Friday, September 2, 2011

The future of work

Parrado, Caner, and Wolff (2007) find that workers have changed jobs more frequently in the 1981-1993 period compared to the 1969-1980 period. Underlying this article there seemed to be a subtext that this not a good finding, based mainly on words such as volatility, standard deviation, and turbulence. Yet in another labor market - sports - we think of frequent team (or club) changes by athletes as evidence that the labor market is competitive and that the player is selling himself to the club that places the highest value on him.

Is this because in the ‘usual’ labor market occupation changes are seen not so much as career progression but as involuntary changes forced onto the individual by competitive market forces? Why not see these occupation changes as portfolio/skill diversification? Of course, none of these stories can be told from the data yet the loaded terms in the paper point to the assumption that frequent job changes are in some ways unhealthy.

At the other end of the spectrum, some would view this increase in volatility as evidence of a “free-agent nation”. As Daniel Pink writes:

The old social contract didn't have a clause for introspection. It was much simpler than that. You gave loyalty. You got security. But now that the old contract has been repealed, people are examining both its basic terms and its implicit conditions.

Free agents quickly realized that in the traditional world, they were silently accepting an architecture of work customs and social mores that should have crumbled long ago under the weight of its own absurdity. From infighting and office politics to bosses pitting employees against one another to colleagues who don't pull their weight, most workplaces are a study in dysfunction. Most people do want to work; they don't want to put up with brain-dead distractions. Much of what happens inside companies turns out to be about . . . nothing. The American workplace has become a coast-to-coast "Seinfeld" episode. It's about nothing.

But work, free agents say, has to be about something. And so, instead of accepting the old terms, they're demanding new ones. Thus the second rule of the road for navigating Free Agent, USA: work is personal. You can achieve a beautiful synchronicity between who you are and what you do.

Despite its celebratory nature, work is work. And if one reads through the entire article, even free agents have their down days - be it their personal lives due to work commitments or a client (in place of boss) who is difficult.

Daniel Pink wrote that in 1997. Almost 15 years later, Justin Fox revisits this issue:

From 1997 through 2005, the net change in employment at existing firms was -11.4 million, according to data gathered by the Census Bureau and tweaked by Tim Kane at the Kauffman Foundation. It was only because of the 28.7 million jobs created at new firms over that period that overall employment didn't go backwards over that period.

The Kauffman Foundation plugged this as meaning that U.S. job growth was "driven entirely by startups." Which isn't untrue, but it gives a picture of job growth being driven by the Groupons and Facebooks of the world. In fact, most "startups" are and remain single-employee enterprises. They are new members of Free Agent Nation.

Ying Lowrey, an economist at the U.S. Small Business Administration, reported on this at the annual meeting of the American Economic Association in Denver in January. She estimated that between 1997 and 2008, startups had created an average of 2.5 million "entrepreneurial jobs" (that is, jobs for their founders) a year, and just 1 million "paid employment jobs."

Sara Horowitz (featured in Pink’s and Fox’s articles), the founder of Freelancers Union writes almost triumphantly:

It's been called the Gig Economy, Freelance Nation, the Rise of the Creative Class, and the e-conomy, with the "e" standing for electronic, entrepreneurial, or perhaps eclectic. Everywhere we look, we can see the U.S. workforce undergoing a massive change. No longer do we work at the same company for 25 years, waiting for the gold watch, expecting the benefits and security that come with full-time employment. We're no longer simply lawyers, or photographers, or writers. Instead, we're part-time lawyers-cum- amateur photographers who write on the side.

Today, careers consist of piecing together various types of work, juggling multiple clients, learning to be marketing and accounting experts, and creating offices in bedrooms/coffee shops/coworking spaces. Independent workers abound. We call them freelancers, contractors, sole proprietors, consultants, temps, and the self-employed.

And, perhaps most surprisingly, many of them love it.

This transition is nothing less than a revolution. We haven't seen a shift in the workforce this significant in almost 100 years when we transitioned from an agricultural to an industrial economy. Now, employees are leaving the traditional workplace and opting to piece together a professional life on their own. As of 2005, one-third of our workforce participated in this "freelance economy." Data show that number has only increased over the past six years. Entrepreneurial activity in 2009 was at its highest level in 14 years, online freelance job postings skyrocketed in 2010, and companies are increasingly outsourcing work. While the economy has unwillingly pushed some people into independent work, many have chosen it because of greater flexibility that lets them skip the dreary office environment and focus on more personally fulfilling projects.

Unfortunately for some, this recession has focused attention on whether the free agent economy of the this new decade is a result of the bad economy or whether it is by choice as highlighted in this New York Times article who refers to them not as free agents but as the Generation Limbo:

WHEN Stephanie Kelly, a 2009 graduate of the University of Florida, looked for a job in her chosen field, advertising, she found few prospects and even fewer takers. So now she has two jobs: as a part-time “senior secretary” at the Florida Museum of Natural History in Gainesville and a freelance gig writing for, a “secret Santa” Web site.

But is Ms. Kelly stressed out about the lack of a career path she spent four years preparing for? Not at all. Instead, she has come to appreciate her life. “I can cook and write at my own pace,” she said. “I kind of like that about my life.”

Likewise, Amy Klein, who graduated from Harvard in 2007 with a degree in English literature, couldn’t find a job in publishing. At one point, she had applied for an editorial-assistant job at Gourmet magazine. Less than two weeks later, Condé Nast shut down that 68- year-old magazine. “So much for that job application,” said Ms. Klein, now 26.
One night she bumped into a friend, who asked her to join a punk rock band, Titus Andronicus, as a guitarist. Once, that might have been considered professional suicide. But weighed against a dreary day job, music suddenly held considerable appeal. So last spring, she sublet her room in the Fort Greene section of Brooklyn and toured the country in an old Chevy minivan.
“I’m fulfilling my artistic goals,” Ms. Klein said.        

Meet the members of what might be called Generation Limbo: highly educated 20-somethings, whose careers are stuck in neutral, coping with dead-end jobs and listless prospects.
“We did everything we were supposed to,” said Stephanie Morales, 23, who graduated from Dartmouth College in 2009 with hopes of working in the arts. Instead she ended up waiting tables at a Chart House restaurant in Weehawken, N.J., earning $2.17 an hour plus tips, to pay off her student loans. “What was the point of working so hard for 22 years if there was nothing out there?” said Ms. Morales, who is now a paralegal and plans on attending law school.

There is an undeniable rise in free agency and freelancing. Yet as Pink’s article seems to imply, though not directly, it is only suitable for a (perhaps small) subset of people. These are highly educated people who have cut their teeth in corporations and built the network essential for stepping out on their own. Sometimes their first clients are the corporations that they quit working for. Moreover, these are also people who are perhaps less risk averse than the average population.

So is there a future of work that consists of mainly free-agents?

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