Workforce Development

GAO: The workforce development system does not adequately prepare workers for independent work

October 26, 2017  • Ethan Pollack & Hilary Greenberg

The nature of work is increasingly unstable and uncertain. Growing numbers of workers are now engaged in independent work – short-term, project-based work where individuals provide services independent of a stable, traditional employer-employee relationship. And technology is increasingly capable of performing tasks previously done by workers, changing the skills that are necessary to hold a job and threatening disruptions to various sectors of the workforce.

These trends make our workforce development system especially critical. Independent workers do not have stable employers to train them; they must develop skills themselves. Independent workers also have diverse skills needs, requiring both soft skills such as customer service and time management, and business skills such as marketing and financial literacy. And as workers of all kinds face disruptions, they should have a system that provides pathways and training to return to work.

The rise of independent work presents policymakers with an opportunity, as it can be used as a stepping stone for workers reintegrating into the labor market. New technologies connect workers to an array of project-based work. These are not traditional jobs that provide long-run stability, but they can be a way for workers to maintain existing skills and acquire new skills – as well as provide a vital source of income – as they continue to search for more stable employment. And if workers find themselves enjoying project-based work, they are better prepared to transition into formal self-employment by starting their own business.

The workforce development system should meet the needs of independent workers and help disrupted workers connect to independent work opportunities. Our current system does neither.

We need a workforce development system that meets the needs of independent workers, and helps disrupted workers connect to independent work opportunities.

Unfortunately, a new report from the U.S. Government Accountability Office (GAO) finds that our system often fails to do either. Through an extensive research process, which included interviews with officials at selected federal agencies and workforce development organizations, GAO examined existing programs that serve gig workers and noted areas in which this population lacks the tools necessary for improving their employment options and conditions. The GAO found that the workforce development system does a poor job of consistently utilizing nontraditional forms of work when moving unemployed workers back into the labor market. While some job centers actively connect workers to nontraditional work, many do not.

The GAO points to a number of reasons:

  • Mission Confusion. Many state and local workforce officials reported feeling as though the goal of the system was to connect unemployed workers to full-time, traditional work, and thus connecting them to nontraditional work would be inconsistent with their mission. Of the 11 local workforce boards interviewed by GAO, five boards indicated that their staff members felt unprepared or uncomfortable sharing information about gig work opportunities with job seekers. Furthermore, workforce officials in two states expressed a belief that federal and state law actually prohibited them from promoting nontraditional work. While DOL states that no such limitations exist – at least at the federal level – this concern remains a challenge.
  • Inadequate Data Tracking. State and local workforce boards have expressed that they face issues in reporting and tracking performance outcomes specifically for gig workers. Employment and earnings data from the Unemployment Insurance (UI) system are used to show the effectiveness of both training programs and re-employment services. Unfortunately, these data only include earnings from traditional employer-employee relationships. If boards want to track earnings from nontraditional work, they must use supplemental wage information, which often requires an intensive effort on the part of the boards’ staff, as well as the cooperation of independent workers, many of whom are reluctant to provide their income information on surveys. The difficulty in collecting nontraditional earnings means that boards and job centers have a disincentive to move workers to nontraditional jobs.
  • Poor Knowledge Sharing. WorkforceGPS is DOL’s interactive online platform designed to promote knowledge sharing among state and local workforce boards. The WorkforceGPS website offers resources, fosters peer-to-peer connections, and serves as a platform to supplement other technical assistance efforts. Unfortunately, GAO found that it was difficult to find information on the platform specifically related to the gig economy. This is primarily due to the fact that locating the information in WorkforceGPS that is applicable to independent work often requires multiple searches and fails to yield relevant results.

Overall, the GAO found that “The [workforce development] system’s focus has been on providing services that help job seekers move into work that is defined by a traditional relationship between an employer and an employee, rather than the more temporary relationship between consumers and providers that is present in gig work.”

The workforce development system should be modernized to incorporate nontraditional forms of work. In light of the GAO report, policymakers should consider the following proposals:

  1. DOL Clarification. The report states that some state and local officials believe that in order to serve self-employed workers, a “change in ‘mindset’ on the part of the workforce system” is needed. DOL should make it clear to state and local workforce boards that there is nothing in federal law or regulations that prohibits workforce boards and job centers from promoting nontraditional work, and that connecting unemployed workers with gig work is not only consistent with their mission, but actively encouraged.
  2. Better Data. Policymakers should explore options to make it easier for local board and job centers to track self-employment income of workers who have completed training programs and/or received job placement assistance. They should consider adopting the recommendation of the Commission on Evidence-Based Policymaking to create a National Secure Data Service (NSDS), which would link existing data and provide secure access to those data for exclusively statistical purposes in connection with approved projects. The NSDS could potentially facilitate access to IRS income data, which includes self-employment income of every American worker.
  3. Improve WorkforceGPS. Finally, DOL should take steps to help the workforce boards find and share information on promising practices related to preparing workers for independent work on its WorkforceGPS site. This includes establishing common terms to describe independent work and the “gig economy,” and linking these search terms to promising practices that are currently only linked to the topic of self-employment in the WorkforceGPS system. In addition, independent work should also be considered its own subject area, with unique practices that may not be relevant to self-employment. The GAO report explicitly endorsed this action.

Ethan Pollack is the Associate Director for Research and Policy at the Future of Work Initiative. Hilary Greenberg is an intern at the Future of Work Initiative.