Your Sunday mind bender. The future workforce and the Zebra economy

SUMMARY:

We need a more level headed discussion about the future of work in the context of relentless digital transformation and the application of advanced technologies for predicting required workforce levels.

terms of employment

In a post recession world, there has been much heated, polarized and often ad hominem debate about the future of work and entrepreneurship.

On the one hand we see hard evidence that the so-called middle class of the U.S. – largely working class in the UK but you already get the political language coloring the debates – are faced with declining living standards as evidenced by disposable income and with no end in sight.

On the other hand, we see observers who believe that despite the relentless march of automation and now the implied threats of applied artificial intelligence to many job types, there is an abundance of opportunity. These people see small business opportunities afforded by the likes of Etsy, Uber, AirBnB and many others who are capturing network effects that either optimize assets and/or disrupt otherwise stable business sectors.

The Zebra economy

In the Exponential View weekly update (do subscribe – it is an extremely good read) provided by Azeem Azhar but crafted this week by Saul Klein, I was taken by Klein’s resurfacing of a 2015 argument that says entrepreneurship,

…once the pursuit of the few, was now the necessity of the many. With the public sector and established businesses contracting through automation or disruption, tens of millions of people around the world would surely need to become founders to take control of their own economic futures: I called them Zebras.

In that argument, Klein interweaves the opportunities afforded by the networks with a discussion around the role of public policy. It is a useful addition to the broader ‘future of work’ debate which is often missing in the narrower ‘winner v losers’ discussion offered by others. Indeed, I felt that Vinnie Mirchandani’s otherwise useful and optimistic Silicon Collar failed by side stepping the politically laden problem of the disenfranchised middle/working class. I said: 

The glaring hole in these [story supported] explanations points directly to the failure of governments of many stripes to provide the framework around which markets can operate efficiently but without the inherent dangers of stifling regulation.

Bizarrely in my mind, it’s not a topic of widespread discussion in a year where we have already seen the UK vote to leave the EU and where there is the real possibility of the US experiencing its own version of Brexit in the form of electing Donald Trump as the next President.

Looking back and at current events, it is hard to position Brexit, or the possibility of a Trump presidency as anything other than massive protest votes against the status quo.

At the risk of jumping feet first into a bucket of political crap, I think that Silicon Collar could have delivered a knock out punch to his thesis by looking more closely at the role of government rather than extolling the reader to get off his or her proverbial backside and look (solely) at the world of opportunity.

In his analysis of the Taylor report last week, Stuart Lauchlan concluded:

For the government, UK Prime Minister Theresa May insisted that 21st century working practices need to avoid over-regulation and deliver a labour market that is “a home to innovation, new ideas and new business models”, while ensuring that “people working in the ‘gig’ economy are all properly protected”.

This report was always going to be controversial – whatever side it came down on, it would alienate another group of vested interests.

The Gig Economy elements are the ones that have attracted the most attention as the ‘Uber factor’ kicked in, but the wider report raises some interesting questions about the future of work, including the impact of AI and robotics.

Back to Klein who says:

…the future of the world of work is not going to be without debate, so here is the IPSE’s deputy director of policy on shortcomings of the report: failing to clarify what self-employed really means.

The critique to which Klein refers argues that:

Flexibility needs to work both ways, Taylor says, and he is absolutely right. British consumers, businesses and the wider UK economy have greatly benefited from the flexibility offered by freelancers, gig economy workers, those on zero-hours contracts and the self-employed.

Reality gap?

I am not so sure that Klein’s Zebra argument, compelling as it sounds on its face, will lead to better outcomes for the many. It may hold up for that small number of people who see opportunity in the face of adversity but does it really hold for the many? Does Klein’s observation in the FT (subscription required) back in 2015 ring true?

My Uber driver, Nathier, owned his car, like many of his peers across the world, and he loved making a living on his own schedule. But he did not want to stop there: he was ambitious and wanted to build a fleet and to manage other drivers so he could move from being self-employed to becoming an entrepreneur. He was not a unicorn like Larry Page (CEO, Google) with a degree from Stanford, just a zebra with a driving licence from the Cape Flats.

It’s a lovely, feel good story but I often think is too easy for those of us who are both privileged and fortunate enough to enjoy a relatively comfortable life to view the world of opportunity uncritically and without understanding the very real impact that sudden job loss has on the person who’s been hit by a Reduction In Force (RIF’d.)

Equally, while Chamberlain calls out benefit from zero hours, I can cite many examples where the uncertainty of those types of contract leads to genuine but lumpily experienced hardship. Then we have the hotly contested impact of Uber among drivers. I encounter moderately happy people but when I make that case I am quickly trolled by those who yell ‘exploiters’ (see comments.)

A basic problem

Whichever way you see it, my fundamental problem in all these discussions comes down to a basic and simple question: in an economic environment where demand isn’t going anywhere but where cost is continually being sucked out through AI and other digitally inspired measures that is in turn fed directly to business owners rather than shared, where does the demand come from that pulls the middle/working class along in a fruitful way? After all, the evidence is everywhere that trickle down is an illusion. So – if all we are talking about is replacement rather than expansion, then are not many of these discussions redundant and representative of a tinkering around the edges to accommodate the ‘new normal’ while tacitly accepting the status quo for those who are already ‘winners’ in the economic game of life?

A bigger problem

More prosaically, I wonder what this means for the world of contracting as business seeks to take advantage of gig-economy style working coupled to things like the zero hours regime.

If we assume that the definition of ‘self employed’ is recast to a more interesting ‘dependent contractor’ model then I can imagine an explosion in the numbers of people appearing in that segment. In turn, that will mean massive upheaval for HR departments unfamiliar with concepts like seasonal employment of the kind often seen in agriculture but which could be predictively managed to allow for peaks and troughs in demand across multiple industries.

We see a form of that already in the clumsy attempts to appropriately staff public transportation services and airport catering services during the day. That’s just a beginning.

Regardless of how you see these issues working out, of one thing you can be certain. Technology will quickly drive the kinds of change in the working environment that will put pressure on policy makers to rethink ‘work’ and ‘entrepreneurship.’ In that context, I am inclined to agree with Klein about where governments should place their bets but less hopeful about government’s ability to understand how this works.

Bonus points:  check out this series of charts (PDF) on the impact of austerity and public sector spend patterns.

Image credit - via fotolia - andiafaith

    Comments are closed.

    1. Dennis, two points

      – It is fashionable to talk about disappearing middle class both in the US and UK and somehow link that to Trump election and the Brexit vote. The middle class by my analysis is vibrant in both. I have looked at plenty of IRS and BLS, retirement fund and census data. Yes disparity between the top and bottom has grown but the core middle is still solid. And it does not begin to factor that cost of many products has improved in the last 20 years. Yes, real estate, healthcare costs have ballooned but most manufactured products have not. Also we have way more choices in products and services that our parents did. And within the middle class, if you analyze demographics by age you see wealth in form of retirement funds and real estate scales nicely as people age. Besides my finding lots of data so many refuse to look at, I tend to depend on walks around neighborhoods in my travels. I have not seen too many empty aisles in CostCos, Southwest flights, Marriott hotels, GM dealers. These do not sell to the very rich or very poor. They solidly sell to the middle class.

      – The other point I commented on Stuart’s post is we need to quit calling it the “gig” economy and specifically focusing on the Uber/Lyft segment. That’s not even 1% of the labor force. We many layers around platforms, franchises, contingent staff and small businesses among others – see my post The “clover-leaf” talent economy. http://bit.ly/2sUpxhf And in the US we have 5 million unfilled jobs which suggests wages and middle class incomes can only head upwards.

      There are bottom of society issues that clearly need tackling but dont buy into selective data that the middle of the bell curve has disappeared.

    2. Behind the curtain: The gig economy is internet demand creation matching skills and delivery in the same way digital ad-tech matches attention. Uber being the poster child.

      Powering this is a hidden funding source. ICOs not IPOs. 100 initial coin offerings are projected this year at about $20 million per pop (is that $2 billion…)

      Before founding TechCrunch, Michael Arrington was a securities lawyer who worked on Amazons IPO, he has invested in an ICO. ICOs are commonly for blockchain ledger technologies. More accurately they are Agoric marketplace distributed systems. Often times with platforms and apps like Uber.

      Under the umbrella of logos covered by Diginomica only SAP seems to have cottoned on to agoric systems fostering blockchain technologies in Leonardo. Many have jumped the gun to Etherium blockchain ledger platforms to trade assets: Uber was an early mover. Now others funded by ICOs are working to remake the talent economy by building platforms to do so.

      Very exciting times ahead for enterprise agoric platforms.

      https://www.crowdfundinsider.com/2017/07/119263-p2p-real-estate-blockchain-platform-propy-announces-board-includes-techcrunch-founder-michael-arrington/

      https://medium.com/@ecsa_team