The New Era Workforce in the Gig Economy What do they need to succeed. The New Era Workforce in the Gig Economy

AGENDA Welcome, Jillian Boyd, CALED Intro and moderated by Claudia Viek, CEO, CAMEO Explore the data, trends, and opportunities with new research by the Federal Reserve Board with Marysol Weindorf. Understand the Entrepreneurial Ecosystem: Coaching, Capital, Connection to Markets, Climate with Heidi Pickman, CAMEO Solutions of the future, a case study in SF with Natalie Foster of the Aspen Institute Q&A www.microbiz.org

www.microbiz.org Data from the 2015 -16 State of Independence Report Over the next five years we expect the number of Full-Time and Part-Time Independents in America to grow by 16.4% to 34.1 million in 2021, at which time independents will constitute 29 percent of the private, non-farm workforce. If we add the category of Occasional Independents based on the same proportion as today, the projected total number of adult Americans working independently will grow to an estimated 48.9 million in 2021—or just over 40% of the private, non-farm workforce. The number of full-time independents fell by 5%, or 800,000, to 16.9 million. The number of people working part-time in independent work (fewer than 15 hours per week) remained steady at 12.4 million. the Occasional Independents, the 10.5 million people in 2016 who pursue freelance or independent work on an “as needed” or “as desired” basis from time to time but not on a regular schedule. www.microbiz.org

Economic Impact

Senior Community Development Analyst Marysol McGee Senior Community Development Analyst Board of Governors of the Federal Reserve System www.microbiz.org

Survey of Enterprising and Informal Work Activities (EIWA) Presentation for The Gig Economy and The New Era Workforce, a CALED Webinar hosted by CAMEO Wednesday, January 4, 2017 The analysis and conclusions set forth in this presentation are our own and do not indicate concurrence of the Federal Reserve Board, the Federal Reserve Banks, or their staff.

Survey Background Exploratory Survey INTRODUCTION Survey Background Exploratory Survey Designed with three primary motivations Help monitor trends in work opportunities and employment creation especially for low-to-moderate income households and communities Explore the incidence and prevalence of the enterprising and informal work activities ecosystem: online and offline Identify data gaps related to changing job and paid work opportunities online and offline

Overview of the Informal Online and Offline Economy

OVERVIEW OF THE INFORMAL ONLINE AND OFFLINE ECONOMY Issues in the Changing Work Ecosystem Who are the workers in the paid “informal on-line and off-line” economy? BLS part-time jobs since the great recession are holding steady (highest in record keeping of part-time jobs) Where do they live? IRS data indicates a rise in Schedule C (sole proprietor) as well as 1099Misc and 1099K (credit-card payments for services or goods and third-party payment network transactions) How often do they engage in paid “gig” or “on-demand” work? What kinds of paid on-line and off-line work are households taking on? Why do they engage in paid “side” work? CPS surveys indicate that multiple job holding and the self-employed are declining (Katz & Krueger, 2016)

OVERVIEW OF THE INFORMAL ONLINE AND OFFLINE ECONOMY A Snapshot of the Changing Work Ecosystem Source: Dourado and Koopman, “Evaluating the Growth of the 1099 Workforce,” Mercatus Center, George Mason University, December 2015

OVERVIEW OF THE INFORMAL ONLINE AND OFFLINE ECONOMY Where are the jobs? Source: U.S. Bureau of Labor Statistics, Employment levels by industry, seasonally adjusted (numbers in thousands), http://www.bls.gov/charts/employment-situation/employment-levels-by-industry.htm

Enterprising & Informal Work Activities TOP TAKEAWAYS TOP TAKEAWAYS . 19% 31% 27% of total E&I respondents engaged in three or more on-line and/or off-line informal paid work activities. of total E&I respondents engaged in on-line selling of new/used goods. of total E&I respondents engaged in house cleaning, painting, yardwork or other household maintenance activity for pay.

ENTERPRISING & INFORMAL WORK ACTIVITIES Majority of E&I Respondents Participate In One Informal Work Activity Percent of E&I Respondents Engaged in One or More Informal Paid Work Activity Number of Informal Online and Offline Paid Work Activities Asked of all E&I respondents n=2,483

ENTERPRISING & INFORMAL WORK ACTIVITIES House/Property Maintenance is the Most Common Labor Service Activity In the last 6 months, have you been paid for the following? Asked of all E&I respondents. n = 2,483

Selling New/Used Goods is the Most Common Online E&I Work Activity ENTERPRISING & INFORMAL WORK ACTIVITIES Selling New/Used Goods is the Most Common Online E&I Work Activity In the last 6 months, have you been paid for the following? 5% 20% BR-Aug2: QC’d and corrected title 53% 22% Asked of all E&I respondents. n = 2,483

ENTERPRISING & INFORMAL WORK ACTIVITIES Temporary Locations Such as Flea Markets are the Most Common Offline E&I Work Venues In the last 6 months, have you been paid for the following? Asked of all E&I respondents. n = 2,483

Employment, Self-Employment, and Small Business TOP TAKEAWAYS TOP TAKEAWAYS 20% 56% 9% of E&I workers have another full-time or part-time job, in addition to their main job. of E&I respondents reported being employed in the past 6 months. of E&I respondents were self-employed or owned their own business.

Side, “Gig” & Informal Work Activities TOP TAKEAWAYS 65% 50% 25% of E&I respondents that engage in informal paid work activities, do so to earn extra money. of E&I respondents spend 1-20 hours a month engaged in side or “gig” work activities. of E&I respondents indicate that informal work activities have been “very much” and “somewhat” a regular source of monthly income.

Demographics TOP TAKEAWAYS 31% 56% 19% of total qualified respondents report income less than $40,000. of respondents were women. of respondents were 60 years old and over.

Thank you Links: Exploring Online and Offline Informal Work: Findings from the Enterprising and Informal Work Activities (EIWA) Survey Chartbook summarizing findings from the EIWA Survey Community Development and Consumer & Community Development Research Division of Consumer & Community Affairs of the Federal Reserve Board

Communications, Policy Heidi Pickman Communications, Policy CAMEO www.microbiz.org

Understanding the Entrepreneurship Ecosystem The Business Owner Capital Financial Resources Coaching -Training Entrepreneur and Owner Skillset Connec- tion Resource & Relationship Network Culture communities’ perception and support Climate Regulation, Economic Development, and Policy The ecosystem is the support to create and grow new enterprises Capital, Coaching, Connection – Internal to the Biz Climate – Regulation, Policy – where you come in. Culture – communities perception (not going to talk about – it’s local and includes things like buy local campaigns, local investment, local pride) Dell Gines, Kansas City Fed summarized these 5C’s from a variety of entrepreneurship researchers. http://www.forbes.com/sites/danisenberg/2011/05/25/introducing-the-entrepreneurship-ecosystem-four-defining-characteristics/ The most important thing to remember is that the 5 C’s actually interact with each other as well as the entrepreneur. For example, the regulatory and policy climate can influence capital sources. Culture can influence connections and networks. When strategizing for development, the develop has to be cognizant of the interactive nature of all the parts and account for how they influence each other.

Coaching the Self-Employed Business Assistance is the first step in the capital access process 80% who get help succeed + create 2 additional jobs in 2 years Samasource Training equips low-income people with digital literacy and professional soft skills that prepare them for jobs in the formal sector. They use close industry connections to understand what companies need so they can prepare students with the skills needed now. Samasource Trainees are employed through Samasource, employment partners, and as online freelancers. Including helping them to succeed on online platforms They worked in Merced with community college students with funds by the workforce. They showed them how to navigate the platforms such as care.com and handy.com to increase supplemental income and professional development. The important thing is that it was a worforce funded program to teach low income people how to navigate the gig economy Samasource

Coaching the Self-Employed Business Assistance is the first step in the capital access process 80% who get help succeed + create 2 additional jobs in 2 years Centro Business Plan App With a business idea and a phone in your pocket. help anyone write a business plan, but will also provide personalized professional advice, and give access to multiple funding channels to launch or grow a small business. anyone seeking to uplift their livelihood through entrepreneurship should be able to transform their thinking and talents into a viable small business - regardless who they are, where they came from or their current financial status. It’s possible for cities to contract with Centro to provide tools to small businesses. They offer everything from direct training to businesses to train the trainer-type of programs. Last year they did a program with the SBDC of Orange County and helped start more than 60 businesses. Centro Business Plan App

Capital Capital Access Gap - Women entrepreneurs still face challenges getting fair access to capital. Only 4 percent of the total dollar value of all small business loans goes to women entrepreneurs.  Cantwell report: http://www.microbiz.org/wp-content/uploads/2014/07/21st-Century-Barriers-to-Womens-Entrepreneurship.pdf The report proposes expanding microloans and makes SBA’s Intermediary Loan Program permanent to provide more capital to women entrepreneurs. Researchers partnered with Accion Texas to study that question over the course of five years. Their answer? “A lot.” They determined that “[s]tartups receiving funding are dramatically more likely to survive, enjoy higher revenues and create more jobs,” and that  ”loans are more consequential for firm survival among entrepreneurs with [some post-secondary] education and less senior managerial experience.” Receiving a microloan can increase a business’s chance of surviving by over 50%. The team looked at startup businesses that applied for loans using Accion Texas’s MMS system. Because MMS uses a proprietary automated review process to recommend approval or denial of initial applications, the team was able to determine the effect microloans have by comparing borrowers who were otherwise similar, except for whether they received a loan or not. Applicants who receive a loan… are 54% more likely to qualify for future business loans are 54% more likely to survive increase their sales by an average of 41% Average job creation source - CAMEO Annual Survey, Aspen Institute FIELD Success rate source - CAMEO’s Annual Member Surveys from 1999-2009 http://www.microbiz.org/cameo-membership/map-of-microlenders CAMEO members: CDFI’s and non-profit community-based lenders

Connections Connections to Markets Support platforms – support coaching to show how to use CAMEO’s partnering with Youth Business USA and Thumbtack to train YBA mentors on the Thumbtack platform so the mentors can make sure their business clients use the platform to the best of their ability. Etsy example – Other Platforms Size Up Also there’s the connections to each other. - networks

Climate and Culture Regulations, policies – lot can be done at the macro/federal level to make gig workers more financially secure by starting their own businesses. Build out existing microbusiness infrastructure Build out support traditionally provided by employer: Healthcare, portable retirement benefits Classification of workers Self-employment tax Buy Local, Shop and Dine in the 49 Example Oakland Hub; Kitchen Incubators

The next social contract Natalie Foster @nataliefoster

About the Future of Work Initiative The Aspen Institute Future of Work Initiative is a nonpartisan effort to identify concrete ways to strengthen the social contract in the midst of sweeping changes in today’s workplace and workforce On-Demand Economy: How best to advance and protect the economic interests of Americans in the rapidly growing economy of shared goods and services Capitalism 2.0: How best to inspire a 21st-century capitalism for a 21st-century workforce by rewarding employers for reducing inequality, helping workers get ahead, and facilitating access to benefits and protections to secure workers’ futures Warner Fellows: Greg, Natalie – Medium letter Roundtables, working on a) research agenda and b) resource guide for policymakers

What is the “gig/sharing/on-demand economy”? Apps or platforms, often marketplaces, that connect people who provide goods or services with people who want them Labor or Service: Uber, Taskrabbit, Care.com Goods or Capital: Airbnb, Etsy, eBay Many types of work Lower skill: driving/delivery, homecleaning Higher skill: doctors, lawyers, graphic designers Many work arrangements FT W2 (Honor) Self-employed (Upwork) PT W2 (Instacart) Small business (Thumbtack) FT 1099 (Uber) PT 1099 (Taskrabbit)

1099 and contingent work are on the rise Depending on the study, anywhere from 15-54 million people are categorized as contingent or 1099 workers (EPI, Upwork/Freelancers Union) Contingent workers (alternative work arrangements + standard part-time workers) comprised 35.3% of employed workers in 2006 and 40.4% in 2010 (GAO 2015) All net employment growth in the U.S. economy from 2005 to 2015 appears to have occurred in alternative work arrangements (Katz/Krueger 2016) There has been a 22% increase in the total number of 1099- MISC forms issued by the IRS since 2000 (Mercatus Center 2015) The sheer number of contingent workers demands attention – especially true when you also consider the growth of those numbers in recent years

In the sharing/on-demand economy, the number of people earning is still small but growing quickly Just under 1% of adults in the U.S. earned income through the platform economy in a given month More than 4% (10.3 million) participated over a three year period from 2012-2015 47x growth over three year period from 2012-2015 Fastest growing sector of economy (faster than health care, software) Source: JPMorgan Chase Institute, 2016

Geography: Cities in the West are the epicenter for sharing/on-demand economy work San Francisco tops the charts for both participation in and reliance on online labor "gigs” Top five U.S. cities by participation: San Francisco, Los Angeles, San Diego, Seattle, San Jose Source: JPMorgan Chase Institute, 2016

Financial health issues for 1099 workers Multiple sources of income Income stability and predictability Benefits and protections Effective hourly rate

Solutions Portable Benefits Paper: Black Car Fund Uber/Independent Drivers Guild agreement Healthy SF expansion Paper: https://www.aspeninstitute.org/publications/portable- benefits-resource-guide/

Case Study Case Study: TechSF and Gig U pilot in San Francisco Paper: http://www.aspenwsi.org/wordpress/wp- content/uploads/CTWP-BayArea.pdf

Thank you!

Yes! We will send you a copy of the slides! Q&A Yes! We will send you a copy of the slides! Claudia Viek cviek@microbiz.org Marysol Weindorf marysol.mcgee@frb.gov Heidi Pickman hpickman@microbiz.org Natalie Foster natalie.foster@gmail.com www.microbiz.org