What the Changing Nature of Work Means for Entrepreneurship
Bottom Line: Entrepreneurship creates economic independence, wealth, and societal value. Perhaps most importantly, it creates jobs. The changing nature of work, including the online platform economy, has implications for both economic independence and entrepreneurship. Policymakers should create a new employment classification to reflect the new economy.
Platform economy work is found in various industries and includes work at all wage and skill levels. It may look like a traditional job ― delivering food, for example ― or like a micro-business, such as producing and selling craft goods online.
Today, 16 to 34 percent of Americans make their living through such non-traditional employment. Research suggests that all net employment growth between 2005 and 2015 was the result of such alternative work arrangements.
The platform economy is attractive to workers for many reasons, including flexibility and the ability to earn extra money. Platform work can be full- or part-time and may supplement other income.
Platform economy work could act as a trial run or stepping stone to entrepreneurship, yet research suggests that the platform economy also makes people less likely to undertake lesser-quality entrepreneurial ventures since platform work is less risky. The platform economy, in other words, reduces much of the risk associated with entrepreneurship while still allowing for economic independence.
The platform economy falls between traditional W-2 employment and independent contractors (1099), necessitating a new category that is a compromise between the two of these. Critics argue that such a third category will lead to increased legal battles about which workers belong in this new category ― something that happened in Italy after it adopted a similar third category.
To respond to the platform economy, policymakers should:
1. Rethink how social insurance is distributed ― for instance, make benefits more portable across jobs, and make unemployment insurance more flexible to cover nontraditional work.
2. Facilitate asset building and accumulation ― raise asset limits for public benefit programs and create savings accounts for children to help workers make career decisions based on passion and ideas, rather than necessity.
3. Make education forward-looking ― fund more research to determine what education and job training should look like to prepare for the emerging economy.
Read the full report: “What the Changing Nature of Work Means for Entrepreneurship” by Emily Fetsch, Kauffman Foundation.
- Platform economy work is found in various industries and includes work at all wage and skill levels.
- It may look like a traditional job, like delivering food, or like a micro-business, such as producing and selling craft goods online.
- To respond to the platform economy, policymakers should rethink how social insurance is distributed, facilitate asset building and accumulation, and make education forward-looking.