How online platforms are misaligned with late-career workers

The wonders of internet technology and the advent of the gig economy have given hope to many highly skilled workers that their reputations built up over many years can help them transition from a traditional office-based job (with all the associated pressures) to freelancing work in which they provide clients with similar services but gain more control over their lives.

Yet when it comes to such transition by older workers late in their careers, there is an acute problem in this assumption: there is reputation system misalignment between the historic system they relied upon to evaluate their value and the way that online platforms operate based on the work actually arranged on that platform, finds research co-authored by Sienna Helena Parker, Assistant Professor in Information Systems at Cambridge Judge Business School.

We call this a ‘cold start’ problem and it’s especially acute for late-career workers seeking to change their working pattern, but this has not been well studied or understood.

We find that these late-career workers who make a change to freelance work often need to recalibrate not only their professional worth but also their motivations for making such a move that is more challenging than it might look before they take the plunge.

The misalignment found by Sienna particularly affects late-career workers for a key reason: people at an early stage in their career are more likely to accept a temporary loss of status through a freelance portfolio because they see it as leading to future rewards, whereas late-career workers often make the change to freelance work in the expectation that this will enable work and career to become less central to their lives – “placing greater value on finding immediate satisfaction in what they do rather than striving for professional advancement”, says the research published in the leading journal Administrative Science Quarterly. 

Freelance platform ratings systems amplify the cold-start issue

The research focuses on workers aged 55 or older with at least 30 years of work experience, who have throughout their careers signalled their “skills, expertise and potential through credentials like job titles, company names and educational degrees”, but these signals often do not translate to recognition by the freelance platforms used to match high-skilled workers and clients. Instead, such platforms often amplify the cold-start problem through a ratings system that requires such workers to build credibility only through transactions using that platform.

It’s a vicious cycle: “Workers’ non-platform experience contributes little to their platform-specific reputations, making it nearly impossible for them to begin securing work until they engage in activities that garner ratings promoted by the platform’s algorithms and consequently, valued by clients,” says the research.

“In other words, actors on a platform can build reputations only from interactions captured within the platform’s systems.” Another complicating factor: the sort of hustle required to achieve these ratings resembles the pressure and stress these older workers sought to leave behind by transitioning to freelance platforms.

Older workers are the fastest-growing part of the labour force

These findings matter, given the changing demographics of the labour market including longer life expectancy and overstretched, less-generous pension systems. Workers aged 55 and older are the fastest-growing workforces in many countries, so it’s important to understand how such older workers can effectively transition – or not – into platform work. In the US, while members of the baby-boom generation are well past official retirement age, more than two-thirds of those born between 1959 and 1964 said in a recent survey that have no plans to retire before 2030, while the US Labor Department says that the share of workers age 55 or older is expected to climb to 23.8% by 2033 compared to 15.1% back in 2003.

The research by Sienna focused specifically on workers who retired from full-time organisational employment but sought to continue work through a freelancing platform. Yet the cold-start findings have broader implications in that similar situations arise when experienced workers switch sectors and when people move to new countries seeking recognition for their credentials.

“People spend their careers building reputations and expertise – why should all of that be lost during a transition?” asks Sienna. “As career transitions become more common throughout the life course, especially into later life, organisations need systems that allow for portability – lest specialised knowledge be lost and workers’ livelihoods impacted.”

The authors said they were aware of only one previous study that specifically examined late-career platform workers, but that concerned the driving platform Uber rather than freelancing for skilled professional work.

Challenging assumptions on how people shift to freelance work

The new research challenges 2 key assumptions in previous studies about people transitioning to freelance platforms later in their careers: that to surmount the cold-start challenge workers must commit to making freelancing online a central part of their professional identities, and that online freelancers view the transition through a long-range time frame in which they invest “time, effort and discomfort” now in order to win future opportunities

“A more nuanced approach would reveal how platform-based freelancing careers unfold differently for workers at various career stages,” says the research by Sienna, changing assumptions about what constitutes success in such work. As late-career workers seek to make work a less central part of their lives in favour of other pursuits, “they may be unwilling to justify sacrificing the present for future rewards.”

Study based on 60 older workers using the Upwork platform

The study was constructed by studying how late-career workers navigate the cold-start issue through Upwork, an online labour platform that matches freelance workers with clients and has an extensive ratings system: workers create profiles and apply for jobs, while clients post job listings and manage freelancers’ work. The platform is one of the world’s largest in this area, which (as of 2022) had 12 million registered freelancers collectively earning more than $3.8 billion and completing projects for nearly 800,000 clients.

While Upwork does recognise a worker’s previous experience through ‘Rising Talent’ and ‘Expert-Vetted’ badges in a worker’s profile, earning those badges still requires freelancers to engage in platform-specific activities such as obtaining a skill certification from a designated vendor. “If freelancers do not complete these activities in the specific ways that Upwork designates, their prior non-platform work experiences are not aggregated and captured by the platform’s algorithms,” says the research.

The study’s sample included 60 workers aged 55 to 83 (46 of them holding a bachelor’s degree or higher), with a median tenure of 2 years on Upwork’s platform and a median age of 66. A coding system was devised to analyse semi-structured interviews with the participants.

The stark findings of these interviews: “More than frustration at having to build a platform-specific reputation, our coding revealed that informants were most perturbed by a fundamental misalignment between how they had built reputations earlier in their careers through credentials and how reputation was constituted by ratings on the platform.”

Interviews with participants highlight frustration with freelance platforms

Among the interviews, here are some excerpts:

“Like Manuel and Bernard, all late-career workers in our sample described wanting to continue working but with a redefined relationship to their work. They sought to make work less central, more compatible with the rest of their lives and more intrinsically gratifying. How they expressed these motivations varied, but the underlying desire to decentre work was shared across informants.”

Late-career workers recalibrate their approach or abandon freelance platforms

The research clearly identified 2 pathways of how late-career workers respond to the cold-start problem: persisting through the ratings system or abandoning the freelance platform option.

Those who decided to persist did so, while retaining their decentring goal, through recalibrating their approach – adjusting “both their motivation and their sense of professional worth to accommodate the platform’s demands, but in a way that preserved their broader goals and self-conceptions.”

Take Ted, a former business owner and executive in the consumer packaged-goods industry, who focused on aspects of the new work he found satisfying:

“I knew I had interests I would love to pursue after selling the company, and it so happened that coincided with this Upwork thing … In the beginning, it was a lot of work … playing around with answering surveys, taking jobs that looked interesting but didn’t pay much, that sort of thing … [Interviewer: Why do those jobs?] It was the psychological rewards of being involved, whether with artificial intelligence for a lead generation company or quantum computing.” 

Redesign of online labour platforms could better recognise prior experience

The authors emphasise that their goal in conducting the research was not to make claims about whether the ratings systems in these platforms were useful, but rather to point out the misalignment that these systems pose to late-career individuals contemplating a freelance career. They suggest that online labour platforms could through redesign modify their algorithms for search and recommendation to place more weight and visibility on credentials alongside their current platform-specific metrics.

“Our intent is to bring attention to how ratings-based reputation systems may undermine online freelancing platforms’ ostensible goal of catering to experts and professionals. In other words, our study suggests that a previously unelaborated consequence of algorithmic visibility in platform work is the potential preclusion of a considerable population of workers who join platforms because they want to continue using and applying their relevant prior knowledge and skills.”