarizes findings from a new dataset of American residents who were trained how to increase their income through freelance work in the “gig economy.” Part 2 reveals how the pilot training program did, in fact, increase the earnings of participants, indicating that self-employment is a skill that can be enhanced through education. Training may increase income for gig workers as much as other forms of government labor policies and regulations.

As I wrote about in part 1, state agencies face a complicated dilemma helping underemployed residents get back into the job market; encouraging self-employment is a proven way to recover from recessions, yet many people have little experience in the “gig economy”. As a result, a relatively small percentage of freelancers end up earning less than they would, compared to being a steady employee.

Many policymakers are uncomfortable with wide variation in self-employment income; to protect some people from getting into work situations where they earn less, there’s been a smattering of policies: Germany gave cash allowances to unemployed workers to work in a startup, France supplemented income for flexible short-term jobs, and American cities such as California and New York have sought to limit whether some workers can enter into freelance relationships at all.

That is, prior policies have assumed that there is inherently something riskier about self-employment and freelancing. But, a team of economists from Stanford University and Uber had a different theory on the reason for the wide-variation of income in freelancing: lack of experience. Unlike traditional employment, freelancing can be more complicated, since workers must manage their time, earn clients’ trust, and learn when to work during peak hours of consumer demand. If self-employment is a learned skill, then Uber drivers would increase their earnings as they get more experience.

Indeed, this is what the team found: drivers that completed 5000 trips earned significantly more (about 14%).

This finding raises a fascinating policy question: can simple education make gig work more lucrative and financially stable? Fortunately, as we wrote about in the previous post, at the same time as California legislators were mulling legal restrictions on whether gig drivers could be classified as freelancers, San Francisco was piloting a program teaching underemployed residents how to be better freelancers.

The typical participant would receive 8 hours of in-person or online training in how to get jobs on various gig platforms, set up a profile, do their taxes, and develop client relations.

Topline Results

Tech4America obtained data from roughly 400 of the program’s participants, with income data from the first month, six months, and nine months after graduation. The longitudinal survey allowed us to see whether people could be trained in better gig work strategies.

— Training does, in fact, correlate with increased gig earnings. The median increase in monthly income was $111/month (the total median gig income was $645)

— The median increase in income for part-time driving and delivery gig workers was $319/month (calculated by looking at the largest difference between one, six, or nine months, with part-time work defined as 15–34 hours per week).

— Income derived from freelancing often complimented employee-derived income. For those in driving and delivery, 31% of income came from gig work (calculated by taking the median fraction of income from gig work in month 6).

Conclusions

The gig training pilot shows promise that self-employment is a skill that can be taught — and this training can yield meaningful increases in incomes. Considering the fact that a gig worker may earn roughly an extra $6,000/year, training may be comparable to other cash subsidies or regulations currently being considered for self-employment public policy.

The data suggests that the reason why some people struggle with freelancing is a simple lack of experience.

However, there are important qualifiers: as we stated in our previous post, the income data is based on surveys, the sample size is relatively small, and only the first nine months was observed, even though gig work income can significantly increase over a few years. Subsetting this small dataset by multiple categories (part-time, drivers, etc.) often means that the conclusions are based on a small number of people. The program was not randomized, so it’s difficult to know how exactly a scaled-up version of gig training would impact workers.

Additionally, the amount of training was pretty light. Typical vocational education programs last months and can involve intensely hands-on career coaching. The typical worker received about eight hours of training and little support after graduation. Would a gig training program comparable to other more hands-on vocational programs yield stronger results? Perhaps.

Regardless of future regulations or policies, self-employment is likely to become an increasingly important part of the future of work. Governments spend significant resources preparing workers for traditional employment, so it makes sense that they should consider devoting resources to support and education for self-employment as well.

*My statement of conflicts of interest here.