News from the Freelance, Gig, On-Demand, Sharing Economies: A Mixed Bag

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Though we can’t agree on how we define and label them and how big and significant they actually are, there seems to be a consensus that, increasingly, new ways of arranging and performing work are emerging in many different places of the economy. These work arrangements are shorter and more fluid than what has been the norm, they involve workers that are not permanent employees of firms, they are often intermediated in some way by some kind of digital platform and they are raising contention about how laws and regulations should be applied.

For contingent workforce and services procurement practitioners, we have argued that what is happening points to additional ways to source and consume skills, knowledge work and services. (Visit our Contingent Workforce page to follow our coverage.)

Whatever this new world of work is, developments in an around it now surface every month. This a short summary of such developments from just recent weeks, presented at face value for you to peruse and consider.

LinkedIn Announces it is Proud Parent of ProFinder

On the heels of the announcement that LinkedIn is being acquired by Microsoft, LinkedIn recently made a public announcement that its new baby, ProFinder, has grown and is looking more viable. ProFinder is basically a way for organizations and independent professionals to find one another in local markets and do their business. We covered rumors of the start of the ProFinder pilot program back in October 2015.

Recently, LinkedIn reported that ProFinder has registered some 50,000 professionals across more than 140 service areas (the company did not disclose the number of engagements transacted). Today, projects can be posted on ProFinder at no cost; providers, as they are called, can respond to an unlimited number of projects, but they must be registered for the Business Plus subscription (about $60 a month). LinkedIn is upfront that it is still evolving the business model and that it will likely change over time (read: monetization). But if LinkedIn can pull this off, it should be a watershed event for this new economy.

To read more, and have a look at some juicy LinkedIn statistics about freelancing trends, check out the announcement.

Is Freelancing All It’s Cracked Up to Be?

Deloitte’s recent of survey 4,000 workers produced some findings that raise some questions about how great the gig economy is from the standpoint of workers.

  • Not quite a vote of confidence, 67% of those who had worked as an independent contractor said they would never do so again
  • Less than half of those workers who had been freelancers “were very satisfied with their experience, and more than half (56 percent) said the most important benefit of full-time employment is the steady income”
  • Among employed workers, 60% “said that their stability would suffer if they moved to independent contract work, and 42% worry about sacrificing good compensation and benefits”
  • Overall, about 40% of all the workers surveyed believe that “independent contracting offers more flexibility to work where, when and how they want to as compared to full-time employment,” but identify “inconsistent cash flow and lack of employer-paid benefits as drawbacks that discourage them from pursuing independent work”
  • Apparently a company’s culture was also a factor in determining worker choices. Among those respondents who had worked independently before “nearly half said that a lack of connection to a company’s culture would discourage them from working independently in the future”

Despite the challenges, Deloitte reported that “more than one-third of respondents (34%) said they would consider working independently.”

Read more about Deloitte’s perspective on independent workers and how businesses should react.

Arizona’s New IC Classification Laws: Prophylactic or Palliative Measure?

Arizona’s declaration of independent business status law and another independent contractor classification law went into effect earlier this month.

One of the new Arizona laws allows business “contracting with an independent contractor to prove the existence of such a relationship by having the independent contractor sign a declaration,” a National Law Review article reported. The second law recognizes “independent contractors as individuals or entities using a qualified marketplace platform’s digital platform to provide services to third-party individuals.” What it all means remains to be seen.

In case you missed it, read our own detailed coverage of this development.

IRS Opens a New Resource Center for Sharing Economy Participants

In recognition of what it terms the “sharing economy,” the IRS launched a new online website called the Sharing Economy Resource Center “to help taxpayers involved in the sharing economy quickly locate the resources they need to help them meet their tax obligations.”

Bringing unprecedented clarity to these new developments in the economy, the IRS noted that the sharing economy has been an emerging area of economic activity that “has changed how people commute, travel, rent vacation places and perform many other activities.”

“Also referred to as the on-demand, gig or access economy, sharing economies allow individuals and groups to utilize technology advancements to arrange transactions to generate revenue from assets they possess — such as cars and homes — or services they provide — such as household chores or technology services.”

The IRS is also taking additional steps to bring sharing economy participants clarity about appropriate tax treatment in different situations. In addition to launching this online information center, the IRS also reported that the sharing economy will now be “a special focal point for tax professionals” this September and beyond at IRS Nationwide Tax Forums held at various locations across the country.

So is the IRS trying to become an enabler and not just enforcer? Hard to say. Read more at the IRS website and see what you think.

Summing It Up

The news items reported above are from just the last month — likely just a few of probably a greater number. Accordingly, it’s hard to deny that something is happening. And it appears just short of impossible to predict how it will all shake out — when, where and how. Nevertheless, it cannot be ignored, and insight can be gained through following developments, identifying trends and analyzing and synthesizing all that information.

While presented in an unstructured form here, you can avoid all of the heavy lifting by tuning in to our leading edge coverage and commentary at Spend Matters Contingent Workforce content portal (and enroll for email updates while you are there).

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