New ‘gig’ economy spells end to lifetime careers
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The archetypal worker in an advanced economy used to be a man on a production line or a salaryman in a city office — a secure, yet repressed, cog in a machine. “A crowd flowed over London Bridge, so many/I had not thought death had undone so many,” wrote T.S. Eliot in The Wasteland, who once worked at Lloyds Bank.
There are still millions of these, including many women, but the new world of work is both more exciting and less secure. There is greater variety, in both pay and conditions. A job is more likely to be part-time, temporary, freelance or self-employed. It may not be a job at all, in the way it used to be defined.
Hillary Clinton, the Democratic presidential candidate, lamented in a recent campaign speech the weakening of the US employment bargain that “built the greatest economy and the strongest middle class the world has ever known” — that “if you work hard and do your part, you should be able to get ahead”. As she observed, the “gig economy”, the growth of online platforms such as Airbnb and Uber on which people buy and sell services and jobs, “is creating exciting economies and unleashing innovation, but it is also raising hard questions about workplace protections and what a good job will look like in future”.
The gig economy is only part of a shift in employment over the past three decades, unleashed by technology and global trade. It has created many winners and losers, both by outsourcing jobs from the west to Asia and Africa, and by changing the terms on which most people work. Financial and contractual risk that used to be borne by companies has been transferred to employees.
“Gone is the era of the lifetime career, let alone the life-long job and the economic security that came with it, having been replaced by a new economy intent on recasting full-time employees into contractors, vendors and temporary workers,” Nick Hanauer and David Rolf wrote recently in Democracy Journal, although the US jobs statistics do not yet reflect such a transformation.
Yet this world of insecurity and risk is also one that many people seem to appreciate. More self-employed people in Europe and the US report enjoying their jobs than those who are employed. Many entrepreneurs, even those who run a tiny business that amounts to self-employment, like their freedom and self-reliance and the possibility that they could become wealthy.
There is a lot of potential in the new world of work. The McKinsey Global Institute, the research arm of the management consultancy, estimates that what it calls “online talent platforms”, job sites such as Monster.com and platforms such as Uber, could add 2 per cent to global gross domestic product by 2025, increasing employment by 72m full-time equivalents.
The UK has added 1.4m “micro-firms”, those with between zero and nine employees, since 2000. The Freelancers Union, a US employee group, estimates that 53m Americans now freelance in some form, including 21m independent contractors. Some 82 per cent of millennials believe that the best days for freelancers lie ahead.
The ideal working life for many millennials is not finding a safe job that will last them a lifetime but creating a technology start-up, a glamorous form of small business that is backed by angel investors. They dream of being Mark Zuckerberg of Facebook or Larry Page and Sergey Brin of Google, not an executive of a professional services firm or public company.
The dream can be just that; the average income from self-employment fell 22 per cent in the UK between 2009 and 2014, even as self-employment contributed 732,000 of the 1.1m rise in total employment. The rewards of new forms of employment contract accrue to a minority, while others lose out.
The challenge for policymakers is to find a new form of employment contract that suits the changing workforce. Benefits such as pensions and sick leave are often attached to permanent jobs and increase with longevity. As jobs fracture, individuals who switch jobs, work as consultants or run “micro-businesses” with one or two employees need similar support.
There are already legal rumblings.
The Labor Commissioner’s Office in California ruled in June that Uber drivers were in effect employees, not independent contractors, as the company sees them. The UK government is raising the adult minimum wage and the New York Wage Board has recommended phasing in a $15 minimum wage for the state’s fast-food workers.
The task is to limit the downside of the new economy without curtailing job growth or preventing people from working in they way they prefer. There is a danger of romanticising the past benefits of permanent full-time employment and fixed-job contracts when many now want alternatives.
Few want to be a cog in a machine, even if they are given the chance. The new world of work must chart a course between the twin dangers of corporate conformism and worker exploitation.