Interview 3: Terry Westfahl

Reading Time: 7 minutes

Terry Westfahl is the Vice President of Human Resources at Graef.

Tim: What’s your background in dealing with and what’s your role? What do you do?

Terry: I have been in human resources for 30 years. I’ve worked in a number of different industries, but in the

last 15 years I have been, primarily engineering and architectural areas. I work with employees from a standpoint of finding them, courting them, bringing them on board, and then maintaining, developing, and having a relationship with them. And during that time I have to make sure that we are all on the same page.

Tim: There’s a lot of debate right now that technology is destroying jobs. Some folks are saying that we’re going to see emergence of new kinds of jobs. What’s your opinion on that? In the engineering space, are more jobs being created?

Terry: I think that in the long run technology is helping us be smarter and will make us more able to work on compelling problems versus the churning, day-to-day problems. I think in this millennia is going to be about complex problems such as how do we make sure there is good drinking water and how infrastructure is going to be maintained—those kinds of things instead of the more mundane things that employees have been dealing with in the past.

Tim: Do you think in the engineering and architectural space the very mathematical, very logical jobs are going to be automated or has that already happened?

Terry: I think that the different CAD programs have taken a lot of the design work out of something that we used to spend a lot of time on. In each decade I have seen another layer of tools that doesn’t require as much human work, but at some point I don’t think it’s always going to be the case. At some point we alway need the higher intellect of the human brain.

Tim: What skills do you see is being the resilient ones, the ones that are going to move forward that you’re looking for assuming math, science, all that’s there.

Terry: Creativity, problem solving outside of the box, collaboration, and foresight. You normally don’t think of engineers as creative individuals. But in the complex world, the people that can solve problems in creative way are the ones that are going to be the differentiators.

Tim: Work is evolving. You’ve been in the human resources space for a while so you’ve got a perspective on this. There’s a lot discussion about how do we handle this contingent workforce, but companies have been handling it for a long time in various ways. Is the hype around it warranted? Is there a sea change happening now? Or is this something that’s been in the mix for a long time?

Terry: I think that it has been in the mix for a long time. I think what scares people is that there is this new way of thinking about it that is more expansive than it has been in the past. Nnow the conversation around this is the new normal. We could have up to 50%, 60%, 70% of our employees that are contingent workers and that’s scary. But when you think about the pros that come along with that it really becomes more exciting because skill sets are going to need to change as a manager. The people that you’re going to be employing are going to be more creative, better at problem solving, and more collaborative rather than this employee who doesn’t get along with that employee because they’re so stressed out because they’re doing stuff they don’t like to do. So many people come into work because they have to. In this new space it feels as though people are designing their work-life with more intention. There’s an element of excitement from an HR perspective that you get to help create this work-life that’s exciting and passionate for employee versus trying to engage them, retain them, and motivate them. I think engagement, retention, and motivation will begin to come naturally out of this new way of thinking about contingent workers.

Tim: I really like what you said about helping design employees’ work life-with them. That’s a compelling thought that  as someone in HR, you role is to help workers design their work-life. What’s has struck you recently that has you thinking, “I need to start paying attention to contingent work and the way that work is changing.”?

Terry: We always talk about the challenge of finding enough engineers for the future, and the future is getting closer and closer. The baby boomers are going to be retiring more and more rapidly, and millennials are coming in, and they need something different than what we’ve offered in the past. There’s no ignoring it anymore. There’s no putting our head in the sand anymore. We have to do something or we won’t survive. I want to be a survivor, a thriver, and I think those that push their worry about this to next year are going to be left behind.

Tim: You’re starting to prepare for the change in work and trying to integrate it into the business side.

Terry: Right. If we wait and start worrying about the problem when we no longer have the engineers it’s already too late. We have to look at all the possible pipelines, and contingent work is going to be a big pipeline.

Tim: How do workers need to think about this differently? You working in an engineering company. Being an engineer is a good job. What should workers be doing to make themselves attractive over the long-term? Whether they are contingent or employed, how should they be thinking differently?

Terry: I always go back to collaboration. That is really a skill set that I think is going to determine whether or not you’re someone that the employer leans on or if you’re someone that we have to develop. The ability to collaborate, listen to others, figure out how to make the solution work is really important. The basic things like math skills, the reading skills are definitely important too, but the ability to collaborate is really where I think employees and people who are graduating need to focus. We all want to do it our way, but in this global world that we’re living in, collaboration is the biggest skill.

Tim: This is interesting considering the major attention being given to STEM with the emphasis on science, technology, engineering, and math. Yet we’ve talked a lot about about creativity, problem-solving,  and collaboration. In certain ways, this is a liberal arts emphasis that is emerging.

Terry: Right. And when you look at who is getting promoted up through the ranks, they’re technically sound, but they are also the ones that are able to bring people together and solve problems. They can collaborate and are creative. I never really put those two things together, but you’re right in that it’s a liberal arts kind of skill set. These skills are often considered to be the soft skills, but they are really hard in that they are measurable, they increase productivity, and they reduce cost. These skills are as hard as they get.

Tim: How should businesses be thinking about talent differently?

Terry: Businesses need to put themselves in the world of talent. We’re not the prize anymore. We need talent,, and in order to have a good partnership we need to be putting what they need on at least the same level as what the business needs. Because without talent there is no product or service to give to clients. We’ve gotten very comfortable with saying, “What are you bringing to the table?” We need to be saying, “We’re in this together. Let’s figure out how we both can win.” There is so much area for both parties to get exactly what is wanted.

Tim: In order for this shift in work to be positive, what systemic changes do we need?

Terry: Compliance is huge. With the way that we’re going, we need to reconsider how to categorize employees so that they can move seamlessly between outside the employer world and inside the employer world. Right now employers are afraid to use independent contractors because of the way the regulations are set-up. The IRS is adding agents for this purpose and they’re making it more difficult to categorize someone as an independent contractor. In the event that they are misclassified, there are tax implications, there are fee and penalty consequences, and there are benefit consequences. It’s just easier to stay in the traditional employee-employer relationship. If the compliance piece isn’t dealt with, we’re going to have an uphill battle. But I think that there’s this force around the discussion today that is not going away. It’s going to eventually be resolved, but there needs to be more focus on how to resolve the compliance issue sooner. Because as an industry, let alone as a country, we’ve got to have things in place that allow us to be quicker, faster, better, and worrying about all these regulations that result in whether or not a person is an independent contractor or employee is not helping anybody.

Tim: I just have two more questions. What are your top two or three big challenges that you are trying to figure out from the business side as it concerns this shift in work?

Terry: Talent, talent, talent. It is our top three problems. That’s something that I think all industries are dealing with. HR people are not sleeping at night because of concerns around bringing talent in, keeping talent, developing talent. That’s huge. And then the next level becomes the cost of the talent; health insurance cost is astronomical. Those would be the two main ones, but the three at the top are all talent.

Tim: What do you think is the big opportunity right now for companies and workers?

Terry: I think this is a really exciting time. There are so many opportunities to rethink all the things that have bugged us in the past. We’ve all wanted flexibility in the past. We’ve all wanted to spend more time with our children. We’ve all wanted to feel like I’m 100% when I am at home and I’m 100% when I’m at work. And yet we haven’t had the tools or the mindset to allow us to have it all. I think that we’re in a position to allow both our own and the generations coming to have that. And this is what we want for our friends, family, and the world really.

Tim: More productive, healthy, happy lives?

Terry: Right.

Tim: Thank you very much for your time.

Work Future 7: Anchor Institutions Need to Lead

Anchor institutions are important for economic or community development1. For those not acquainted with the term, anchor institutions are organizations that are stable in their current position and are expected to successfully carry out their missions over long periods of time. Examples of anchor institutions are hospitals, universities, and large corporations. These organizations tend to be less affected by local conditions due to their scale. They tend to have the ability to experiment to a degree without threat to their bottom lines. Anchor institutions are often pillars of development strategies because of their relative predictability and ability to experiment. The premise is anchor organizations can implement desired changes that would potentially sink less stable and smaller organizations. This leadership role needs to be embraced by anchor organizations when it comes to laying the groundwork for how work is done in the future.

Many anchor organizations have already implemented certain aspects of the gig economy. To meet the scheduling demands of running a 24/7 operation, hospitals routinely offer positions of 20/hr/wk, 24/hr/wk, 28/hr/wk, 32/hr/wk, 36/hr/wk, and 40/hr/wk along with pool and on-call positions. According to the American Association of University professors, over 50% of faculty are contingent (meaning part-time or non-tenured).2 Similarly, industry-funded research has found that 32% of workers at companies are contingent or contract-based.3

It is again important to note that the shift in the nature of work spans the spectrum from traditional employees to Uber drivers to workers provided by staffing agency. This isn’t something happening to the proverbial “them.” It is something that is happening to all of us.

Unfortunately, the Industrial Age hangover of “efficiency gains” is currently driving a race to the bottom through contingent work. Hospital nurses are chronically understaffed,4 adjunct professors on average earn $20,000 to $25,000 a year5, and corporations routinely use third-party agencies to effectively employ workers without incurring the fixed costs of actual employment. For every dollar paid in wages, employers can save 29 to 39 cents on taxes and benefit costs by using non-employee workers.6 This focus on 20th Century efficiency by anchor institutions largely overlooks the true costs of talent churn and lost productivity. (It turns out efficiency gains that are not built around human considerations aren’t all that efficient.) Due to the size and influence of anchor organizations, their approach effectively determines the norms by which all others must abide. This is especially pressing because productivity gains in the last decade are only half of what they were the previous decade7. Productivity gains are a core component to supporting a healthy middle class.

Open work up to the world.

The single biggest thing anchor institutions can do to improve both their own situations and the general state of the economy is to open their work up to the world. Organizations must realize that the talent outside their doors is as important of an asset as the talent inside. The full-time mold of 40 hours a week needs to be set aside. Anchors should make a portion of their work and vendor contracts public. Moreover, a certain percentage of them to be issued to local vendors. This will help invigorate the local economy. (We already know high quality talent is attracted to vibrant locations.) These actions will also provide work to the talent ecosystem outside the anchor and thereby improve the talent pool they have available to draw from.

Anchors can also get creative about time commitment. If algorithms can schedule retail workers based on real-time demand8, anchor organizations should be able coordinate someone who wants to work 15 hours a week with someone who wants 25 hours a week with someone who wants to work 45 hours a week. By doing so, suddenly those who don’t have the desire or ability to work 40 hours a week become part of the talent pool. Anchors also need to learn how to give workers more extended time off. This could mean jumping on the 4-day work week train9. This could also mean spreading payments for nine months of work over a 12 month period so worker can take three months a year to refresh, reflect, and grow. Talent would be enabled to take a significant amount of time off while knowing there is a job to return to.

Anchors need to get serious about time commitment as well. This means creating a work environment that doesn’t let a commitment of 40 hours of week creep up to 50, 60, and beyond. Organizations need to support and respect the time commitment of their talent. Taking time to live a full and whole life needs to be promoted and celebrated by anchors because fulfilled workers will increase productivity.

Just as anchors need to adjust their ways, so do workers. Workers need to realize that $60,000/yr with more control of their time can be equal to or greater than $100,000/yr for 50 hours of work a week. This frequently means lifestyle adjustments such as smaller home, home cooking, and less stuff!

  • 7.1 What tools do anchor institutions need to help them open their work to the world? These tools need to address considerations such as intellectual property, contracting, and project management with a more dynamic talent pool.
  • 7.2 What adjustments does talent need to apply to meet anchor institutions in the middle and create a vibrant talent pool outside the organizations themselves? How does talent need to adjust expectations?
  1. https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=anchor+institutions+and+development ↩︎
  2. http://www.aaup.org/issues/contingency/background-facts ↩︎
  3. http://www.skilledup.com/insights/longer-just-temp-rise-contingent-worker ↩︎
  4. http://www.scientificamerican.com/article/widespread-understaffing-of-nurses-increases-risk-to-patients/ ↩︎
  5. http://www.npr.org/2013/09/22/224946206/adjunct-professor-dies-destitute-then-sparks-debate ↩︎
  6. http://www.irle.ucla.edu/publications/documents/IndependentContractorCost20151209.pdf ↩︎
  7. http://www.nber.org/papers/w21974 ↩︎
  8. http://www.wsj.com/articles/retailers-under-fire-for-work-schedules-1428890401 ↩︎
  9. http://www.fastcompany.com/3047329/the-future-of-work/how-companies-actually-make-four-day-workweeks-feasible ↩︎

Interview 2: Steve King

Reading Time: 19 minutes

Steve King is a partner at Emergent Research.

Tim: Steve. I just want to thank you for taking the time to do this. Let’s start. What’s your background in dealing with temporary and contingent work?

Steve: We’ve been studying the growth of the contingent workforce now for over a decade so we have extensive experience in this space. We do surveys, interviews and focus groups. Our clients range from companies that are hiring these people to companies that are providing services to independent workers. We’re trying to figure out how to make life better for independent workers. We’ve looked at it from a lot of different angles. 

Tim: Some people say technology is finally destroying more jobs that it will create. Others say human innovation will, as it has in the past, create new jobs to make mass employment viable. Where would you put yourself on that spectrum and why?

Steve: I fall more on the “there will still be jobs” perspective on this. I don’t have any doubts that automation is taking jobs away, but automation has always taken jobs away. The six words that are the most wrong in forecasting are: “This time it will be different.” Right now, there’s absolutely no empirical evidence that automation is destroying jobs faster than it’s creating them. There are some studies suggesting that it could happen. The Oxford study is the one that gets cited all the time, but when you to get under the hood you’ll see that they’re being very clear: there’s no evidence that this has happened yet. They don’t even say it’s going to happen. They just say, “Here are some jobs that could be automated away.” And in the past, even in the recent past, you can look for evidence. There are more bank tellers today than there were in 2000. Think about bank tellers. We have more ATM machines, the banking industry is consolidating and shutting down branches, there’s online banking, and yet with all of that we have more tellers. We have fewer tellers than we had 2007 before the recession, but we have more tellers than we had in 2000. And yes, there will be fewer tellers 10 years from now but there will still be a lot of tellers. 

I go back to the 1980s when I worked for Lotus Development, the spreadsheet company. We came out with really the first truly successful broad-based  spreadsheet and everybody said, “Oh my god, think of all the jobs that are going to be destroyed.” But of course what happened was instead of destroying jobs, the spreadsheet allowed people to do more and they did. It actually created all sorts of jobs. What I love about this comment about destroying jobs is it’s all coming at the time that we have historically low unemployment rates and job creation is moving along at a reasonable clip. What I think is happening is that automation is helping create polarization of jobs, which is hollowing out of middle income jobs. What’s going on here in Silicon Valley is a  great example. We’re not gaining enough high income jobs to replace the middle jobs. And so a lot of people unfortunately are falling into lower income jobs. And so if you ask me if it’s a changing structure of the work force, I say yes. And I would say that it’s increasing income equality, and it’s increasing the bifurcation of jobs into high paying and low paying jobs on a relative basis. But overall, it’s hard to find any evidence that there’s going to be this wholesale “end of work” kind of scenario that we hear so often out here. 

Tim: So is technology changing the way we work?

Steve: It’s changing both the way we work and the way companies choose to deploy and use assets. And labor is one of the assets that they’re looking at. Technology is making work more mobile, it’s making it more collaborative and it’s making it more knowledge-based in the higher-end cases. It’s definitely changing work in a lot of ways. The other thing that it’s doing is it’s increasing the rate of change and the speed of which organizations and the economy operate on. And so that all is leading to greater levels of economic uncertainty. And when a corporation is faced with economic uncertainty what they try to do is reduce fixed costs and raise variable costs. And one way to do that is by outsourcing, partnering, using other people’s assets, and we’ve seen that across the economy as more and more firms are choosing an outsourcing path. It started with manufacturing outsourcing. And now business are outsourcing all over the place. All of that increases agility and flexibility, and reduces fixed costs, which are all good things. In terms of people, what companies do is raise the percentage of people in the workforce that are contingent because if they are contingent there are not a fixed cost. And we always talk about how in the United States labor is at will and can be fired anytime, but the truth is corporations don’t behave that way. They don’t behave that way because there’s a bunch of laws protecting labor, so they can’t just fire everybody at once very easily. 

Obviously there are also emotional and brand reasons. Layoffs are just very hard to do. Employees are effectively long-term commitments. And so the way to cut long-term commitments and fixed cost is to turn them into contingent workers. There is data from all sorts of sources showing that corporations, large and small, are increasing their use of contract labor of various kinds: statement of work consultants, project consultants, even in key positions across the organization. And technology has reduced the friction of doing all this. It’s as simple as becoming  an Uber driver in about 24 hours. Ten years ago if you had to get a part-time job, you had to find the job, you had to apply for the job, you had to interview for the job and you finally got the job-—there was all this friction associated with that process. Today much of that friction is gone. I can be up and running in 24 hours and I don’t even have to talk to a human being if I don’t want to. I can work the hours that I want. I don’t have to deal with a boss.

From a corporation’s standpoint, those same technologies are giving them just-in-time access or real-time access to talent, and the cost and the effort of finding, organizing and managing that talent because of technological innovation has fallen quite a lot. The friction associated with hiring contingent talent has fallen a whole lot. Economic uncertainty also gets more corporations to focus on reducing their fixed-term costs, on being more flexible and agile. When this reduced friction through technology is combined with economic uncertainty, the economy moves towards contingent labor. When I share this with others, everybody says, “Oh my god, everybody’s going to lose their job and everybody’s going to be contingent.” No, large and small companies and businesses are still going to have a lot of traditional employees. It’s just that they will be in the core areas of the companies. We’ve already started to see this shift.

There’s a lot of discussion around Facebook and Google and Apple because they don’t hire very many people relative to IBM in the 90s, or what GM did in the 80s. It is true that they don’t have very many traditional employees. Apple has about 90,000 now and GM back in its heyday had two and a half to three million. But if you look at the ecosystem around Apple or the ecosystem around Facebook, the number of people actually earning their living because these companies exist一the independent app developers, the third-party support, the business operations service provider一start to add up again. Those just aren’t traditional employees.

Tim: Instead of economic participation within one entity, it’s more of it’s an ecosystem of economic participation that’s anchored by Apple. I can be an app developer for Apple, but I simultaneously can be a Google app developer. I am able to participate in multiple ecosystems. Maybe the role of the corporation is shifting from employment to the creation of an ecosystem that allows people to participate in various ways.

Steve: And companies are unbundling intentionally because it’s more economically efficient. In the old days, vertical integration was more efficient. There’s a lot of discussion about the theory of the firm and Thomas Coase’s original work from the 30s, but the reality is in the old days you had to be vertically integrated to make things happen. Now you’re better off not being vertically integrated because you know you’re not a specialist in all things. So you bring in other people who are specialists and across the whole ecosystem you have greater efficiency. Maybe my organization is not particularly good at procurement or logistics, but UPS is good at logistics so I use them. It’s an example. What technology is doing is giving us the ability to coordinate activities more efficiently, which we couldn’t do before.

One of the projects that we do every year is the State of Independence study. This is a case study of coordination across entities. The client, MBO Partners, contracts with us. We then contract with a research firm to help us. That firm then contracts with specialty research firms to collect the data. Meanwhile we also contract with another firm to help us with the data analysis. And so there are six firms involved in this one project. Fifteen years ago that would’ve all been done by my firm. We would have needed to be big enough and integrated enough to do it all otherwise we would not have gotten the work. But today my little two-person firm can easily coordinate these six other firms and we’re the main producer of the project. And this is because I’m unbundled. I don’t have to maintain those resources full-time. I can rent those resources and the technology allows me to coordinate it across the group. 

This is happening across all chains of commerce. In some places, that means you’re outsourcing to another company or you’re hiring in another company. You may be hiring another company to do your marketing, but along the way those people are also hiring independent workers to help them. Even the big companies are hiring more independent workers. It’s part of that whole shift. 

Work is changing fundamentally, but 10 years from now over half of working Americans will still have traditional jobs. Much of the growth right now is in people working on the side part-time and with multiple sources of income. We looked at sites like Upwork. A third of the Americans on those sites have traditional jobs and are using the sites for side gigs. Side gigs are growing very, very rapidly. The number of independent workers is growing and it’s growing faster than the overall workforce, but it’s not growing at an astronomical rates. We have it growing 4% to 5% a year with the overall workforce only growing at 0.8% a year. The workforce changes are slow. There’s inertia, there’s investments, there’s the way people think, and so it takes a long time for that stuff to shift. But it is all shifting and the leading edge right now, in terms of the rate of  growth, is people working side gigs. It also should be noted this that this type of work is still small relative to the overall economy.

Tim: What parts of the contingent work discussion are expected and what parts are surprising?

Steve: It depends on your point of view. The thing that surprises us the most is how many myths there are around what’s going on in the contingent workforce. I read an article today about how the vast majority of independent workers are forced into this. But in every study that’s ever been done of independent workers, it’s very clear that a majority of them chose that path. All the private studies and certainly all of our work reflects that: that a majority of people chose the path. The second myth is that people don’t like independent work. Again, every study that’s ever done shows that the majority of people like it. And then of course every study that’s ever been done show the majority of people want to continue independent work. The fact that those big three myths don’t seem to change, despite overwhelming research and statistical evidence, continues to fascinate me.

Part of this is because there are all sorts of people whose best interests are served by the perpetuation of these myths. Another part of it is people who aren’t independent workers are much more risk averse. They can’t believe that people actually are embracing this lifestyle. If you look at the people who are criticizing this field right now, most of them are academics and think tank people. These two groups are about as risk averse as you can get, and they have the most traditional of jobs. Academics, once they are tenured, never leave their job. The most risk averse people are saying, “Well this is too risky” while those who are actually doing it are saying, “No, it’s not.” And then the third group that is critical of contingent work are journalists. And their industry has not fared well in this shift to independent work so they don’t like it either. So there psychological reasons behind why these myths persist.

What I’d like to see is for people to recognize the fact that this is a viable path that a lot of people prefer over traditional employment. Now this doesn’t mean we don’t have to make it more secure and improve labor laws. I like the idea of portable benefits. I like the idea of a prorated, independent security accounts. We want to make this better, but right now there’s this theme that it’s just really bad. It is certainly bad for a subset. About 25% to 30% of the people who are working in independent work very much dislike it. They would much rather have a traditional job, and they feel that they are being taken advantaged of. We have to definitely address those concerns. But let’s not throw the baby out with the bathwater. In our zeal to protect those who don’t want to be independent or are abused as independents, let’s be careful not destroy it for the 60% to 70% of people that chose to work independently.

Tim: Is the emphasis on online platforms in contingent work warranted?

Steve: I think the online platforms are very important. I think they’re going to grow and continue to grow in importance. But when you get under the hood, like we did in this most recent study, you find that one of the big complaints you always hear is you can’t make a living as an Uber driver. There are two problems with that complaint. The first is: Compared to what? When you compare Uber work to traditional manufacturing jobs, they are absolutely worse off. But those manufacturing jobs aren’t here and are not coming back. Now if you compare driving for Uber to driving a taxi you’re going to see that an Uber driver probably has a slightly better life and slightly higher income. Neither group is very well protected. Eighty percent of taxi drivers in this country are independent workers, which is also confusing. There is this push to get Uber drivers to be employees because taxi drivers are employees一no, they’re not一most taxi drivers are independents. The second problem with the complaint about the inability to make a living as an Uber driver is very few people are doing it full-time. It is better to compare driving for Uber to a low wage part-time work and look at the trade-offs around flexibility, scheduling, work-life balance and income. When you make that comparison, you begin to see the reasons why these platforms are popular. Your earnings tend to be above minimum wage and you have this enormous flexibility and lack of friction in doing it. So for many people, these platforms provide acceptable work. The key is to know the facts and look at it in a segment by segment basis.

The woman that’s suing all these gig work platforms very consistently talks about the work as full-time work. I do think that the people that do full-time work with Uber and others are going to end up being classified as employees under current labor laws. Uber does exert enough control for that classification. But I go back to the fact that somewhere between 5% and 10% of the people that drive for Uber are doing it full-time. If she wins her suits and gets everything she wants, the 80% of people that are doing this work for flexibility will stop and that doesn’t make sense for any of us, in my opinion. She’s focused on one small segment in making a claim that works for everybody, but that is the wrong approach.

Tim: So how should workers be thinking about work differently? How should the worker be considering work today?

Steve: The first thing is work is definitely becoming skills based in all ways. To compete today you need to think about how to develop marketable skills that can be used to get work and to earn a decent living. And this is nonstop. People have to reinvent themselves, they have to study on their own, they have to learn on their own and they have to upgrade their skills constantly. If you’re not doing those things you’re going to have problems. Traditional education isn’t required, but it certainly helps. There is also this whole new world of online and short-term education emerging. People need to understand that part of what they have to do is invest in themselves regularly to create work for themselves. And that is whether you are on the low-end of the high end of the skill spectrum一everybody has to think this way. The other big shift  everyone talks about is一and I think it’s fundamentally true一the lifetime career in one place is over for most people. It still happens occasionally. The government still has a lot of lifetime workers. There are private employers that still follow that model such as some utilities and insurance companies. But on average you have to be thinking about what your next next career is going to be on a regular basis. And so in many ways, you have to think like an independent worker even if you plan to be a traditional employee. 

Tim: There is a lot of debate about W2 versus 1099 saying that one is employment and the other is project-based. But I believe work is becoming project-based across the board, whether you’re a W2 or a 1099, and it’s better to conceptualize work through that lens because of the point you just made. The traditional approach to employment just isn’t there anymore. All workers need to be thinking about perpetually retooling and their next thing, not just contingent workers. 

Steve: One of biggest problems a lot of people looking at this are having is they’re equating W2s with the old style traditional work. How do we report for taxes is becoming increasingly disconnected from what we do. Temps report as W2s and so they’re not considered independent workers. If you have a 6-month contract with the company, you’re a W2 worker and you’re not considered an independent worker. Contract work is growing very, very rapidly. And so this idea that a W2 is fundamentally different than a 1099 is one of the things that’s really changing. Our company looks at it psychographically: How do people behave? When we interview someone who’s on a fixed-term, six-month contract, they know they’re not a traditional employee and they don’t behave like a traditional employee. But because of their tax reporting status they’re usually considered a traditional employee by people doing work in this field.

Tim: It sounds like the way we classify workers doesn’t have a lot of bearing on the reality of the work experience.

Steve: Right. So much of the work being done in this field is based on out-of-date government statistics that don’t reflect how work has changed and how employment has changed. What cracks me up about this is when you go talk to the Bureau of Labor Statistics they’ll tell you that it’s absolutely true. Nobody is hiding that fact. But most researchers still say that’s the data set I am going to use.

Tim: How should businesses be thinking about talent and work differently? How should they be thinking about recruitment and retaining talent?

Steve: There’s a couple of things there. Most businesses, on average, are increasing the use of contingent talent. And so businesses have to figure out what that means for the corporation and have a strategy around it. One challenge is that contingent talent increasingly holds key positions. There are talent shortages and they will continue to grow in certain fields. If you’re trying to find a mobile developer right now and you’re not a technology company, good luck. You’re going to be using contingent talent. You have to start to ask: How do I become the client of choice for that contingent of talent? How do I become the employer of choice for that contingent of talent? Companies think about this all the time for their full-time employees. They have to think more about it in terms of how they attract and retain contingent workers also because that is going to become a more important source of talent.

Within their full-time ranks, companies have done a horrible job, particularly since the recession, of treating employees well. Companies are not embracing the shift toward result-oriented work environments, which every survey shows every employee wants. And the companies that don’t provide good employee experiences will eventually find out that they no longer have good employees.

We’ve been studying the contingent workforce for ten years and we’ve been waiting for corporations to realize a big reason why a lot of top talent is leaving for independent work is traditional work sucks. They are capable of fixing that, but they haven’t yet. I think there has to be a renewed focus on the employee experience, and I think there has to be a new focus on making the contingent worker experience better so that you can be the employer of choice of both classes of workers.

Tim: What systemic changes, whether social or policy-oriented, do you think should be implemented?

Steve: At the policy level, portable benefits is the most logical thing. We started down that path with the Affordable Care Act, ACA. I do think we have to split at least some level of benefits off from employers, and that will help to a certain degree. I think we need higher minimum wages because a lot of jobs are becoming low end, and as a society it makes sense to sustain jobs that provide the ability to make a living. I’m very concerned about the fact that many of our existing laws that cover employees do not cover contingent workers, and I’m particularly concerned about safety laws. We have to expand our OSHA [Occupational Safety and Health Administration] laws and our policies so the contingent workers used in lieu of traditional workers have the same legal rights as employees when it comes to occupational health and safety.

Tim: What are your thoughts on basic income?

Steve: Yes, I had two reactions. One is politically it’s impossible. What Congress in the United States is going to vote for basic income in the next 50 years? And the answer is none. So the first problem is it’s politically infeasible. The second problem is we would have to gut all of our existing programs to pay for it. And so while in theory it sounds like a great idea, gutting all the existing programs would just be an enormous fight. But if you don’t gut the existing programs you simply can’t afford it. And the final piece is taking away the incentive to work is a bad societal decision.

What I think can happen is the expansion of the earned income tax credit. I’m a big proponent of expanding the earned income tax credit. If you look at the way people respond to that they don’t see it as welfare. Americans very consistently hate being on welfare. They think that they failed. They think that they’re a drag on to society. Americans want to contribute, and it would take a sea change in our attitudes to get people to feel a sense of contribution on basic income. But the earned income tax credit which is basically a pure handout almost, isn’t seen that way. It is seen as something that is earned because of work. I would like to see that expanded both in terms of coverage and in terms of the amounts that people are able to get. Yes, that system has been the victim of a fair amount of fraud, but that problem is much easier to surmount. That’s just a question of enforcement and doing a little better job at the backend with data collection. I think that’s a relatively easy thing to fix, whereas basic income thing was just a hornet’s nest.

The other great thing about the earned income tax credit is it was originally a Republican program that got upgraded by Bill Clinton during his administration by the Democrats. You got both political parties historically supporting it.

Tim: I just have two more questions. In this evolution of work, what are the top challenges that need to be addressed? What should we be focusing on as we have this discussion about contingent work?

Steve: To me there’s several challenges. One we talked about over and over again, I just think people don’t understand the data and what’s going on. I think we conflated the on-demand economy and Uber with the overall shift to contingent work. And I think that is a huge challenge going forward. We’ve always had this problem when we’re dealing with small businesses. One of the first things we have to do with every new study on small business is first ask the definition of small business because everybody defines it in a different way. The same thing is going on here. And so it’s very hard to come up with solutions to figure out what’s going on if nobody can agree to the terms and there’s currently no agreement to the terms. I think that’s an enormous problem and will continue to be a big problem.

Tim: It’s a taxonomy issue on a basic level.

Steve: Yes. And then it is too multi-faceted to understand. When you say future of work and the evolution of work, there’s technology involved, there’s social issues involved. One of the biggest drivers of change in workers is demographics right now with the aging boomers and millennials. When you have so many moving parts it’s hard to understand the linkages, it’s hard to understand what’s the driver and what’s not the driver. It’s just incredibly complex issue and I don’t think anybody truly understands it. I think it’s too complex a system to truly understand it, and so makes it very hard to figure out what to do with it.

Tim: Last question. What do you see as the big opportunity in how work is changing currently? What should we be trying to embrace and foment in what’s going on right now?

Steve: A lot of people have come to the conclusion that work needs to be more human and it needs to be more flexible and it needs to better reflect our life and our values as opposed to just going in and punching the clock. That’s a social trend that I think doesn’t get enough play. I think one of the reasons there is a growing number of contingent workers is people are chucking traditional jobs because they don’t feel it reflects their lives and it doesn’t allow them to live the lives that they want to live. And I think we now have the ability to give people traditional jobs and have that, and also have contingent jobs that have that. And so we do have an opportunity to make work much better from a social standpoint. We’re not doing that yet, and that’s why so many people are going independent to create it themselves. But I think there is a real opportunity for corporations to take a lead on that and some of them are. There is a golden era opportunity here if we get focused on the right things.

Having said that I’m pessimistic that we’re still going to have income inequality in a bifurcated workforce because the work is getting more complex and more skills-based. And the reality is a lot of people are not going to be successful in that kind of world.

Tim: What you’re saying is that as the skills gap widens it’s going to be harder and harder for people to catch up and to span it.

Steve: We had a system where average was fine. You could have a very successful life as an average person, as an average contributor. And the reality is most of us are average. Now, you have to be better than average. You got to find something that you’re better than average at. And there are a lot of people that are not capable of that, unfortunately. That is why improving safety nets is going to continue to be important.

Tim: Great. Steve, those are all the questions I had. Thank you.

Work Future 6: The Gig as Startup

Reading Time: 4 minutes

There are few concepts that embody the ethos and optimism of Silicon Valley as well as the accelerator.

Accelerators are programs that typically last 90 days and seek to scale startups quickly. They do this by infusing capital (usually in exchange for equity), providing access to connected mentors and their networks, and giving technical assistance both to develop the product and the business. Due to the intensity of programming, accelerators generally demand total devotion from their participants. This all-in commitment is built on the startup trope that says the truest entrepreneurs prioritize their business over all else. Accelerators don’t claim to be the end-all and be-all for starting new companies, but anyone with commitments that cannot be put on hold (e.g. spouses, children, mortgages, student loans) is ill-suited to participate in them due to this all-in culture. The average age of entrepreneurs funded by Y Combinator, the original and most successful accelerator, is 26 years old1. This is a demographic that is delaying marriage, children and mortgages (students loans are another thing). Yet research from the Kauffmann Foundation2, the preeminent foundation for entrepreneurship, notes that the average and median ages for successful business founders are both 40 years-old, and a majority are married with children.3

So why does this matter? And how does this relate to the gig economy?

This matters because as economic development policy and practice seek to emulate the successes of Silicon Valley, it is important to understand the context within which those successes function. The tendency is to shine the spotlight on the Y Combinators of the world and ask how we can make that happen here (wherever “here” happens to be). But in reality, the accelerator model works well for two very specific segments of the population: youth with few responsibilities and those with the means to support their commitments while they work on a business.

For most everyone else, the better business startup model is the gig.

By some estimates, over 50 million Americans do some type of side work while employed, be it part- or full-time. These are the people with spouses, children and mortgages—commitments than cannot and should not be put on hold—who are interested in expanding their economic potential. Gig work allows individuals to test the waters of a business idea or passion while simultaneously allowing them to keep up other commitments. If 1% of the people who currently work on the side have interest in starting a business (we know the number is higher than 1%), that would be 500,000 potential businesses. If only 10% of those potential businesses were successful, that would still be 50,000 new businesses.

The flip side of this overlooked potential for new businesses is the reality that 90% of startups fail4. The fact of the matter is the all-in approach of Silicon Valley mythology means betting the farm, and a very small percentage of the population is willing and able to do that.

Unfortunately, this prioritization of the all-in entrepreneur isn’t limited to contemporary tech startup culture. It is the main archetype applied in existing economic development efforts across the country. It is a significant oversight that more business startup and support efforts do not embrace gig work as a more patient and inclusive path to economic development.

This is not to say there aren’t already steps being taken in this direction. A specific example that supports and encourages gig work is Wisconsin’s Pickle and Cookie Bill5 that is currently being considered by the state legislature. This bill would allow gig workers to produce and sell up to $7,500 in canned or baked goods without having to go through the regular licensing requirements. In essence, the bill invites individuals interested in expanding their economic potential to test the waters of entrepreneurship without the high stakes of the all-in route. Variations of the Cookie and Pickle Bill have been passed in Wisconsin and other states establishing precedence for this type of thinking. Economic policies and practices need to evolve to support the gig economy.

I would like to note that accelerators should not be simply thrown to the side as business summer camps for the select few. They can work well for investor-driven business development. But what can immediately be taken from accelerators and applied more broadly to gig workers and beyond are some of their practices. The ideas of the lean startup, iterative design, customer validation, cloud technology and coworking apply to all businesses (both non- and for-profit), not just tech companies in accelerator programs. These “how” practices of tech startup culture are excellent tactical innovations.

The gig economy is currently touted as the result of Silicon Valley innovation, but the gig economy is much broader and more established than the current tech boom (and the one before that…and…). There is real opportunity for economic development approaches to embrace and encourage gig work.

Questions for further consideration:

  • 6.1 What could communities do to further activate the economic potential of all their citizens who are working on the side of employment?
  • 6.2 How could existing business development and support services be adapted to the gig work approach?

  1. http://business.time.com/2013/03/14/ask-the-expert-the-best-age-for-a-start-up-founder/ ↩︎
  2. http://www.kauffman.org/ ↩︎
  3. http://www.kauffman.org/~/media/kauffman_org/research%20reports%20and%20covers/2009/07/anatomy_of_entre_071309_final.pdf ↩︎
  4. http://www.forbes.com/sites/neilpatel/2015/01/16/90-of-startups-will-fail-heres-what-you-need-to-know-about-the-10/#679fb19855e1 ↩︎
  5. https://docs.legis.wisconsin.gov/2015/related/proposals/sb330 ↩︎

Interview 1: Ray Marcy

Reading Time: 11 minutes

Ray Marcy is the Executive Chair at Healthcare Staffing Services.

Tim: Ray, thank you for taking the time today. Let’s jump right in. What’s your background as it relates to contingent work?

Ray: I spent my whole career in what’s broadly considered to be the staffing industry. Out of graduate school, I when to work for Manpower. I then developed North America for a Swiss-based company, Adecco, which is the largest staffing company in the world today. I went on to become a CEO and chairman of a multi-billion dollar company called Spherion that we built over an 11-year period. Spherion provided virtually any skill to any company in most places around the industrialized world. We operated out of 13 countries with about 1,400 offices, and supplied everything from IT professionals to administrative assistants to accounting skills, and all points in between.

That launched me into a world of human capital consulting where CEOs were beginning to ask how they could deploy human capital more efficiently. I spent a fair amount of my life working with Fortune 500 CEOs in that environment, firms like UPS, American Express, IBM, and Dell.

And today I continue to spend my time in the world of human capital. For the last 10 years I have partnered with private equity firms, and I invest in companies that are in the human capital space today, whether it is healthcare or professional staffing. I help them grow and we eventually seek a liquidity opportunity. I’m now 108 years old and I spend most of my life in the world of human capital.

Tim: You look great for 108.

Ray: Thank you.

Tim: From your perspective, is the buzz today about contingent and on-demand work about a legitimately new trend or is it part of a longer process that just happens to be getting more media attention?

Ray: I would explain what’s going on today as an evolution, not a revolution, of something that has been going on for decades, maybe even longer.

There’s an overriding principle that I subscribe to: a more efficient model will always prevail. That’s true in nature, that’s true in the universe, and that’s certainly true as it relates to employment and how we find meaningful work. A more efficient way of working will always prevail in the marketplace. It might be messy, it might go sideways for a while, it might look like we’re making sausage, but efficiency in the long term will always prevail.

Within that broad concept, I was a thought leader, along with some of my colleagues, way back in the 90s when we started describing what we called the emergent workforce. At the time, it was quite revolutionary. What we noticed was the traditional fabric of employment was changing at a rapid pace. For the traditional worker who worked for Sears for 30 years and then got a gold watch, that fabric was breaking down and being replaced with a new notion of the emergent workforce. There were a lot of negative connotations attached to that emergent worker at the time. They were lazy, they weren’t loyal, they skipped around a lot, something was wrong with them. We argued that the fabric of employment was broken by big companies, not by the workers they were criticizing. It was broken by the IBMs of the world, and the worker was just responding to those actions. Moreover, we argued that the emergent workforce was not less loyal, they just had a different definition of loyalty, and companies the in the future would have to be careful and to understand what that emerging worker was all about. It’s an evolution, not a revolution, of a process that has been doing on for a long time.

Tim: What is your definition of efficiency in this sense?

Ray: Efficiency can take a near infinite number of turns all driving towards a more productive world. When I left Spherion number of years ago I was given the opportunity to take over what was a struggling .com called Guru.com. They were attempting to aggregate all free agent techies around the world. I had a programmer, I’m not sure what time he came into work or when he left, but that programmer was brilliant. I didn’t clock him in, I didn’t clock him out. He was paid weekly compensation based on a high value. It had relatively little to do about time or number of hours per week worked and everything to do with his brilliance and his mind. At some point that had to translate that into dollars, cents, and value, but I’m very sensitive to what makes something efficient. Yesteryear, Henry Ford could look at the assembly line on a Model T and break everything down into minutes per day. Today, harnessing the value of the brain requires a different equation.

Tim: Are companies looking for ways to measure performance other than hours per day and days per week? What are the units and scale of work that you are seeing today?

Ray: There’s a deeper importance being placed on outcomes rather than measuring the task required to get to an outcome. There’s less emphasis being put on how much energy needs to go into something versus determining the value of the outcome itself. When can I get the outcome? What is the quality of the outcome? How earth shaking is that outcome? Again, I think it’s an evolution, not a revolution, but there’s far more emphasis today on outcomes rather than the steps of the process.

Tim: Some people say technology is finally destroying more jobs that it will create. Others say human innovation will, as it has in the past, create new jobs to make mass employment viable. Where would you put yourself on that spectrum?

Ray: I’m optimistic based on the facts. There’s a long history of humans innovating new jobs, and there is more meaningful, fulfilling work today than ever before on the planet. Does that mean that people don’t get displaced? Of course not. People get displaced. But we have consistently throughout history innovated and created more jobs. This question reminds me of my grandparents thoughts that the next generation was worthless. I remember my parents feeling the same way about my generation. I’m wildly optimistic for incredibly good reasons, and it’s historically based. 

But what does that mean? Twenty years ago we were all angry that jobs were being outsourced. Jobs have been outsourced for hundreds of years. We just put a label on it twenty years ago. All of the call centers were going to India. Why were they going to India? It was more efficient. It wasn’t more efficient to build a call center there, it was less efficient. The equipment that went into the call center wasn’t more state-of-the-art, it was less state-of-the-art. What was more efficient was the labor—it was less expensive. But what happened next? There was more employment in Delhi and wages went up. And then it became as efficient to build a call center in Nederland, Texas, as it was in Delhi. So we then built call centers in Nederland, Texas, where making $18 an hour was very good money based on rent and local conditions. It became a more efficient place to be. If you’re a coal miner, you may indeed be working a job of the past. In 50 years, there will probably be fewer jobs mining coal. Workers will be displaced and we’ll feel bad about that, and we should accommodate for that. But I daresay there will be thousands of other types of jobs that will be created as a result of that displacement.

Tim: How is the concept of the “job” changing?

Ray: When we began to look at the emergent worker we realized they had a different definition of loyalty. What became clear is that these individuals were taking responsibility for their own career. They were no longer depending on IBM or Sears to take care of them. We argued at the time of the that this approach was healthier. Workers and employers had started to create agreements that were mutually desirable for as long as it made sense for both parties. This change has created a healthier environment than when dad or grandpa was working for IBM and got to a stage in their career where they said, “I really can’t go anywhere else. I’ve been here too long. They’ve changed my job description now three times. I don’t like what I’m doing anymore, but I have no options.” Many of us look back with some kind of euphoric recall on traditional employment. I would argue it wasn’t particularly healthy and it’s substantially healthier now.

Tim: How can the worker of today be successful in a higher churn, more independent space?

Ray: There’s an important discussion to be had around what barriers exist today that keep people from using their talents and skills. One example of a barrier is transportation. Many workers simply don’t have the means to get to good jobs only a few miles away. What if labor could move freely and be unencumbered? There was recently tragedy on the outskirts of St. Louis, in a minority population. The unemployment rate there was nearly 30%. Why was it nearly 30%? There is no immediate employment in the area and there is limited access to nearby employment. Good jobs are less than ten miles away, but the population doesn’t have an efficient way to get to them. What if all of us could travel in an unencumbered way throughout the United States? Meaningful work opportunities would improve significantly.

Healthcare is another barrier that we don’t talk about. The chains that limit talent in the United States because they are encumbered by healthcare are incredible. We are the only developed country in the world where healthcare is largely dependent on employers. Workers don’t change jobs out of fear for their health and stability. Pre-ACA, if a worker wanted to change jobs but had a pre-existing condition, that worker was encumbered by healthcare and essentially indentured to his or her current employer.

These are just two simple examples. If healthcare was a right, and it made no difference whether a person was working or not, and if the complexities of deductibles, waiting periods, and in-network service were gone, if none of that existed, the labor market would be dramatically different, and opportunities would be dramatically improved.

Tim: I would like to follow that thread. Much of today’s contingent worker debate centers on 1099 vs W2 categorization. What are the policies that we should be putting in place to handle this evolution of work we’re seeing?

Ray: The discussion around 1099s and W2s, whatever those categories might be at a moment in time, and especially if they are government induced, are little friction points. Eventually there will be Teflon that’s sprayed on that and eventually they’ll become indistinguishable. It will be about efficiency winning. And efficiency will win when talent can move around freely and find opportunities. That will be good for all parties including the worker and including whatever partnership they enter into to find meaningful work.

Tim: I can’t help but notice that the systemic changes that you suggested are not emphasizing smartphones and getting every person online. This is a interesting point. A very popular media image of today’s contingent worker is the 30-something who runs a technology company via computer from a coffee shop. But what you’re suggesting is the need to design the physical world to better enable work. It isn’t all about technology.

Ray: Let me make myself clear. I’ve been to Africa a number of times, and there’s nothing in many ways more primitive than being on the Serengeti Plains. And within the Serengeti Plains, if you have the opportunity, you will come across the Maasai Tribe. Amazing people. In the last ten years, the Maasai have set up schools that travel with them and they are educating their children. In these Maasai tribes today you will see a smartphone. And somebody, often times the tribal leaders, will be able to communicate with the world. Do you know how powerful that is? But the point is they can recognize the benefit of that technology and react to it by getting a smartphone. Similarly, I was in Brazil not too long ago and was looking up at the favelas [slums] that go up the mountainside—almost every home had a satellite dish and access to smartphone technology. The point is the individual can take care of certain things, and from an affordability standpoint, telecommunications are already largely available for everyone. What individuals cannot take care of for themselves is providing universal healthcare. And they cannot take care of providing a transportation system so they can go anywhere they want within Brazil or the Serengeti Plains. There are certain things that we have to think about that are barriers to talent being able to find opportunity. Talent will take care of getting a cellphone. It’s affordable and they understand the value. But there are different infrastructure needs that did not exist when we built the systems that exist today.

I don’t want to minimize the barriers to accessing technology and the influence technology is having, but there are good options for individuals to solve those problems for themselves. One thing we should not lose sight of is that today for the first time ever all information is everywhere.  It will have an amazing impact on our civilization in ways that we haven’t even thought of.

Tim: We’re sitting in the greater Milwaukee area. There is a lot of emphasis on the New Yorks, the Bostons, and the San Franciscos of the world as the places to be for innovation. What are your thoughts on how geography affects innovation and the way we work?

Ray: Where I am becomes substantially less important all the time. But when it’s brainpower, and we’re trying to unite brainpower, there is still a notion of physicality, of being around each other, that is helpful. It is more helpful than just being online, it’s more helpful than just being on the phone. And that’s going to be with us for quite some time. It will continue to diminish in importance. Talents are transferable across lines. The notion of countries, the notion of nationalities, will all get more and more silly, and less and less important. But there will still be pockets where people like to hang. And some of that will be based on historic tradition and legacy. Some of that will be based on climate. But geography will continue to be less and less important.

Tim: A lot of the conversation around contingent work tends to be a very much about high-level, high-talent, in-demand folks. What are the implications for those on the lower end of the skills spectrum?

Ray: In most places in the United States today, manual labor is going to be in less use going forward than it was yesteryear. But nevertheless there is still work in America that requires a plumber, that requires an electrician, that requires a local worker to do the work. My kids started a chain of cafes. You can’t simulate that on the internet. You actually have to go to a cafe and sit down there to enjoy it. 

Tim: I’m thinking of simulated coffee right now.

Ray: It probably we won’t get the job done.

But if you’re a young student, being a barista could be a good job. It is work that can only be done locally. There are still local jobs and there is still local trade, and that will never change. Those jobs will continue to exist.

I think the key to any skill level, and it doesn’t matter whether it’s low or high, is for workers to take responsibility for themselves. Workers need to decide what their values are in relation to work. They need to determine how geography affects their work. Am I willing to relocate or do I want to stay here? Am I bound to stay here? But staying “here” could mean that while I am physically in Milwaukee, I could still be working with a company in Delhi. Workers need to look at what’s going on in the marketplace. Even from a micro standpoint, there are opportunities right outside the door. How can those be exploited? As I said before, I’m wildly optimistic, but I’m optimistic based on historic facts. There is a wealth of opportunities. For the young person looking forward into the future, they can do anything they want to do, whether they’re encumbered locally or not. The opportunities will be endless. Will some people be displaced based on trends that are occurring? Yes. And do we have to predict that and protect them from that? Of course.

Tim: Last question. How should businesses be considering this evolution of work and the implications for their own infrastructure and operations?

Ray: They have to understand that it is their job, if they want to be successful, to deploy their human capital in the most effective way they can. They need to sit down and ask: How can we make the best use of our people? Every company needs to think about this, big or small. And they need to know that today’s workers have a different definition of loyalty and different expectations of their work. Workers will hang with an employer, big or small, as long as the mutual requirements for both the worker and the employer are being met. It’s not rocket science. Today’s core metric for sucess is whether or not human capital is being deployed in the most efficient way.

Tim: Any closing thoughts?

Ray: Efficiency wins and I am wildly optimistic about the future of work based on historic fact. 

Tim: Thank you very much for your time, it’s greatly appreciated.

Ray: Thanks, Tim.

 

Work Future 5: The Collage Career

Reading Time: 3 minutes

  • col·lage /kəˈläZH/ noun, a piece of art made by sticking various different materials such as photographs and pieces of paper or fabric onto a backing.1
  • ca·reer /kəˈrir/ noun, an occupation undertaken for a significant period of a person’s life and with opportunities for progress.2

The collage career posits that the “how” of work is at least as important as the “what”. Three defining characteristics of the collage career are:

  1. A strong baseline skill set
  2. Diversification of revenue streams
  3. An increasing integration of work and life

Baseline Skills

According to Bloomberg, the most desired yet hardest to find skills for employers seeking MBA graduates are strategic thinking, problem-solving, leadership skills, and communication skills.3 On the lower end of the skills spectrum, there is much demand for workers with skills such as writing, basic math, basic computer skills (typing, Microsoft Work and Excel), and organizational skills.4 None of these skills are industry-specific. All of these skills are frequently used on an daily or even hourly basis.

Gone are the days where simply becoming an expert is enough to guarantee economic stability. Businesses solve for ever-increasing productivity, and it turns out that significantly more time is filled with navigating colleagues, writing emails, and solving problems, than are filled with creating algorithms, engineering electric cars, or designing products.

A strong baseline skill set is anchored by the soft skills of communication, problem-solving, organization, collaboration, and cultural literacy. These soft skills must be augmented with basic technological competency. Today’s worker should be familiar with the use of phones, tablet and computers; with Windows, Android, OS and iOS; with Google search; and with common software like Microsoft Word and Excel, Google Docs, and WordPress. The baseline set of soft skills + basic technological competency applies to nearly every work situation today. This is also the core skill set needed to stay relevant over time through continual learning and development. Workers of all stripes need to be sharpening existing skills for today while developing new skills for tomorrow.

Diversification

By investing in the development of skills that can be applied in multiple sectors, workers diversify economic opportunity while minimizing economic fragility.

This diversification is partially driven by the realities of employment itself. Workforce participation is dropping while job tenure is increasing.5 Those with jobs are holding on to them longer. And many without jobs are giving up all together.

WorkForce-Participation-v-Tenure

Reduced workforce participation and longer tenure mean people are changing jobs less. This is worrying because changing jobs (increasing diversity) is one of the best ways to boost productivity and wages6. It also helps develop skills and grow personal networks, both of which are keys to economic success in the 21st Century.

Employment is not going away, but it is no longer the guarantee of stability or viability it once was. A significant portion of gig economy workers are also currently employed. Of an estimated 12.4 million people who work part-time as independents, 71% have either full- or part-time jobs.7 Instead of changing jobs, these workers are adding to what they already have-collaging, if you will. Diversification is a strategy for both economic survival and success.

Work-Life Integration

A 2014 White House report that compared Millennials to Gen Xers and Baby Boomers found that Millennials prioritize life goals more than the previous generations…

Generational Life Goals8

…while having equal or lesser expectations from their job.

Very Important Job Characteristics Among High School Seniors9

And according to the MBO Partners’ State of Independence report, “…the top four reasons individuals [across all generations] cited most frequently as factors for working independently were: the ability to control my own schedule (61%), more flexibility (58%), like being my own boss (54%) and the ability to do what I love (48%).”10 More workers are building their own work practices to suit their lifestyle needs. And life regularly encroaches into our work worlds in many forms, including spouse 11, age12, and gender13. The division between work and life is an artificial and misleading relic from the Industrial Age. There are numerous reasons approximately 40% of workers are already contingent 14, but one of the biggest is many contingent workers want their work to be aligned with their lifestyles.

The need to be professionally agile, the need to minimize economic fragility, and the desire for an integrated life are why the collage career is emerging.

Questions for further consideration:

  • 5.1 What is the best way to develop baseline skills?
  • 5.2 How can the development of baseline skills be better incorporated into educational experiences?
  • 5.3 What are the social implications of shifting from “What do you?” to “How do you do what you?”?

  1. https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&es_th=1&ie=UTF-8#q=define%3A%20collage&es_th=1 ↩︎
  2. https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&es_th=1&ie=UTF-8#q=define%3A%20career&es_th=1 ↩︎
  3. http://www.bloomberg.com/graphics/2015-job-skills-report/ ↩︎
  4. http://burning-glass.com/wp-content/uploads/Human_Factor_Baseline_Skills_FINAL.pdf ↩︎
  5. Lower workforce participation itself could be driving the increase in tenure. ↩︎
  6. http://fivethirtyeight.com/datalab/want-a-raise-quit-your-job/ ↩︎
  7. https://www.mbopartners.com/uploads/files/state-of-independence-reports/MBO-SOI-REPORT-FINAL-9-28-2015.pdf ↩︎
  8. https://www.whitehouse.gov/sites/default/files/docs/millennials_report.pdf ↩︎
  9. Ibid. ↩︎
  10. https://www.mbopartners.com/uploads/files/state-of-independence-reports/MBO-SOI-REPORT-FINAL-9-28-2015.pdf ↩︎
  11. http://www.psychologicalscience.org/index.php/news/minds-business/how-your-better-half-may-impact-your-success-at-work.html ↩︎
  12. http://www.aarp.org/about-aarp/press-center/info-03-2015/older-workers-unemployment-survey.html ↩︎
  13. http://jag.sagepub.com/content/early/2013/10/29/0733464813508649.abstract ↩︎
  14. http://www.gao.gov/assets/670/669766.pdf ↩︎

Work Future 4: Attention Employers

Reading Time: 6 minutes

There is a lot of hype about the gig economy and prophesies that Me Inc. is everyone’s future. But regardless of hype and the issues surrounding employment itself1, employment isn’t going away anytime soon. The percentage of employees working for large employers (500 employees or more) has steadily increased since 2004, accounting for 51.6% of employees in 2012.2 3 What can employers learn from the trends of the gig economy to take healthy advantage of gig workers?

Four “lenses” that consistently surface in surveys of why and how contingent workers4 end up contingent are stability, sophistication, lifestyle and learning.

The importance of stability to workers is easy to understand. Having a predictable amount of money for a known duration of time allows for planning and reduces anxiety. Stability is likely the most dominant concern for gig economy workers. (The decreasing duration of job tenure suggests that full-time employees may also be feeling the same stress.)

Sophistication refers to the kind of work being undertaken—workers want to be challenged. Forward-looking employers need to find ways to offer sophisticated and engaging work if they want sophisticated and engaged workers. An advantage large businesses have is they can tackle very complex problems that require thousands of minds to solve—a team of three is not about to build an MRI machine in a garage. Whereas an advantage small businesses have is it is often easier for workers to contribute in more areas of the overall process. These are just two ways sophistication can be leveraged according to scale.

Lifestyle acknowledges that work life and private life are not two separate things to be balanced, but two parts of a whole that need to be integrated. Children, health, parents, education, vacation and passion-projects all affect productivity. Happy and healthy people cost less and make individuals, businesses, and societies more economically vibrant. The wild proliferation of employer ratings, “best places to work” lists and certifications for green, democratic workplaces, and corporate responsibility, while great for appearances, are ultimately driven by the competition for talent. Consideration of lifestyle is gaining more importance in the hunt for talent.

Learning recognizes that if skills are not kept sharp in our fast-changing world, they rapidly lose their market value. Today it is the norm to be looking for the next “thing” even when the current “thing” appears to be working just fine. Over-achievers are looking for work that is all about learning all the time, and the minute the learning stops, they get bored and wander off. Everyone else is realizing that the only way to stay relevant is to keep learning.

How can employers re-imagine compensation, time and benefits through the lenses of stability, sophistication, lifestyle and learning?

Compensation

Deferred compensation, usually in the form of stock options that vest over time, is frequently used to retain high-value employees at larger organizations. Its more derogatory name of “golden handcuffs” suggests how this practice can result in decreased worker productivity and actually may not be in a company’s long-term best interest. But what can be negative leverage for an employee (“The only reason I am working here is for my stock options.”) can become an opportunity when modified for contingent workers.

Contingent workers face consistent income volatility, while small businesses generally cannot compete for high-priced talent with large businesses. Taking on an employee at $100,000 per year isn’t possible or desirable for many small businesses. This is especially so when the demand for that individual’s services isn’t constant. But a small business may be able to offer a high-talent contingent worker $100,000 over two years to do a major project in a matter of months. The advantage to the worker in this scenario is they become affordable to small companies and the potential client-base expands.

For businesses, deferred compensation can make talent more affordable and cashflow management less difficult (smaller payments over a longer period rather than a large payment immediately). Obviously, legal guarantees would need to be in place.

Some will argue that deferring compensation for workers is too risky because it is akin to gambling one’s pay on the future of the client. This is certainly true. But those making this argument don’t realize how much “gambling” is already going on in the gig economy.

Time

One thing employers can do immediately is break out of the 9-to-5, 40 hours a week mold. That model was functional for three shifts at the factory, but it is out of touch with the realities of 21st Century lifestyle demands. This points directly to gig economy work, but even permanent employees should be given more flexibility in how many hours they work, when they work, and where they work. A retirement home in Sweden has found that reducing the workday to six hours increased efficiency and reduced turnover5—two things every employer wants. Or perhaps a worker is okay with working intensely (50-60 hours week), but they are given an annual month-long sabbatical to recharge. Because of the amplification of technology, a great hour of work from one person has the potential to generate incredible value for a company. Quality of hours is starting to trump quantity of hours.

Getting creative with how hours are allocated doesn’t just benefit the workers. It can add a dimension of flexibility to businesses as well. A full-time employee needs to be kept busy full-time. As competition becomes more global and technology more sophisticated, is it smart to build expectations of productivity around the rather arbitrary number of 40 hours a week? Why not ask workers to determine their ideal workload and help them make that happen in order to utilize, and only pay for, their best work? Employers need to design their business structures to support quality hours of productivity.

Contingent workers can make a company more agile and innovative, assuming there is a stable talent pool to tap when needed.

Benefits

The lesson for employers here is help workers help themselves. Compensation and benefits are often wielded antagonistically as tools to coerce commitment (see: golden handcuffs). Benefits are also massive responsibilities and relatively illiquid costs for businesses. How can we reduce the antagonism, get businesses out of the business of providing healthcare and retirement, and empower workers?

One answer is portable benefits. An example of portable benefits in practice is the 401(k). The 401(k) goes where the worker goes. Another example is self-insurance. The biggest innovation of the Affordable Care Act was the step it took towards making benefits independent of specific employment situations, but we have the opportunity and responsibility to innovate more.

Thinking outside the box, Labor organizer David Rolf and investor Nick Hanauer have proposed the “shared security account”6 as one avenue towards benefit portability. The gist of the shared security account is proration (benefits allocated on an hourly, or more granular basis), portability (benefits not attached to, or the responsibility of, a single employer), and universality (elegance of policy to minimize loopholes and complexity). Imagine if a worker had a shared security account and a business simply paid compensation with a determined percentage going to that account. This allows the business to contribute to the stability of the worker (helping guarantee the availability of talent) while maintaining the worker’s independence.

Innovate or alternative benefits can be provided. In Milwaukee, WI, one general contractor who uses project-based workers realized he was not in a position to offer traditional benefits due to the nature of the work. So instead he picks up his workers at their homes, feeds them breakfast, lunch, and snacks, and then drops them off at home, every day. These two “benefits” of transportation and food are allocated on a daily basis, making it possible to offer alternative benefits where the traditional options are not available. The advantages for the business are the workers show up on time every day and are fed and ready to work.

Employers should also consider that contingent workers may actually prefer to provide benefits for themselves. Benefits that are not tied to an employer can have a stabilizing influence.

Regardless of the merits of these particular ideas, employers are an important partner in the evolution of the gig economy.

Questions for further consideration:

  • 4.1 How can employers be encouraged to foster behaviors that are mutually beneficial to businesses and workers?
  • 4.2 How can employers help stabilize contingent workers?

  1. http://gig.work/work-future-3-employment-is-broken/ ↩︎
  2. http://www.census.gov/content/dam/Census/library/publications/2015/econ/g12-susb.pdf ↩︎
  3. It is worth noting this could be due to either a growing number of people being employed by large employers or due to fewer people being employed in smaller businesses. ↩︎
  4. Agency temps, on-call workers, contract company workers, independent contractors, self-employed workers, standard part-time workers. http://www.gao.gov/products/GAO-15-168R ↩︎
  5. http://www.theguardian.com/world/2015/sep/17/efficiency-up-turnover-down-sweden-experiments-with-six-hour-working-day ↩︎
  6. http://democracyjournal.org/magazine/37/shared-security-shared-growth/ ↩︎

Work Future 3: Employment is broken.

Reading Time: 3 minutes

Traditional employment was not designed for the hyper extremes of ability, access and resources within networked societies.

  • “…In 1990 GM, Ford, and Chrysler brought in $36 billion in revenue and hired over a million workers… The big three today — Apple, Facebook, and Google — bring in over a trillion dollars in revenue and only have about 137,000 workers…”1
  • India has 1,000,000 people a month entering the workforce.2 3

The conundrum is this: Productivity is going up, requiring less people, but the global population is growing, meaning more people. And productivity gains are by and large concentrated in a minority of highly talented workers. This is not the first Gilded Age, but this is the first Gilded Age where the 91% of us with a cell phone can bear witness to the gilding.4

Social stability in the United States (and many other places) is built around the idea of stable employment and the ability to move up in the world. Be born, go to school, get a job—only then is the middle class promise of financial stability supposed to kick in. In the U.S., healthcare and retirement are designed to be taken care of through employment. Even the path to obtaining homeownership financing begins with W-2s5.

But what happens when economic transition becomes the new normal? The percentage of people participating in the workforce has been trending downward since 2000.6 And youth (15 to 24 years-old) workforce participation in the United State peaks at 60%7, which means a significant percentage of youth don’t have the experience of employment at all. And even when employment is achieved, other issues emerge. In the United States, 30% of employees are engaged in their work, 52% are not engaged, and 18% are actively disengaged.8 The bad news is we are only 30% efficient using the tool of employment to activate human talent. The good news is there is a lot of room to improve productivity by increasing the engagement of workers. But even if we put engagement aside, having a job does not promise opportunity. Workers are not seeing a return on their investment even as unemployment drops, which in theory should tighten the job market and raise wages.

Does employment look promising in this chart?

Screen Shot 2015-11-01 at 6.30.57 PM9

How about this one?

Screen Shot 2015-11-01 at 6.35.06 PM10

In summary, a decreasing percentage of people are participating in the workforce, many youth have no experience with jobs at all, the majority with jobs are not engaged in their work and those who are employed are not seeing a bright future.11

The challenge before us is to create the systemic and institutional structures that better activate and stabilize workers. And the first step is to consider what economic participation that does not assume traditional employment is the primary path to financial stability looks like.

Questions for further consideration:

  • 3.1 What are the implications of increasing financial volatility for a growing segment of workers?
  • 3.2 What opportunities exist because of increasing financial volatility?
  • 3.3 What alternatives to stable employment already exist and what can we learn from them?

  1. http://www.businessinsider.com/technology-is-destroying-jobs-and-it-could-spur-a-global-crisis-2015-6 ↩︎
  2. https://www.youtube.com/watch?v=6_CDBJfIUBw ↩︎
  3. This is of concern for every nation as mass migration across great distances has been enabled by globalized communication and transportation systems. Most assume technology will move the work to the workers. Few consider the implications of technology enabling the movement of people to where wealth resides. ↩︎
  4. http://www.pewresearch.org/fact-tank/2013/06/06/cell-phone-ownership-hits-91-of-adults/ ↩︎
  5. https://en.wikipedia.org/wiki/IRS_tax_forms#W-2 ↩︎
  6. http://data.bls.gov/timeseries/LNS11300000 ↩︎
  7. http://www.bls.gov/news.release/youth.nr0.htm ↩︎
  8. http://www.gallup.com/services/178517/state-global-workplace.aspx ↩︎
  9. http://www.nytimes.com/2015/11/01/sunday-review/the-mystery-of-the-vanishing-pay-raise.html ↩︎
  10. http://www.nytimes.com/2012/12/12/opinion/global/jobs-productivity-and-the-great-decoupling.html ↩︎
  11. It is at this point the political obsession of job-creation needs to be questioned. ↩︎

Work Future 2: What is work?

Reading Time: 3 minutes

Work is an institution. An institution is “a significant practice, relationship, or organization in a society or culture1.” Institutions evolve. And the institutional evolution of work is what the Gig.Work project will consider.

Today the institution of work is largely conceptualized as employment. Companies are started and/or grow and workers are hired to do the work. Work is rarely thought of as something that can be reimagined. And only recently has the economic development conversation started to seriously consider the role of non-employment work in our economy. Examples of non-employment have always existed in the ranks of the self-employed, entrepreneurs and artists.

But to reimagine the institution of work, we need to first consider its functions.

Work:

  • makes a livelihood (money);
  • produces goods and services for exchange;
  • provides well-being, a sense of participation and health;
  • creates a sense of identity, of role.

Let’s consider how work fulfills these four functions.

Livelihood

The investment of time and effort in exchange for value is the core economic action of the individual. Individuals, whether employees, entrepreneurs or investors, hope for an outcome of their work that provides for their needs and wants. The livelihood function is how most of us internalize work. I work to generate the means to acquire the goods and services I want.

Goods and Services

Work is the most basic input in the production of goods and services (a.k.a. productivity). The opportunity to offer labor to the production process is the one thing that guarantees that people with nothing else to offer—no investment capital nor control of resources—will be able to participate in the market. The goods and services function is how most of us externalize work. That person does work that creates a good or service I need or want.

The combination of the livelihood function with the goods and services function is the essence of the market system. Time and energy are invested with the promise that one will be able to acquire what one needs to live. An important assumption here is that one’s productivity will be valued at a rate that allows one to live well.

Well-being

Well-being is a role of work that has been greatly under appreciated, but the increasing discussion around the concept of work-life balance demonstrates its emerging importance2. While many are striving to improve work-life balance3, others are throwing the concept out completely4. Regardless, there is newfound energy for understanding how work affects well-being and health, and how well-being and health affect productivity. And beyond the pure economic discussion, the implications of how our work practices affect things as diverse as home life, child-rearing and the environment. The well-being function of work is an underutilized opportunity to improve a range of social systems such as strengthening the sense of community and advancing healthcare and educational outcomes.

Identity

The sense of identity that is associated with one’s efforts is immense. A majority of Americans for the past 15+ years have consistently said that their sense of identity is derived from their job5. And one of the few questions that is appropriate to ask when meeting a new person (in nearly every culture) is “What do you do?” or “What is your job?” The identity function of work is still largely overlooked by all parties: people doing the work, people creating the work, and people regulating the work.

In Closing

A practice I would like to introduce in this installment of Gig.Work are thought experiments6. The initial work on this project is exploratory and philosophical. This is intentional because impulsive solutioneering is a symptom of having access to infinite information in the Network Age. Gig.Work intends to open conversion and invite discussion. The smart paths forward are generally found through time and practice. So with that, I close with four questions for further consideration.

  • 2.1 How does your work meet the functions of livelihood, goods and services, well-being, and identity?
  • 2.2 What does work look like that equally values livelihood, goods and services, well-being, and identity?
  • 2.3 What functional alternatives to the current institution of work can we imagine and practice?
  • 2.4 If identity and well-being are functions of work, is work something only humans do? Can machines do work?

  1. http://www.merriam-webster.com/dictionary/institution ↩︎
  2. http://www.nytimes.com/2015/09/24/upshot/the-great-divide-in-workplace-benefits.html ↩︎
  3. http://www.mayoclinic.org/healthy-lifestyle/adult-health/in-depth/work-life-balance/art-20048134 ↩︎
  4. http://fortune.com/2015/03/06/work-life-integration/ ↩︎
  5. http://www.gallup.com/poll/175400/workers-sense-identity-job.aspx ↩︎
  6. https://en.wikipedia.org/wiki/Thought_experiment ↩︎

Work Future 1: An Introduction

Reading Time: 3 minutes

The beginning is a great place to start, and luckily we are at a beginning.

This particular beginning emerged in the 1960s as we started to connect computers and share packets of information among the resulting networks.1 And ever since, the Internet, along with its biosphere of accompanying software and hardware, have been inviting themselves deeper into our lives. What started as a novelty whiz-bang-wow is now considered a critical necessity. Just place a random group of technologically-habituated humans in a space without connected devices and wait—the withdrawal symptoms will not be far behind. And as with all beginnings, they invite questions as to where they lead.

In light of this Network Age, Gig.Work explores one question in particular: How is the institution of work changing?

In order to explore properly, we must have lenses to see. The two primary lenses used will be the gig economy and systems thinking.

The gig economy lens looks at the evolution of work itself. Today the basic unit of work is the job. Children are educated for jobs. Adults look for jobs. Employers control jobs. Politicians promise to create jobs. Governments regulate jobs. The Gig economy proposes the project as the basic unit of work. In the gig economy, a job is considered just one form of project that qualifies as work.

The systems thinking lens examines how the institution of work fits into the larger society. Systems thinking is the process of understanding how things, regarded as systems, influence one another within a whole.2 Basically, everything is a system itself and everything is a part of a system. All these systems are interconnected. A primary thread of the Gig.Work project is the idea that we need to fundamentally reconsider the role of work within our social systems.

Using these lenses of gig economy and systems thinking, the change in how we work is readily observable. We each can think of concrete examples of people (perhaps even ourselves) who work on gigs, have multiple streams of income, and/or hold the title of “consultant” or “contractor.” The Uber-ification of everything from laundry3 to flower delivery4 to executive talent5 is another example of how work is changing. And many of us can relate to feelings of frustration, tenuousness and instability that permeate the experience of work and how it integrates into our lives. Gone is the option of the 30-year job with a pension. How we work is quite obviously changing.

The societal implications of this systemic change in the institution of work are immense. The questions for further consideration come rushing in:

  • What does employment mean today?
  • What does having a “collage career” mean?
  • Why are people doing project-based work?
  • What does education look like for the gig economy?
  • What skills are most critical in the gig economy?
  • What systems need to be adapted and built to create a predictable marketplace for both businesses and workers?
  • What is the current discussion about the “gig-project-sharing-on-demand economy” getting right and what is it getting wrong?
  • What is the role of work in our society?

It is questions such as these Gig.Work will explore through editorials, research, workshops, interviews, and document reviews, all to be published here.

This is a critical exploration because like the transition from hunting and gathering culture to agrarian culture; and like the transition from agrarian culture to industrial culture; the transition from industrial culture to network culture will fundamentally rewrite the human experience of work.

Welcome. Let’s begin.


  1. https://en.wikipedia.org/wiki/History_of_the_Internet ↩︎
  2. http://en.wikipedia.org/wiki/Systems_thinking ↩︎
  3. http://www.getwashio.com/ ↩︎
  4. https://www.bloomthat.com/ ↩︎
  5. http://www.businesstalentgroup.com/ ↩︎