The Tech Aristocracy’s ‘Guaranteed Income,’ And A Jobs-Based Alternative

Here in California, the tech aristocracy is active with “end poverty” projects, centered on a government guaranteed income and increased government benefits.

But there are alternative anti-poverty approaches more quietly being undertaken, that are employment-based, and emphasize jobs. One of the most thoughtful of these is in the City of Long Beach, where the public workforce board, Pacific Gateway, is utilizing job assignments in the contingent economy to help low income workers both augment income and gain a foothold into regular employment.

The project, termed “Work LB”, is operated by the Pacific Gateway Workforce Development Board, the public job training and placement entity serving the Long Beach, Signal Hill and Harbor areas. It is led by Nick Schultz, the Pacific Gateway director, who for the past 27 years has been involved in training and placement for unemployed and low income workers. Schultz developed WorkLB, following the closure of the area’s Boeing C-17 facility in 2015, and loss of its middle class manufacturing jobs.

“When Long Beach was faced with the closure of the Boeing 17 facility, we did a deep dive of our demographics and a companion economic analysis. In that analysis it became clear that residents were doing a lot more than accepting or working payroll jobs in Long Beach in order to make ends meet for themselves and their families,” Schultz explains. The use of the gig economy, formal and informal, was extensive, and low income residents were showing considerable entrepreneurial energy, not reflected in official data.

Through a convening of the Bloomberg City Lab in 2015 Schultz was introduced to Wingham Rowan, a former BBC producer, and entrepreneur based in London. Since 2005, Rowan has been the managing director of Modern Markets for All (MM4A), a nonprofit developing labor exchanges for lower and middle income workers. He has written extensively on the potential of these exchanges to assist workers who prefer contingent work as well as those who utilize it while they seek regular employment.

Rowan sees in the gig economy opportunities to harness the entrepreneurship of workers and contractors to assist both. To Rowan, the growth of the gig economy is inevitable in advanced capitalism, the result of both cultural and economic forces. Governments should not shun the gig economy, but seek to strengthen it, by assisting workers in getting gig economy assignments that pay a decent wage, with worker protections.

The structure that Rowan hit upon was a local labor exchange, operated by a public entity. This public labor exchange would not replace the online exchanges operated by private firms, like DoorDash or Handy, but would augment these, and be tailored to local economies. An independent entity, private or public, would serve as the employer of record, to ensure timely and full payments.

Rowan succeeded in establishing several such local labor exchanges in England, and in 2015 and 2016 received funding from the Annie E. Casey and Kauffman Foundations, to test the approach in America.

Schultz garnered support among others in Long Beach government, and the city became the first major test site. A labor exchange platform was launched in 2017, focused on work assignments in the home health care field.

As Schultz explains, “At Pacific Gateway, we heard from the home health care companies that they needed additional workers generally and in peak times. We also knew that there were persons with home health care skills who wanted to earn extra income. We set up a platform to connect the two, with processes of vetting the workers and vetting the employers. We recruited an existing home health care company to be the employer of record, ensuring that the workers were classified as part-time employees, with benefits.”

“We built on the capabilities that Pacific Gateway as a Local Workforce Board already possesses. We recruit workers regularly for local employers and have vetting capabilities. We know how to reach out to workers, and many come in on their own into our centers. We have experience with employer of record structures. Additionally, our platform, CalFLEXI, that Rowan helped build, is an upgrade over the scheduling technology of most of the home health employers.”

In 2018, the project won the US Conference of Mayors’ award for the job/economic development initiative. Additional private funders came forward, Wells Fargo and Irvine foundations, and Pacific Gateway made plans to expand to other fields of hospitality and events and group childcare in early 2020. The first two fields were put on hold following the start of the pandemic in 2020, but childcare moved forward, though pivoting to flexible at-home children.  

“We saw quickly during the pandemic that childcare workers in group settings and paraprofessionals at schools were being laid off, and looking for work assignments. Within a few days we had hundreds of workers. The City provided subsidies for child care under the CARES Act for residents who wanted to go back to work but lacked childcare. Over 120 families signed up for childcare services, and the City assigned an initial 40 hours to each. Some families subsequently received additional hours, others purchased hours on their own.”

Today, the home health care and childcare labor exchanges continue, and Pacific Gateway is in the process of developing additional labor exchanges with work assignments with the city’s public works and parks and recreation departments, that need to staff up from time to time. It also is looking to sign up hospitality and warehouse employers.

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“WorkLB” encompasses only a small number of workers at present. Whether it can grow and operate without large-scale philanthropic or government subsidy remains to be seen (Schultz estimates that it needs to reach $20 million in activity annually, to be viable). Governments, at all levels, do not have strong track records in building or operating labor exchanges.

But the involvement of Pacific Gateway in the process brings several values, including the infrastructure in place to recruit and screen workers, to be in contact with employers, and to understand the local labor market in detail. Most important, it brings an infrastructure to assist workers, as they desire, to transition into regular employment.

The current contingent economy already enables many low income workers to augment their incomes. The major delivery companies, for example, estimate that over 70% of their drivers, are driving part-time to augment incomes. The current gig economy also enables workers who are between jobs to obtain income quickly—enrollment in many gig economy services can take less than a week).

Pacific Gateway, and other Workforce Boards, can add the job placement assistance to those workers who want to move into regular employment. As Schultz describes,

 “Within the contingent economy are those workers who prefer to be gig workers, for a range of reasons, and don’t seek regular employment. But there are many workers we see, the ‘forced irregulars’, who seek regular employment but are unable to find it. By participating in WorkLB, they are able to build a track record, gain experience, and meet employers, and we can better assist them into the regular employment that is their goal.

The contingent economy, or irregular work, thus becomes a portal to regular employment.”         

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For the past few years, the tech aristocracy in California has turned its attention to promoting guaranteed income projects. Facebook co-founder Chris Hughes, through his Economic Security Project, was one of the main funders of a guaranteed income project in Stockton, California, launched in February 2019. In Stockton, 125 lower income residents were sent monthly checks of $500, for over a year. Sam Altman, president of YCombinator, and Slack co-founder Stewart Butterfield are developing guaranteed income pilots, and Jack Dorsey of Twitter has committed $15 million to a national mayor’s group advocating guaranteed income approaches.

This past month guaranteed income even made its way into the state budget. Governor Newsom proposed spending $35 million of state funds to augment local guaranteed income pilots that were had private funding. 

The proponents of guaranteed income claim a range of positive preliminary results from Stockton, including that the $500 per month stipend actually increased rather than decreased the employment rate of participants. With greater economic security, participants, it is claimed, had greater confidence and focus to look for work. If this indeed turns out to be an impact, it is to be welcomed.

But the WorkLB approach brings a more direct nexus to employment and the work world. Schultz and the others connected to WorkLB understand the role that a job assignment, even part time and irregular, can play in navigating into regular employment. Workers advance through multiple paths. Employer contacts and work experience through the gig economy are two of these paths, especially as the contacts and experience are leveraged by a job placement professional, assisting the worker.   

Getting-in-the-door through an entry level position, part-time position, and even through contingent and short term work assignments is a proven workforce strategy for advancing into middle class jobs. A guaranteed income approach can never replace this dynamic.

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