A Strong Job Market and the “Gig” Economy

The two don’t go together very well.

It wasn’t so long ago that the so-called “gig” economy was all the rage. In the early 2010s, with a sizable portion of companies being skittish to commit to hiring full-time workers due to fresh memories of the economic downturn, many workers found opportunities to make money through various different gig economy service firms — companies like Uber, Lift, Postmates and others.

What those jobs offered workers were flexible schedules, reasonably decent pay, and the ability to cobble together a livelihood based on holding several such positions (while still being able to hunt around for full-time employment).

For employers, it was the ability to build a workforce for which they didn’t have to cover things like office expenses and various employee benefits — not to mentioning paying for payroll taxes like the employer social security contribution.

In the past few years, the environment has changed dramatically. With national unemployment hovering around 3.5% — and lower still in many larger urban areas — “gig” companies have found it more difficult to find workers.

What’s more, those workers who are hired are churning through the companies more even more quickly than before — many staying with these jobs for just a few months.

Tis is driving up worker recruitment costs to their highest levels ever.

In a May 2019 interview with The Wall Street Journal, Micah Rowland, COO of Fountain, a company that helps gig companies acquire new workers by streamlining the hiring process, puts it this way:

“It [strikes] me that in some of these markets, they’re processing thousands of job applicants every month — and these are not large cities.”

In Rowland’s view, gig companies in some markets may be burning through the entire available labor market of people willing to work in roles of this kind.

It isn’t as though turnover rates aren’t high in other service sectors in the more “traditional” economy. In the fast-food industry, for example, turnover is running as much as 150% annually these days. But in the case of gig employment markets, it’s even higher — sometimes dramatically so.

With the tight labor market showing little sign of loosening anytime soon, it may be that we see some firms looking at “regularizing” employment for at least some of their workers. If it makes economic sense to hire some actual employees in order to curb recruitment costs, some will likely go that route .

There’s another factor at work as well. More of these gig economy workers are becoming more vocal about pushing back on pay and working conditions. Noteworthy examples have been recent protests by rideshare company workers in cities like Los Angeles and San Francisco.  Others have done the envelope math and have determined that once driver-owned vehicle costs of gasoline and depreciation are calculated against declining fares that have dropped below $1 per mile in some markets like Los Angeles and Minneapolis-St. Paul, workers’ effective wages are significantly less than even $10 per hour.

Picking up on these worker concerns, a number of activist groups are making gig economy companies like Lyft and Uber into a “cause célèbre” (not in a good way), but loud, polarizing detractors such as these tend to muddy the water rather than bring fresh new insights to the debate.

As well, one wonders if the activism is even needed; I suspect what we’re seeing now is a pendulum swing which happens so often in economics — where an equilibrium is re-established as things come back into balance after going a bit too far in one direction. In the case of the gig economy, the low unemployment rate in many regions of the country appears to be helping that along.

Why aren’t wages moving in lockstep with the improved employment picture?

If you’ve taken a look at September’s U.S. unemployment figure – 3.5% — you’re seeing the lowest level of unemployment in over 50 years. And for particular subgroups of the population, they’re enjoying their lowest employment percentages ever — at least since records have been kept.

It’s definitely something to cheer about. But at the same time, it’s become increasingly evident that wage growth isn’t happening in tandem with lower unemployment.  And that includes industrial wages as well.

In fact, September results show the first dip in wages – albeit slight – in the past two years.

What gives?

According to Zheng Liu and Sylvain Leduc, two economics researchers at the Federal Reserve Bank of San Francisco, the cause of stagnating wages in an otherwise robust economy can be laid at the doorstep of automation.

According to Liu and Leduc, as certain tasks move more toward automation, employees are losing bargaining power within their organizations. When people fear that they could lose their jobs to a robot or a machine, there’s a hesitation to ask for higher wages as that might hasten the eventuality.

The net result is a widening gap between productivity and pay.

But does this situation apply across all of industry? Perhaps not. Last year, manufacturing expert and Forbes magazine contributing writer Jim Vinoski noted that “huge swaths of industry remain decidedly low-tech and heavily manual.”

The reason? Complexity, volume and margins are often barriers to the implementation of automation in many applications.  Just because something can be automated doesn’t mean that there’s a compelling economic argument to do so – particularly if the production volumes aren’t in the league of “mass manufacturing.”

Jobs in engineering and R&D are even less likely to become automated. After all, probably the single most important attribute of employees in these positions is the ability to “think outside the box” – something artificial intelligence hasn’t come anywhere close to replicating (at least not yet).

What are your thoughts about automation and how it will affect employment and wage growth? Please share your perspectives with other readers.

LinkedIn’s Weak Link

On balance, most people would agree that the LinkedIn social media platform has been a positive development in the field of business. Until LinkedIn came along, often it was quite challenging to make and nurture connections with like-minded industry or professional colleagues, or to find relevant contacts deep within corporations or other organizations.

I’m old enough to remember the “bad old days” of fruitless searches through the Corporate Yellow Book, Hoover’s and Dun & Bradstreet mercantile listings to try to find good company contacts. Often the information was far too “upper-level,” out-of-date, or simply wrong.  Industry, state and regional directory listings were even worse.

Invariably, any data ferreted out needed to be vetted through phone calls made to beleaguered front-office receptionists who were understandably disinclined to spend much time being helpful.

Of course, as with Wikipedia all LinkedIn “data” is submitted information, and subject to varying degrees of accuracy. As well, the data are comprehensive and accurate only to the degree that each LinkedIn member keeps his or her employment and related information current and complete.

But as a crowd-sourcing database of information – and often with “deep-dive” data on members available to view – LinkedIn is miles ahead of where we were before.

That being said, there is one negative aspect about LinkedIn that seems to have become more pronounced over time — and that’s the burgeoning volume of LinkedIn connection requests that are happening.

Speaking for myself, I’ve spent an entire career nurturing my business relationships. That this has resulted in being one of the LinkedIn members who are in the “500+ connections” club speaks to a lifetime of establishing “real” connections with “real” people – not mindlessly sending out connection solicitations to just anyone.

But that’s what’s happening with many of the incoming requests-to-connect on LinkedIn. These days, I’m receiving requests daily from people I do not know personally and have never even heard of before.

These are the folks who take advantage of LinkedIn’s higher cost”premium membership” programs to gain access to the more detailed information contained in member profiles that is normally off-limits to all except first-degree connections.

In what ways are these people actually interested in connecting with me?  Are they simply sending out a rash of “spray-and-pray” requests in the hopes of getting a nibble … or perhaps making an effort to build their own network and look more like an “authority” in their line of work?

When I click through to view the profiles of those people requesting to connect, it turns out that most them are in fields that relate to my line of work, however tangentially. Likely they’ve identified my name based on shared professional organizations and vocational interests.

But their reasons for requesting to connect — if they even bother to give one — are so generic (or so lame) as to be laughable.

Early on, I did a bit of “empirical” research to see how a few of these connections might actually evolve after I accepted their request to connect. Big mistake, that was.  Recently, freelance copywriter extraordinaire Ed Gandia described something very similar about his own personal LinkedIn experience, characterizing the typical follow-up communiqué from a new LinkedIn connection as “the business equivalent of a marriage proposal” – to wit:

“I’d like to get on the phone with you about [marrying me/having kids/opening a joint bank account]. Here are three times I’m available to talk.  I’m so excited to hear what you can offer me as [my new husband].”

If ever we needed reminding about how not to engage in business development solicitations, these sorry LinkedIn communications are it.

The bright promise of LinkedIn is the ability to identify people with whom we can potentially work or collaborate.  In that regard, the platform can be very valuable.  It’s just too bad that so many people are now using it for ill-conceived (or perhaps desperate?) shotgun attempts to sell themselves, their products or their services.

It won’t work. Communications technology may have evolved but some fundamental things never change.  At the top of the list:  No one wants to be pestered by unsolicited pitches for products, consulting services, employment opportunities and the like.  Not then, not now, not ever.

Hopefully, LinkedIn can calibrate its business practices to ensure that the benefits of interacting with the social platform always outweigh the detriments. We all recognize that this is one way LinkedIn can monetize the data that’s valuable housed on its platform.  But LinkedIn needs to get this just right, lest they turn off their most consequential members – or worse, drive them away.

The “woke” workplace? Employees vote thumbs-down.

Most of us have probably heard the old adage that one should never talk about politics or religion at a party (unless its an election party or at the social hour following religious services, I suppose).

But what about at work?

In the “old days” – like when I started in business some 40 years ago – a similar unspoken rule applied; at the office, it just wasn’t “seemly” for people to wear their partisan or “cause” labels on their sleeves.

But that was before the bitterly disputed presidential campaign of 2000. Ever since those fateful 35 days following that election, it’s been downhill in the decorum department pretty much nonstop.

And after the election campaign of 2016, it’s gotten even worse.

Now we read stories about employees revolting against their own employers for seemingly “cavorting with the devil” (Wayfair selling furnishings to border detention facilities), employees losing their jobs – or at the least feeing compelled to leave their place of employment – due to the unpopularity of their political viewpoints (Google), and the like.

Add to this the social “virtue signaling” of some companies and brands who have become involved in social action initiatives (Gillette’s “shaming” of purported male personality traits in its “toxic masculinity” ad campaign).

With the 2020 presidential election campaign on our doorstep and the prospects of continued “high dudgeon” on the part of many people we can charitably refer to as being “highly sensitized” to the campaign, it’s worth wondering what everyday employees think of all this socio-political drama.

If the results of a new survey are any indication, the answer is … “not much.”

Recently, Washington, DC-based business management consulting firm Clutch surveyed ~500 full-time employees working at a cross-section of American businesses ranging from small employers to enterprises with more than 1,000 workers. The breakdown of the research sample included respondents whose philosophical leanings mirror the country’s as a whole (34% conservative, 25% liberal, 21% moderate, 13% apolitical).

What these respondents said should make everyone want to go back to the standards of yesteryear — you know, when socio-political advocacy in the office was considered the height of boorishness.

Among the salient findings from the survey:

  • Most respondents (~60%) don’t know if their political beliefs align with those of their coworkers. What’s more, they don’t care to know what their coworkers think politically.
  • Money, not socio-political alignment, motivates where people choose to work. Whether or not their personal views align with their colleagues’ is of no (or very little) concern to the respondents.  What’s more, few care.
  • Less than one in ten of the survey respondents feel that a “dominant” political viewpoint in the office that doesn’t happen to align with theirs is a source of discomfort. But either way, they’d prefer that such discussions not happen in the first place.
  • Despite the well-intentioned actions of some companies and brands, the majority of respondents feel that engaging in political or similar “cause” expressions adds no value to a company’s culture – nor does it create a healthy exchange of ideas in the workplace. Only about one-third of the respondents think that airing differing views will have beneficial outcomes within the office, while for everyone else, such discussions are viewed as having a “net negative” effect, adding no incremental value to a company’s “culture.”
  • At the same time that respondents wish for a less politically charged atmosphere in the office, a majority of them disagree with the notion of “codifying” political expression and expected behaviors in an employee manual or some other formal written policy statement. In other words, what constitutes “being an adult” isn’t something that should have to be spelled out in so many words.
  • What do respondents think of company owners or leaders expressing their political opinions or taking stands on controversial issues? That’s frowned upon, too. A clear majority of employees (~60%) disagree that company leadership should take stances on political issues – even if they’re relevant to their company’s own products or services. Instead, employees expect leaders to foster a culture of respect at work, including setting a standard that discourages political conversations up and down the chain.

There’s an important side benefit to discouraging discussion of socio-political topics in the office setting. All it takes is for a few “loudmouth” employees to risk creating a hostile work environment – and thus the open up grounds for complaints that could ultimately result in enormous financial costs to the company.

And one important final point came out of the Clutch research: For many employees, a part of their identities as people is connected to where they work.  Often, being an employee means more than simply having a job that pays the bills.  Anything that companies and brands can do to make that identity “work” for the vast majority of their employees will go a good way towards keeping morale high and avoiding the kind of fraught “drama” that can make it onto social media or even the news broadcasts.

[More information about the Clutch survey results can be accessed here.]

What about you?  What’s been your personal experience with employers in the “woke” era? Is your workplace one that is tolerant of all viewpoints while avoiding showing explicit (or implicit) support for any one view?  How successful has your company been in the current environment?  Please share your thoughts with other readers here.

Predicting the top tech jobs, 20 years out …

What with the inexorable march of technology – which sometimes seems more like a relay race – it’s interesting to speculate on which occupations will be most in demand five years or ten years from now.

That seems pretty reasonable. But what about 20 years on?

Is it even possible to predict which jobs will be most in demand by then – particularly in the tech sphere? Or is that a fool’s errand, destined to elicit howls of laughter should anyone deign to look back at 2020 predictions when 2040 rolls around?

As it happens, the prognosticators at British multinational defense, security and aerospace company BAE Systems are willing to stick their necks out on the topic. They asked their own futurists to tell the what the top jobs in tech might be in 2040.

In broad terms, the answer is that future jobs will be in professions that bridge technology.  More significantly, it will be the technology that is the primary job generator, not the profession itself.

But it you really want to bottom-line it, anyone who focuses on artificial intelligence, virtual reality or robotics should be able to future-proof his or her career.  At least, that’s the unmistakable takeaway from the jobs that have been earmarked as the “hottest” ones looking ahead 20 years.

And … here they are:

AI Translator – People in these jobs will train other humans as well as their artificial intelligence assistants or robot counterparts, tailoring AI to meet workers’ needs and tune it to acknowledge and correct human errors.  Smart-aleck machinery – it’s just what the world’s been waiting for …

Recommended educational background: IT studies, cybersecurity, mechanical engineering

Automation Advisor – As companies become more reliant on automation and robotics, people in these jobs will make sure that the automated workforce is in line with regulations.  Compliance officers for machines – why not?

Recommended educational background: Physics, mechanical engineering, robots

VR Architect – As AI models are used to predict maintenance, people in these jobs will use virtual and augmented reality to monitor components and manage maintenance activities.  That’s OK – plant maintenance has always been a responsibility with a lot of downsides …

Recommended educational background: IT studies, graphic design

Human e-Sources Manager – Differing from today’s human resources managers, people in these jobs will analyze data collected from exoskeletons, smart textiles, wearables and the like to perform predictive and preventive maintenance on human workers.  Isn’t that nice; sensors will now send alerts to your manager when you’re overworked, overstressed, overweight or otherwise unwell — brilliant!

Recommended educational background: Biology, medicine, psychology

Systems Farmer – people in these jobs will help companies grow large multifunction parts with nanoscale features, which will sense, process, harvest energy and perform self-repairs.  It’s otherwise known as “chemputing” – and it’s likely as unappealing as it sounds.

Recommended educational background: Biology, chemical engineering, chemistry

AI Ethicist – As autonomous systems are assigned more responsibility, people in these positions will make sure AI devices and robots don’t show bias, and will make decisions that best serve the business.  I wonder how well that initiative will turn out?

Recommended educational background: Math, history, philosophy

Kidding or snark aside, it is worthwhile to “navel-gaze” along these lines and think of the “what if” scenarios that could very likely paint an employment picture unlike anything we’ve ever contemplated before.

And indeed, BAE Systems fielded research that found that nearly half of people between the ages of 16 and 24 who were surveyed think that they’ll end up having a career in a job that doesn’t even exist yet.

The only problem is – practically no one surveyed had any sort of clue what that future job will be — or how to prepare for it.

What do you think about which jobs will have the most job security in 2040? Does the list above ring true, or are there others that deserve a place on it as well?  Please share your thoughts with other readers here.

Evidently, America isn’t in IKEA’s manufacturing future …

Going, going, gone …

Over the past several years, the political mantra has been that jobs are now coming back to the United States – particularly manufacturing ones.

That may well be. But this past week we’ve learned that IKEA plans to close its last remaining U.S. production facility.  The iconic home furnishings company has announced that it will be closing its manufacturing plant in Danville, Virginia by the end of the year.

The Danville plant makes wood-based furniture and furnishings for IKEA’s retail store outlets in the United States and Canada.

The reason for the plant closure, as it turns out, is a bit ironic. According to IKEA, high raw materials costs in North America are triggering the move, because those costs are actually significantly lower in Europe than they are here.  Even accounting for other input costs like labor that are higher in Europe, shifting production to Europe will keep product prices lower for U.S. retailers, IKEA claims.

So much for the notion that imports from Europe are overpriced compared to domestically produced ones!

The Danville plant isn’t even that old, either. Far from being some multi-story inefficient dinosaur left over from a half-century ago, the manufacturing facility opened only in 2008, making it only about a decade old.  At its peak the plant employed around 400 people.

IKEA made staff cuts or around 20% earlier in the year, before following up with this latest announcement that will wipe out 300 more jobs in a community that can scarcely withstand such large economic shocks.

With the closure of Danville, IKEA will still have more than 40 production plants operating around the world. It employs around 20,000 workers in those plants (out of a total workforce of ~160,000, most of which are employed in the company’s vast retail and distribution business activities).

So, it doesn’t appear that IKEA will be exiting the manufacturing sector anytime soon.  It’s just that … those manufacturing activities no longer include the United States.

As a certain well-known U.S. political leader might say, “Sad!”

Just ducky: Engineers develop robots to replace ducks in cleaning and patrolling rice paddy fields.

Aigamo ducks in a rice paddy.

It’s a common theme that we hear: Artificial intelligence and robotics are coming for many of the jobs that have traditionally been performed by humans.

But what about the fate of animals?

That prospect was raised recently by David Mantey, a writer for Thomas Publishing, in an article about what’s happening in rice paddy fields.  And it involves ducks.

More specifically, aigamo ducks, which are a cross between mallards and domestic fowl. There is a farming method, originating in Japan, that employs these creatures to clear and keep unwanted plants and parasites out of rice paddy fields.

Essentially, it’s an environmentally-friendly practice in which the ducks keep the paddies clear without the need for pesticides. As an ancillary benefit, the ducks’ own waste acts as fertilizer for the rice plants.

The centuries-old practice was revived in Japan the mid-1980s, and has since become a popular natural rice farming method beyond that country, used in places like China, Iran and France.

Broadly speaking, approximately 15 ducks can keep more than a 10,000 sq. ft. area clear of weeds and insects, while also enriching the water with oxygen via stirring up the soil beneath.

It seems like a neat and tidy solution all-around — and one that works based on decades of experience with the farming practice. But as it turns out, it’s something that a robot can accomplish, too (well, maybe not the duck waste bit) — with certain improvements on the original tradition.

A rice paddy robot doing its thing.

While ducks can be “trained” to patrol specific areas of a rice paddy, it isn’t a foolproof proposition. As for the robotic version (which looks more like a white, floating ROOMBA® than it does a duck), it utilizes wi-fi and GPS technology to stir up the soil and keep the bugs at bay.

Reportedly, the robot is more accurate and more consistent in its execution compared to the aigamo ducks.

At the moment, the rice paddy robot is in an experimental phase with beta prototypes patrolling paddies in Yamagata Prefecture in northern Japan — and it’s too soon to know if or when the robot will be deemed ready for commercialization.

But the development goes to show that robots are spreading into some very surprising corners.  Indeed, it seems that robotics technology knows no bounds.