With 2015 winding down, the debate over the gig economy has moved from W-2 versus 1099 into a potent look at whether talent platforms will lead us to a flexible work utopia or a systematic transfer of risk from companies to freelancers. Looming behind this debate is a potentially bigger job disruption via robotics and automation.
“A historic transformation in the nature of work”
Yowza – where do we begin? Let’s start with a new entry in Tim O’Reilly’s curated WTF Work Futures collection, Designing a New Operating System for Work. Marina Gorbis and her colleagues at the Institute for the Future, “worked with 70 thought leaders, technologists, and social inventors” to author 10 Strategies for a Workable Future (PDF link).
The paper focuses on the rise of “talent platforms”: the emergence of technology-enabled talent pools with global reach. Work evolution? Nope – a drastic change from 300 years of wage labor. Gorbas frames this massive shift:
- We are at the beginning of an historic transformation in the nature of work and structure of American jobs.
- A host of technologies, from automation to digital platforms for coordination of tasks. are reinventing not just what people do to earn a living, but at a much deeper level, how we organize to create value.
It’s not just a shift from full-time to freelance. The fundamentals of career advancement are threatened:
For the new class of on-demand or platform workers, there are no career ladders to climb and often no human bosses holding you accountable. Your “manager” might even be an algorithm that breaks down jobs into individual tasks and automatically routes them to the best qualified and available “gig worker.”
Gorbis defines career provisioning by large companies as an “operating system for work” that is now being supplanted by a new one:
Large organizations are a kind of technology, a technology for scaling up economic activities while minimizing costs of doing so. You could think of it as an operating system for work that’s been running for a century. And now we’re creating a new operating system, based on always-on Internet, mobile devices, social media, sensors and geolocation technologies.
The central point of Designing a New Operating System for Work is that it’s up to us to embed into this new “operating system for work” the proper ethics, in the form of worker support. Otherwise this flexible/powerful new working model will be undermined:
This new operating system for coordinating human activities and creating new kinds of value could also be riddled with catastrophic bugs, pushing large swaths of the population to labor at subsistence levels, with no benefits and little predictability over their earning streams. We need to address such challenges before this operating system is ingrained in our way of working so that mistakes we make become societal-scale problems.
Gorbis and her colleagues are not fans of the W-2 employee relationship, seeing it as a poor fit for this new model. They propose that the benefits employees once derived can be “literally and metaphorically” programmed in such a way that workers can be matched with jobs and information can be democratized.
They provide a host of creative examples, such as an algo-driven platform that matches you with a new project. A different platform might provide training to increase skills. Benefits could be portable; companies like TaskRabbit and Uber could ” contribute their fair share to your Shared Security Account that sticks with you, not the company paying into them.”
For such a seismic shift, Gorbis and her colleagues are surprisingly upbeat. They believe these new ways of working will provide superior flexibility and autonomy: “We shouldn’t go back to the old operating system. We have planted the seeds of something better.” (I don’t remember planting any seeds, but I’ll get back to that).
They boil down their recommendations to ten points:
- Combine the best of investor-owned and commons-driven platform models
- Solve for both transparency and privacy
- Integrate marginalized workers in a sustainable economy
- Ensure opportunities for workers to advance outside of traditional organizational hierarchies
- Support worker-owned identities
- Create ways for workers to bring their voices together
- Reinvent benefits to follow workers everywhere
- Integrate learning and work
- Prepare youth for “the hustle”
- Champion a Good Work Code
Note: “champion a good work code” has nothing to do with developers; it’s about a code of conduct. This phrase is inspired by Good Work Code (goodworkcode.org), which has compiled eight ethical principles for on-demand work.
Another angle – talent platforms can help with global labor problems
In June 2015, McKinsey and Company published a more persuasive view of talent platforms, Connecting talent with opportunity in the digital age. McKinsey’s piece had deep data, a global view, and a 100 page PDF to pore over.
McKinsey’s thesis is less futuristic and more about our labor woes. Their position:
- Labor markets around the world haven’t kept pace with rapid shifts in the global economy, and their inefficiencies have taken a heavy toll.
- Millions of people cannot find work, even as sectors from technology to healthcare struggle to fill open positions.
- Many who do work feel overqualified or underutilized.
In other words, talent platforms are not about creating new ways of working, but about fixing a global labor system that’s already broken:
These issues translate into costly wasted potential for the global economy. More important, they represent hundreds of millions of people coping with unemployment, underemployment, stagnant wages, and discouragement.
Numbers are produced to bolster the global labor inefficiency argument: in many countries around the world, 3o to 45 percent of the working-age population is either unemployed, inactive, or working part time. This tallies up to 850 million impacted people in Brazil, China, Germany, India, Japan, the UK and the U.S.
McKinsey defines talent platforms broadly, spanning everything from Monster.com to digital marketplaces like Uber. These platforms can go a long way towards addressing these global “labor market dysfunctions.” or so McKinsey believes, by more efficiently connecting work and job seeker. By the numbers:
- They project a supply-side analysis of $2.7 trillion, or 2.0 percent, added to the global GDP by 2025 via talent platforms. That means increasing employment by 72 million full-time-equivalent positions.
- Up to 540 million people could benefit from online talent platforms by 2025.
- As many as 230 million could find new jobs more quickly, reducing the duration of unemployment, while 200 million who are inactive or employed part time could gain additional hours through freelance platforms.
McKinsey’s boldest (and most compelling) stance? Countries such as Greece, Spain, and South Africa, bogged down with high unemployment rates could benefit most. Among advanced economies, McKinsey thinks the United States could gain the most, “because of the relative fluidity of its job market.” But they acknowledge that the “potential is lower in China and Japan as a result of their low unemployment and other barriers that limit adoption.”
But they really hit home with their assertion that these platforms can provide skills transparency, giving young people a more accurate view of their educational requirements. In theory, this would enable countries to better invest in digital job education. McKinsey asserts that there is an $89 billion misallocation of educational resources in Brazil, China, Germany, India, Japan, the United Kingdom, and the United States.
McKinsey also projects a 9 percent productivity increase for companies that use these platforms to identify and recruit candidates. Unlike the New Operating System for Work position, McKinsey sees potential gains in full-time employment from such platforms, to the tune of 72 million full-time-equivalent positions (part of this may be due to McKinsey’s more expansive definition of talent platforms to include job boards).
Barriers to these projections are acknowledged. Issues include broadband needs, outdated labor market regulations, work benefits shortfalls, data ownership and privacy.
These contrasting reports on talent platforms advance the discussion by moving past a narrow focus on employee-versus-freelance, e.g. “Is Uber good or evil?”. That narrow debate is far too limited for the upheavals on the way.
The strength of “Designing a New Operating System for Work” is its focus on humanizing work platforms. Gorbis and her colleagues are correct to insist that systems are not neutral. Issues like portable benefits and converting worker contributions into equity can be baked into platform design – if those who design such systems have good intentions, regulatory motivation, external/competitive pressures, or some combination of the three.
Point 9, “prepare youth for the hustle” hits home. It’s not just about job skills – if we don’t teach skills for adapting to platform life, we’re going to fall short. That means everything from self-branding to time management to personal finance. “Teaching kids to code” is great, but teaching kids to create on the fly and monetize where they can is the harder job – that’s the “new hustle” aptly named. But as the paper notes, validating that is going to be tough:
Positive platforms can help children safely prepare for this rough and tumble world, but how will we shift the measures of academic success to gauge the readiness of students to participate in an emergent, on-demand labor economy?
The “operating system for work” paper is diminished by polishing the future of work with the sheen of flexibility and autonomy. Too many freelancers are freelancers by desperation. The “we” who invented these new ways of working are pretty darn good at creating wealth for themselves and their investors; some are good at saving companies money through reverse auctions and other cost efficiencies. But they aren’t very good at creating lucrative and rewarding work for freelancers.
I know plenty of freelancers who would happily trade their so-called “flexibility” for a good old-fashioned commute and a healthy paycheck with benefits. Most anecdotes I hear from the on-demand world are stories of necessity, desperation, or at best modest income streams.
The McKinsey piece is a welcome corrective, arguing (correctly) that the existing system is already broken for sizeable chunks of the world’s population. That gives us new urgency: whether this new way of working is better than the old is irrelevant. What’s relevant is we must own the change and try to steer it for the better.
McKinsey’s weakness is in its massive projections. Numbers like “2.7 trillion added to the GDP by 2025” are hypothetical and encourage passivity. Sure, those numbers could benefit a wide swath of the population. They could also go off the rails for any number of geo-political reasons.
Neither report spends too much time on the robotics/automation angle, but even in the case of Uber, the near-inevitability of self-driving cars will force a rethink of skills across sectors. That’s another angle to the life skills piece: if we’re trading stability for flexibility, we’re also trading formal degrees for constant skills growth, with the hope of evolving our skills before we are supplanted.
On-demand training may be the best platform capability of all, but that doesn’t mean people are taking advantage. I have yet to see a young person tell me about a great course they are taking on Lynda.com. They are better than me at texting though. Something tells me that’s not enough.
Image credit: Turn back time © Sergey Nivens – Fotolia.com