An economy beyond jobs: the new normal
In his speech on jobs this Thursday night, President Obama will surely try to win back the six out of ten Americans who think he‚Äôs handled the economy badly. And he‚Äôll probably offer some ideas to pump capital into the economy and create jobs, naturally watered down to offer as little offense as possible to the Tea Party and the US Chamber of Commerce.
Those workers, whose ranks are growing weekly, can only realistically look forward to one kind of future: an economy beyond employment.
The history of jobs
It‚Äôs easy to forget that jobs as we know them today ‚ÄĒ 40 hours clocked at an office, factory, hospital or school in exchange for a guaranteed annual salary with health insurance, paid time off and a retirement plan ‚ÄĒ are relatively new in the history of human economies.
Before the middle of the nineteenth century, most adults (and many children) worked on farms and in small family-run workshops or retail stores. People may have worked longer or shorter hours than we do, but in the old days work time was often hard to separate from time spent with family on domestic chores.
More importantly, even adjusting for inflation, the farmers, craftsmen and merchants of yore made much less money by far than modern people do. Luckily for them, they didn‚Äôt need money as much as we do.
Today, we take it for granted that you can‚Äôt live without an income. But prior to the Industrial Revolution, as Dmitry Orlov has ably explained, people in Europe and North America got most of what they needed from family and neighbors as gifts or barter. The market was only a small corner of the overall economy, a club hosting a few merchants mostly trading in import items like spices from the East Indies bought by the rich.
So, if humans were able to feed and clothe themselves, heat their homes and maintain public order without much use of money, it stands to reason that they didn‚Äôt miss the employment they never had in a market economy most of them never knew.
Modern workers may not be ready to live without money, but if we‚Äôre going to learn from this history, can we find some way to earn the cash we need to cover the mortgage without getting it from an employer?
‚ÄúWe‚Äôve seen a steady erosion of the American dream as an ‚Äėemployment dream‚Äô as more and more jobs (of higher and higher skill levels) move offshore, as companies become ‚Äėlean,‚Äô and as real wages steadily erode,‚ÄĚ explains author Richard Hooker, who writes about the Post-Employment Economy. ‚ÄúThe current recession, in fact, has been preceded by a decade or more of growing underemployment and three decades of rapidly increasing employment volatility. In fact, the current recession is primarily busting the employment dream [through] underemployment rather than layoffs.‚ÄĚ
If an economy beyond employment is our natural future, then the Freelancers Union thinks we‚Äôll all be joining them soon.
Just as workers 150 years ago began a large-scale shift from farms to factories, so today‚Äôs salarymen are beginning a transition just as momentous from full-time jobs to running their own consulting businesses from home, ‚Äúleaving the cubicle for the coffee shop,‚ÄĚ as Freelancers Union founder Sara Horowitz puts it:
Welcome to the Gig Economy, where over 42 million Americans are working independently ‚Äď as freelancers, part-timers, consultants, contractors, and the self-employed. They are simultaneously holding multiple jobs, working for different employers, and mastering diverse skills. They are accountants and fashion designers and website architects.
As exciting as it may be for freelancers to be their own bosses, Horowitz doesn‚Äôt think that they should also have to sacrifice healthcare, unemployment benefits and guaranteed payment for their work. So she proposes an updated version of the New Deal that would offer freelance workers discounts on health insurance along with the ability to pay into self-funded unemployment accounts that they could later draw on when workflow becomes lean. She even thinks that her organization can give freelancers the clout with government that labor unions used to give to employees who worked for the Man.
While useful in the short run for consultants (and since I run a online marketing business, I count myself as one of their number), in the long-term trying to improve the lot of freelancers may prove to be the employment equivalent of rearranging deck chairs on the Titanic.
Turning Dilbert into Zig Ziglar
The cultural change required to convert office workers trained to follow orders into aggressive hustlers of new clients is daunting. And that‚Äôs just the first hurdle to entrepreneurial nirvana in the Gig Economy.
A bigger issue is that if too many more of us become consultants, there won‚Äôt be enough clients to go around.
Even if you believe in a future of endless economic growth, letting corporations lead the US economy down the path of ‚Äúdematerialization‚ÄĚ ‚ÄĒ replacing manufacturing with services ‚ÄĒ can‚Äôt go on much longer. Pretty soon, America‚Äôs knowledge workers won‚Äôt be able to write enough software, film enough Hollywood movies and process enough stock trades to pay the Chinese to keep making our car parts, microwave ovens and tennis shoes.
A country that demands a quarter of the world‚Äôs energy and other resources along with mountains of consumer goods won‚Äôt be able to keep its lifestyle going on the backs of webdesigners, professional Tweeters and wired medical transcribers alone.
If we want to have any hope of maintaining even a semblance of a First World lifestyle, America is going to need to stop closing factories and start opening them back up again right now, as the sensible folks at the Alliance for American Manufacturing have been telling us for years.
But even if the chances of it happening anytime soon weren‚Äôt vanishingly small, rebuilding our manufacturing base still wouldn‚Äôt be enough to bring back 1990s-style prosperity in the face of the new reality of Peak Everything ‚Äď shortages of essential natural resources from oil to fish to drinking water ‚ÄĒ and especially the peak debt that‚Äôs stalled economic growth for now and the peak oil that will soon stop growth permanently.
You can‚Äôt have infinite economic growth on a finite planet, as ecological economists like to say.
(See Richard Heinberg explain why we may have reached the end of economic growth.)
More local and less techy
The peaking of world oil production and those other resources will likely bring corporate globalization to a halt very soon, as economist Jeff Rubin has explained in Why Your World is About to Get a Whole Lot Smaller: Oil and the End of Globalization.
As transportation and materials costs begin to outweigh any savings from making blenders in Shenzhen to sell to cooks in Savannah, manufacturing will be forced to come back closer to home. And if that makes costs higher than shoppers will pay for some items, then those consumers will just have to do without.
Given the economics of the high tech industry, iPhones, tablet computers and wireless inkjet printers are some of the items that companies may not be able to make and sell cheaply in a more localized economy that also suffers from stagnant or even negative economic growth. Doubling or tripling the cost of home-office technology alone would put most freelancers out of business.
In a future with less credit, less capital and fewer jobs, the economy will be much more devoted to providing basic needs ‚ÄĒ food, shelter, basic clothing and security, acute medical care ‚ÄĒ than it is today. Expect the demand for farmers, low-tech community healers and security guards to go up. But with fewer businesses selling luxuries like travel, toys and consumer electronics, the need for product designers, accountants or technical writers is sure to drop. Yet another nail in the coffin of the Gig Economy.
The Web is always with us. Right?
Finally, let‚Äôs consider what most people would think to be a true doomsday scenario. We‚Äôve all heard how much power it takes to run the Internet. And that goes far beyond the few kilowatt hours used by the cable modem or the wireless router that you can see next to your desk.
What you can‚Äôt see is that massive data centers run by Google, Facebook, and others around the world keep the Web always on. But because data centers in the US alone use about 1.5% of America‚Äôs total electricity consumption, more than all our TVs put together, today‚Äôs Internet is made possible by today‚Äôs cheap electricity. So what happens when rising prices for the fuels that keep power plants running ‚ÄĒ coal, natural gas and uranium ‚ÄĒ make power-hungry data centers too expensive?
The tech industry, bless ‚Äėem, is already racing against the clock with a heroic effort to build and source solar and wind power while there‚Äôs still time through initiatives such as Google Green or Bill Gates‚Äôs American Energy Innovation Council.
But if clean energy turns out to be too little, too late, as Heinberg has predicted, then it may be game-over for the Internet as we know it. As with air travel or cell phone service, in an economy limping along on depleting energy that‚Äôs only getting more pricier by the year, a limited version of the Web might still be available to government, the military and the wealthy. But that will be cold comfort to the freelancer who can no longer count on free Wi Fi at her local java joint.
Putting the ‚Äúfree‚ÄĚ back in freelance
Though exchanging cubicle for coffee shop may deliver income in the short-term, given peak oil, the long-term prospects of freelance consulting are dim. Gaining true resilience in the new economy beyond jobs and economic growth will require us all to look for ways to make do with less money and to wean ourselves, slowly or quickly, from the market economy.
That will mean doing more things for ourselves at home ‚ÄĒ growing our own food but also darning our own socks ‚ÄĒ while also seeking more help from our neighbors.
Now, if Obama were to tell the American public on Thursday night to forget about economic recovery; to prepare to lose their jobs if they still had them and to forget about finding new ones; to stop counting on any help from public assistance; and to start living on half the money they used to make by learning to barter for bread and milk, then he‚Äôd be lucky if Joe Biden didn‚Äôt have the locks on the Oval Office changed by morning.
But that doesn‚Äôt mean it isn‚Äôt true.
‚Äď Erik Curren, Transition Voice