Today’s workers face challenges that previous generations did not. First, a diminishing fraction of company earnings goes to workers. Second, real job security is largely a thing of the past. Third, employers provide less generous benefits than they used. Workers bear an increasing share of the costs of healthcare and traditional pensions have been replaced by self-directed plans such as 401(k)s. And, to top all of these off, technology is poised to replace more of the workforce. There have also been substantial changes in the world of work that are positive for workers, however. In this post, I want to explore some of the advantages that workers have in the emerging economy.
The first positive change in work is that you don’t need a large budget to gain access to a wide market. Whatever skills, services, or products you are selling, the internet provides enormous marketing and sales reach to anyone with an internet connection. In conjunction with safe payment methods such as PayPal, even tiny businesses or self-employed individuals can sell their offerings globally. This is a stunning evolution in how people can find clients and get paid for their work. The ability to reach a broad market with limited resources shifts power away from large firms and into the hands of workers.
Second, for many types of work, the cost of the means of production, the equipment needed to perform a job, has dramatically diminished in the past couple of decades. This shift empowers small business and the self-employed. The most obvious examples are in publishing, whether software products or various forms of media. For a few thousand dollars (or even less), one can purchase the hardware and software to produce professional media products or develop and distribute software. If the work in question involves any type of number crunching, costs have plummeted.
Third, thanks to technology and innovations in a range of services, the self-employed may have access to better benefits, at lower cost than many traditional employers can offer. While many company 401(k) plans cost 1%-2% of assets per year, or even more, Solo(k) plans (a retirement plan available to the self-employed) can be had for far less. Over a working lifetime, a reduction in investing expenses can have an enormous impact on retirement savings.
A fourth improvement in the world of work is increased transparency in pay. Traditionally, employers had access to databases of wage levels for different jobs and experience levels, while employees had little or no similar information. Today, there are many resources that provide salary and related compensation data by industry, location, and even individual firm. This levels the negotiation playing field for job candidates.
In summary, while there are aspects of work that are less attractive than they used to be, there are also a number of areas in which workers are better-off. The emerging advantages available to workers provide the greatest benefits to those with higher skills. Those who perform lower-skill or highly-standardized tasks face harder conditions. Creativity and relatively unusual skills and know-how are the key factors in allowing workers to thrive in the new world of work.
Geoff Considine on Finance and Economics 