Next:Economy – what is the research saying about the future of work?

SUMMARY:

Alongside the emergence of the on-demand or gig economy, there is a pressing need to help people understand how the future of work means a need to refresh or learn new skills. That’s proving much harder than it might at first seem and especially for those at the low end of the income/skills ladder.

robots-typing-machinesWe’re drowning in predictions about the future of work. It seems like every year another prediction comes out saying that a combination of automation, robots and globalization will wreak havoc on the world of work. And while it is true that in some parts of the world, unemployment is at stubbornly high levels, there are those who question the basis upon which the broad base of statistics are compiled.

My friend and intellectual sparring partner Vinnie Mirchandani is convinced that labor statistics do not reveal the extent to which new jobs are emerging. In an email conversation he said to me:

There is no single version of truth when it comes to labor estimates. Part of the fear of job losses from machines comes from inadequate/inaccurate government estimates of labor. In the US, businesses report headcount on monthly or quarterly returns. Not all accurate. The hospital pays my wife like a contractor (she works 4 days a week) but sends her a W-2 which is for employees.

Government doesn’t ask each employer how many accountants, programmers etc They ask us on annual individual returns our occupation but few people know the precise job categories they should indicate. Some like my wife should report multiple occupations. So, the government does nationwide sampling by job category, and the census every ten years makes adjustments.In the US, immigrants throw off counts.

We have anywhere from 12 to 20 m undocumented illegals in agriculture, construction, another few million in H1 and Fi visa trainees in IT and other STEM professions, plus many legal immigrants in transition – you get a green card  first, then qualify to become a citizen in a few years.

All in all a best guess, and yet markets closely watch the monthly jobs report -:)

Mirchandani theorizes that there are as many as 30 million ‘jobs’ in the emergent economies associated with contingent, contract and gig economies. He may be too conservative. In Raising the Floor, Andy Stern cites a 2015 report that says:

A 2015 survey commissioned by the Freelancers Union and Elance (a web-based platform for online, contingent work) found that 53 million workers had engaged in supplemental, temporary, or project-or contract-based work in the past 12 months. In other words, 34 percent of the total US workforce is freelance. These 53 million are equal to the aggregate number of full-time workers in 35 states…

…This explosion in contingent work isn’t simply an American phenomenon. According to a 2015 report by the International Labour Organization (ILO), only one-quarter of the world’s workers have permanent jobs. The rest—fully 75 percent of the world’s workforce—is employed in temporary jobs, on short-term contract, or in informal jobs without a contract.

I’ll return to Stern’s argument for a Universal Basic Income in my next story but for the purposes of this one, I want to focus on the nature of work as it is currently unfolding. It is in that context I was interested to learn what the man/machine workplace of the future is going to look like. At Next:Economy, I listened to the observations of Mary Gray, a researcher at Microsoft, Virginia Hamilton of the US Department of Labor and Kate Lydon, portfolio director at IDEO.

I’ve known for a long time that one of the main purposes of applying technology has been to help drive down cost. It is a major feature in almost every IT projects. Starting in the early 1990’s, ERP was touted as a way of reducing the labor cost of managing business processes, which in turn, allowed for the emergence of the business process outsourcing industry based upon labor cost arbitrage.

I thought the cost reduction process that characterized the 1990s and early 2000s had come to an end. Indeed, in the 2010-2015 period, it seemed that the technology emphasis had shifted to that of improving top line revenue. I was wrong. The post recession economy has not led to increased consumer spending yet companies have continued to post ever larger profits. Why?

There are many possible explanations but the one that comes up time and again is that technology is continuing in its relentless pursuit of lowering costs, largely through the elimination of jobs or changing job patterns. Robots and AI may be the current flavor of the technology month, but in raising these topics, we are also raising the question of what work and jobs mean in the 21st century. Phil Fersht argues that advancing automation allows us to rethink business processes again in a post-BPO world but that it will come at a price – fewer jobs.

For her part, Virginia Hamilton noted that:

A recent study by the Federal Reserve of San Francisco showed that while unemployment had returned to more normal levels, the rate of involuntary part time employment was at an all time high. This has implications for people who may need to be trained, learn new skills or whatever because in this economy, (the traditional safety net of) the full time job where employers placed bets on work no longer apply…There’s a whole set of issues around skilling and particularly for the low wage worker.

In Hamilton’s world, government is only just starting to understand what this means. Mary Gray added to that saying:

I don’t think we’re paying enough attention to how much the technologies we’re looking at are completely redefining what constitutes the skills one needs. I feel like the language of skills is becoming almost impossible to fathom and is obsolete…when we talk about the need for workers to catch up and skill up, we’re doing people a dis-service because we’re not equipping them to work in this economy.

Gray argues that the on-demande economy is not a new phenomenon but a technology enabled evolution of the concept of contract labor.

According to the studies, contract labor is the only job growth area we’ve seen in the last decade. If that’s the common state of work then we have a different set of needs and certainly a different set of training requirements but we’ll also need a different form of social safety net that doesn’t assume a full-time W-2 job is around the corner…The reality of these on-demand platforms is that it opens up a global conversation about labor but we are not having those conversations today.

Moving the discussion forward, Hamilton noted that while many low end jobs are being automated, the idea that there will be continuing growth and a pathway to improvement is not a given. Citing the example of check out kiosks in restaurants, she said that in comparison to the past, workers operating those systems are not learning ‘counting back’ math skills that could be useful on a path to a better future.

The implications are profound because in Hamilton’s view, the current wave of technology is not freeing up people to become more useful and creative but accelerating a dumbing down.

We’ve worked with a number of non-profits that are trying to help disadvantaged groups. One person I spoke with recently said that at 21, people who have not been exposed to the skills needed believe it is too late to learn topics like algebra.

That’s got to be depressing but then Kate Lydon strikes a more encouraging tone when she said that work is one of the aspects of life that affirms our place in society and in this economy:

We’re having to design for starting at a place that is empathetic to the person’s needs but at the same time making them feel good about work.

Gray added that one of the by-products of the on-demand economy is that people are naturally networking to help one another but this is happening entirely via services like Skype or SMS and so while there is no objective way to measure the results, there is a form of collective working that allows individuals to find the best match both as consumers and providers of services.

As the conversation came to a close, I was alarmed to discover that US employers can legally discriminate based upon a person’s employed/unemployed status. That needs addressing because in the on-demand economy, understanding what constitutes work is much more fluid and harder to define in traditional terms.

My take

Listening to this panel, I came away with mixed feelings.

On the one hand, my desire to hear that people have stability in their lives was not met. The current conditions are unstable, uncertain and deeply worrying, especially with the unspoken problem of exploitation  lurking in the background.

The fact that government is in experimental mode for certain aspects of the problem and specifically in the field of training and skills education was a surprise but I was left wondering when the period of trying out different things and tinkering around the edges comes to an end.

Unlike some of my colleagues, I am of the belief that the speed at which technology is not just providing new toys to wonder at but also impacting the nature of work at a very basic level has enormous implications for the shape of the future workforce. It’s not a topic I hear too much about from the major technology providers. Neither do I hear much said by companies who are reviewing or implementing new HR systems. It’s a topic I plan to explore in the coming weeks and months.

Image credit - © ktsdesign - Fotolia.com

Disclosure - O'Reilly Media comp'd my ticket for attending Next:Economy.

    Comments are closed.

    1. Sarah lafferty says:

      Den, if you read my last comment again you might notice that I violentally agree with you and have been trying to be supportive. I don’t buy into voodoo economics any more than you do. I personally witnessed its failure. All I’m saying is that governments successfully sold trickle down economics so let’s turn the argument on its head to lobby for and fund a new system.

    2. Dennis to clarify the :30 million ‘jobs’ in the emergent economies associated with contingent, contract and gig economies.”

      At least 15m of those are full time in franchise jobs, alt heath, ethnic groceries etc.

      And my numbers are US only. Plenty such jobs in most developed countries.