The Gig Economy Fallout
When I first started researching this “gig economy” thing I was constantly coming across articles about the flexibility and freedom it offered making much of it seem so sunshine and rosy primarily due to the constant referencing of what I’ve come to call the Uber Et Al’s which is primarily the On Demand Economy which can be more succinctly classified using a JP Morgan Chase study called “Paychecks, Paydays, and the Online Platform Economy” (February 2016) where it distinguishes these various On Demand Gig Economy elements into the Labor Platforms and the Capital Platforms. This Platform Economy doesn’t include traditional freelancers so it’s still not a complete picture of the entirety of the Gig Economy. The majority of these articles I originally read made this whole thing sound wonderful but from my discerning eye I was sniffing marketing or at the very least a lack of understanding depending on the intention of the writer. The more I looked into it the more I discovered that they are not as wonderful as they appear especially in the level of income they generate if you are accustomed to making more than the average $15/hr many of the Uber Et Al’s yield. This is primarily because getting started in the larger income arenas of the Gig Economy such as freelancing takes time to build what Seth calls “Trusted Connections”; these don’t happen overnight so are you prepared for the interim? Do you have an Unemployment Contingency Plan? The Big Picture aka serious income generation is more in alignment with conclusions from the excellent report by the McKinsey Global Institute called “Independent Work: Choice, Necessity, and the Gig Economy” (October 2016) where it delineates the type of people involved with the Gig Economy into four categories; Free Agents, Casual Earners, Reluctants, and Financially Strapped. It is from this that I now refer to myself as “The Reluctant Gigger”. This does include freelancers which appear to be where the better income generation is overall. This is expected where labor won’t generate as much income as specifically honed skills especially when they come with some tenure. Seth’s wisdom addresses this where he discusses the difference between the Average Freelancer and the Quality Freelancer where the averages ones are more often engaged in some element of the race to the bottom in contrast to the quality ones which are in the race for the top.
The point is that not everyone entering into this arena are doing it only because they are seeking the glories of the “freedom and the flexibility” regardless of percentage of total income. Many people, myself included, dream of being independently employed, answering only to ourselves, working the hours we establish instead of those often excessive corporate workweeks of way beyond the “traditional” 40 hours without all of the corporate politics etcetera yet it’s that “Real Job” or “Permanent Employment” resulting in that “Steady and Dependable Paycheck” that we’ve been conditioned to adhere to as a form of being a “responsible adult” that keeps us going instead of voluntarily pursuing it. We admire those who have it at a distance yet cower in fear of the reality of having to always “hunt down” that next bank deposit, all of which is also mirrored in the wisdom of Mr. Godin.
Some are seeking it because they have no choice such as long term positions being eliminated resulting in immense re-employment difficulties in conjunction with depleted cash reserves essentially “shoving” them into the Gig Economy whether or not they’ve heard of it and whether or not they like it as a desperate attempt to maintain some element of their current lifestyle. Or finding work that pays the same but now you’re a contractor which then can mean when that gig is up Continue reading
The Cold Sweeping Hand
My first exposure to the devastating affect that infinite profitability has on those that supply the labor for those profits aka the employees came during the three year financial restructuring at United Airlines which was my first corporate job. There were pay cuts and employee benefit reductions that also resulted in paying more for your insurance. The combination of the cuts resulted in an average of a 15% reduction in Net Pay. Eventually the pension system was dissolved and replaced with the now standard 401K; which if you knew the history of it would realize what a joke it is as it was never designed for the purpose that its used for today. Then there were reductions in the number of people to perform certain roles which then forced them all to re-interview for the same job they may have done for years. I saw people with 10, 20, and 30 years of service to the company basically being told “Thank you for your service” which was absolutely devastating to these people who believed they had a “Permanent Job”. These very same people had many times over the length of their careers taken one for “Team United Airlines” that had some level of financial impact on them all under the guise of permanence. Some were forced into early retirement. Others were simply pushed out as Corporate Politics played out using the phrase “moved on to other opportunities in the company”. I heard a lot of inside information during this time which was jaw dropping for me being such a novice in the ways of Corporate Life. Other than the politics, it was all primarily based on cold, hard calculations because plain and simply The Corporate will survive, even if it’s at the devastation of many of their devoted employees. As a result of these observations I came up with this phrase, “The Cold Sweeping Hand of The Corporate” as I watched it sweep across divisions throughout the company with some never knowing it was coming much less what hit them when it happened. When you’ve worked at a company for so long, starting over can have a devastating impact on your personal financials regardless of the severance pay that was given. This was the worst I witnessed because it was the only company I’ve worked for that went through this deep of a financial restructuring. Yet other restructurings had many similarities so I’ve been through this a number of times in various guises.
Infinite Profits > Life
Depending on to what degree you may have researched what I refer to as “Corporate Shenanigans”, what I’m about to say may come as a surprise if not shocking. I’m an Info Junkie and Truth Seeker in conjunction with having a fascination about everything so I’m always seeking truth and understanding in its various guises. It’s not that all corporations are involved with this but unfortunately more that you may realize because the face they put on to the public can sometimes be more marketing than reality. This all derives from the previous section discussing the drive for infinite profits and how they can actually get to the level of what I refer to as “psychopathic”. I first came across this perspective when stumbling upon a documentary many years ago called “The Yes Men”. It was about these two guys who punk various elements of Corporate America exposing many of its ludicrous behaviors. It wasn’t these actions that took me by surprise but an element in the opening sequence that was demonstrating why they did these things. Someone is filming a middle aged man sitting on a chair in a suit whose tie had been slightly loosened. It had the air of being some kind of seminar. You hear the man behind the camera say something to the effect of Continue reading
This post marks the return from a very long and unexpected hiatus from regularly posting my blogs. At first it was only supposed to be a small one of a couple months while I put all of my focus on creating a course on Udemy called The Gig Economy Preparation Guide which is essentially a “One Stop Gig Economy Information Central”. It’s primarily an analysis driven course of 4 hours yet I consider it to be a “Living Course” that will constantly be updated and expanded as I continue to explore this phenomenon. That being said, I already have plans for updates and a major new lesson on the AI impact. Shortly after the course was launched essentially my life informed me that it had other plans all of which were related to dealing with becoming The Reluctant Gigger which I will go into in future posts. I’m now permanently back with lots to say so let’s get on with it…
It’s not too much of a stretch for anyone who takes even a few moments to ponder the relationship between Corporate America and the Gig Economy that they are interdependent. The purpose of this post is to bring forth elements of companies that feed into this expansion of the Contingent Worker and to some degree have caused the expansion of what has now come to be known as the Gig Economy including its many various nomenclatures. It also shouldn’t be too much of a revelation that much of this revolves around its financial aspects. Before I embark upon this little adventure I want to emphatically state that I am not in any way an economist or financial analyst. Everything I will be discussing comes from over 18 years of experience as a Metrics & Reporting Analyst coupled with my innate analytical ability to take in large amounts of information, see their eventual patterns, and from that construct well thought out conclusions.
Over the course of my career, some of my reporting has gone from the “worker bee” to the C-Suite and all points in between. Because of that level of visibility, some people in management would befriend me to get an “inside track” of their information. From that relationship they sometimes would relate some of the “inner workings” of the company. For example, one company was involved with a proposed merger that would give them a better predominance in a region they didn’t have. The news was all a buzz about how this would be used to dominate that market driving prices higher. Their response was that this was not the case and just business expansion. Yet after the merger didn’t go through, I was secretly told that dominating the market and driving up prices was exactly their intention contrary to what was said in public. A combination of these “Whispers at the Watercooler” in conjunction with various news items over the years has resulted in this perspective.
This will not be a one sided account on the “Evils of The Corporate” as I will be covering elements of the Good, the Bad, and the Ugly. I will be using these as a foundation when exploring the recent merger of Amazon and Whole Foods where you’ll see they have participated in these elements to some degree.
The Entrepreneur Spirit
Many companies start out with what can be called the Entrepreneur Spirit. One or more people have a vision that fulfills a need or even can see a need before anyone knows it and then embarks on the creation of this vision. There are many examples of humble beginnings in a living room, garage, basement, or small store with little or no startup cash, long hours and loads of diligence. This can also easily start out as freelancing. Seth Godin says, “Freelancing is the single easiest way to start a new business.” It is the Business Model that determines if the initial business is entrepreneurial or just an independent business. The determining element of this Business Model is the concept of scalability. The vision must be able to expand beyond the initial efforts of those that initiated their vision to the point that they eventually oversee it such as becoming the CEO. This then brings in the element of “money while you sleep”. Referencing Seth again, “Entrepreneurs make money when they sleep. Entrepreneurs focus on growth and on scaling the systems that they build. The more, the better.” This then can go in one of two directions. The Entrepreneur(s) either sell the business and move on or continue to have a hand in its ongoing development as it continues scaling. Eventually outside money becomes involved in order to reach the higher altitudes of scalability. “Entrepreneurs use money (preferably someone else’s money) to build a business bigger than themselves.” – Seth Godin. Throughout several videos and articles Seth gives multiple examples of how businesses can appear to be entrepreneurial but are not because of this fundamental concept of scalability. One reference to this is “infinite growth” which is an important reference to the next foundational element, Profits. Without this, there is no business no matter how big, small, or scalable. Continue reading
My research into what this “Gig Economy Thing” is all about continues to uncover more and more interesting aspects that I’m not sure are truly being addressed by any one person or organization resulting in a myriad of opinions some of which appear thought out and others not so much. Some of this is due to it not just being relatively new but also as a result of these activities, there appears to be a new employment designation arising as a result of these confusions as this continues to iron itself out which I will explore in a future post. The first question was the most obvious; “What’s the difference between Gigging and Freelancing?” I discovered that although they are frequently used interchangeably, digging deeper demonstrated that is not the case especially due to the persistent growth of the On Demand App aspect which doesn’t necessarily require a specific skill set whereas Freelancing does. You can review that here. The one thing that differentiates a traditional employee from those in the Gig Economy is their tax status of 1099 from which I discovered that this is not a simple tax designation as evidenced by the number of various tax codes. This then brought up the fact that technically those that are considered “entrepreneurs” are also under the 1099 designation so how does that play into the Gig Economy thus explored?
Interestingly and amusing that poor ol’ Freelancing is stuck in the midst of this contrast again, yet when being compared to entrepreneur there appears to be better definitions which at the onset would make one think that it’s better defined but not so much as it appears that many are stuck on the allure of the word “entrepreneur” with some of them either refusing to accept it or at the least not happy about it. The illusion comes from the misconception that anyone who is in business for themselves is an entrepreneur and even further compounded by attempting to understand if one is better than the other or that there’s a wide gap between the two or putting the two together as if they were the same thing but never delineating it. Frustrating when all you want are answers on what they are and how they are different so as to know how it all applies to this Gig Economy.
The dictionary definitions that many articles use further compounds this confusion because although they all have similar initial definitions, it’s when you look at the second definition that it becomes apparent how this definition is being confounded due to “cherry picking” the one you like the best. I’ll use the version from dictionary.com for my example:
- a person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.
- an employer of productive labor; contractor.
Its origin comes from the French word entrepredre which means to undertake (1875-80; < French: literally, one who undertakes (some task)). There’s also an indication of its use in connection with theatrical production; 1828, “manager or promoter of a theatrical production,” reborrowing of French entrepreneur “one who undertakes or manages,” agent noun from Old French entreprendre “undertake”. The word first crossed the Channel late 15c. but did not stay. Meaning “business manager” is from 1852”. In contrast to this is the Oxford online dictionary’s definition; “A person who sets up a business or businesses, taking on financial risks in the hope of profit”. This definition only references “business” with no reference to enterprise, both mentions risk, yet the latter “hopes” for profit. Using the French derivative of “one who undertakes or manages” you can understand how some would think that if they are in business for themselves in any capacity they are “undertaking or managing” a business yet its use has continued to expand over time.
That’s enough of these “Blathering Vernaculars of Confusion” as the more you look, the cloudier one’s understanding becomes. A post on Seth Godin’s SAMBA Blog titled “Freelancers vs Entrepreneurs” Continue reading