What Is “Work Arrangement Intermediation (WAI)?” And How Is It Changing?

OnlineLaborWhat is “work arrangement intermediation” or “WAI”?  In abstract economics terms, it is the intermediating mechanisms that match supply and demand in labor markets.  In more concrete terms, it’s how work arrangements get established between workers with talents, capabilities, and skills and the business/organizational entities that must have work performed (the outcome of these work arrangements can be full or part time jobs, contract gigs, crowdsourcing processes, etc. etc.).

In the not so distant past, “WAI” mechanisms consisted of word-of-mouth, personal/professional ties, newspaper classified, resumes and fax machines, staffing agencies, etc.  Needless to say, labor markets (relative to say financial trading markets) have been relatively informationally inefficient, high friction, etc.

Over the past, 13 years, digital technologies have come to play more and more of a role in ”WAI.”  From late-1990s to the most recent severe recession, digitization has crept along, mostly automating traditional  labor supply change practices/processes with electronic (parsable) resumes, job boards like Monster, company career sites and applicant tracking systems (what amounted to not much more than “paving the cow path”).

But with the recession of the late 2000s, it became very clear that “WAI” mechanisms were “not doing their job.” It was also becoming clear that industry increasingly needed more flexible and variable “work arrangements” and different and rapidly changing skills, and existing “WAI” mechanisms were being pressed to enable more flexible and variable “work arrangements” and faster and more efficient matching/closing of work requirements/needs and skill/talent suppliers (workers). It also became clear that labor supply/demand challenges were not just problems of a locally dysfunctional “spot market,” but there were deficiencies of a much more global scope (especially on the supply side–in other words the adequate development of right-skilled workers through training and education processes and institutions).

In the years since the last recession, there has not only been an obviation of the above problems and shortcomings in “WAI” mechanisms, there has also been increasing (largely entrepreneurial) innovative exploitation of digital technologies (social, mobile, cloud, informatics (AI, semantic, etc), big data, et al) and new social and platform service models to attempt to address these issues/problems. One can definitely say that we are now seeing (increasingly over the past 5 years) the emergence of a broad range/growing populations of “smart service systems” in the domain of “WAI.”  These include social networks like LinkedIn, flexible work platforms like oDesk or Elance, crowdsourcing platforms like Innocentive or Lionbridge, big data aggregators like Entelo and TalentBin, testing/assessment (by doing) platforms like Gild or Smarter.  We are even seeing the focus of “WAI” expanding to smart service systems that integrate labor demand with supply up-stream (in terms of training and education).

The take-away here is that “WAI” is becoming a crucial area of emergence of digitally driven and integrated “smart service systems”–and this wave of development is still at a very early stage–not yet close to cresting on a maturity curve.  Change has already been underway for several years, but what happens in the next several years (by 2020) will be a more pervasive transformation of how work is intermediated and the forms of work that can be intermediated.  Perhaps the most serious question is the extent to which static or slowly changing labor and tax regulations will dampen this transformation (or the extent to which the economic benefits associated with digitized, smart “WAI” will hasten regulatory adaptation/change).

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