Thursday, January 25, 2018

US Job Growth of Contractors and Freelancers eliminates Job Security, Benefits, Protections!!! Basic Income needs serious discussion.

Having been a sole proprietor and independent contractor for the last 15 years, I guess I shouldn't be surprised that the nation is also moving in that direction. While "old economy" Republicans like Scott Walker salivate over filling big manufacturering plants with warm bodies, the 21st century jobs on online and populated with independent contractors and freelancers is picking up steam.

The fact that the new economy isn't even on the Republicans radar yet is scary. We need to plan now, not ten to twenty years from now. The NPR story fits perfectly with the rising talk of a "basic income" for every American. You'll see why below:
A new NPR/Marist poll finds that 1 in 5 jobs in America is held by a worker under contract. Within a decade, contractors and freelancers could make up half of the American workforce. Workers across all industries and at all professional levels will be touched by the movement toward independent work — one without the constraints, or benefits, of full-time employment. Policymakers are just starting to talk about the implications.

Machines are siphoning off basic tasks, and temporary workers allow flexibility to size up and down. In the legal field, there are online platforms that match freelance lawyers with clients. 

It's not just business driving the trend. Surveys show a large majority of freelancers are free agents by choice. The NPR/Marist poll shows that 34 percent of part-time workers are looking for full-time work. That may be increasingly difficult. Currently, 1 in 5 workers is a contract worker. According to economists Alan Krueger and Lawrence Katz, almost all — or 94 percent — of net jobs created from 2005 to 2015 were these sorts of impermanent jobs.

Within a decade, many labor economists believe freelancers will outnumber full timers.

Arun Sundararajan, a management professor at New York University and author of The Sharing Economy, says "this is the work arrangement for the future." The new normal will be freelance work. "Twenty years from now, I don't think a typical college graduate is going to expect that full-time employment is their path to building a career," Sundararajan says.
20 years from now we'll still be doling out taxpayer money to Foxconn, at time we may need to spend money on never dreamed of education and social structures:

Sundararajan says that will ultimately lead to many other changes, from education to social structures and public services. Those looser ties will shift more responsibility to contract workers. They must handle saving for retirement and their health insurance on their own.

"But some people, despite their best efforts, just aren't going to be successful in doing that," Wheeling's mayor, Glenn Elliott says. "What's going to happen to those who fall through the cracks?  Because the 1950s model of retirement and getting your pension check every year from your company is not a realistic model for a lot of people, increasingly."

The public safety net — the budgets for fire departments and social services — is already strained, he says, by the area's opioid problems, among other things. A future where fewer workers have benefits won't help.
Basic Income may be our Future Safety Net, and Job Creator: I cut and pasted the important points and argument for a basic income, which again is still a pretty undeveloped idea that has worked well in a few early experiments:
Since 1980, average income for the top .01 percent of Americans has more than tripled. For the bottom 90 percent, it’s basically flat-lined. Facebook's Chris Hughes is among those who view the disparity as a national crisis. And so he recently launched the Economic Security Project, a two-year effort to invest $10 million from Hughes and others into research on universal basic income. This investment comes amid a sudden wave of interest in universal basic income in the tech industry. 

Y Combinator, the Palo Alto–based startup accelerator, announced in early 2016 that it was starting its own basic income experiment in which a small number of Oakland residents would receive a cash payment and be compared to a control group. Tesla’s Elon Musk, meanwhile, has warned about the rise of the robots, arguing at the World Government Summit earlier this year that a basic income is “going to be necessary.” And when Mark Zuckerberg delivered his commencement speech at Harvard in May, he advocated for a basic income, saying it would provide people with “a cushion to try new ideas."

Hughes was looking for basic income studies that the Economic Security Project might like to finance. The goal of the organization is to provide the money so that researchers can investigate the impact of a basic income on people’s lives. His group has contributed $1 million to Stockton, California’s basic income experiment, as well as to GiveDirectly, a Google-backed charity that is studying the impact of unconditional cash transfers in Kenya, and other projects.

The Economic Security Project team also recently conducted its own survey of more than 1,000 Alaskans who receive roughly $2,000 per person, per year, through the Alaska Permanent Fund, which is drawn from oil revenues. It found that when faced with a choice between lowering taxes or keeping their cash payments, 71 percent of Alaskans say they want to keep the payments. “It feels like security,” Hughes says, “and in an economy that zigs and zags and has more part-time jobs, security is hard to come by.”

Hughes is no basic income purist. He believes, for instance, that for this economic moonshot to be politically palatable, it would have to be tied to work. “Work is a key source of purpose in our lives.” But the changing nature of work, particularly among top tech employers, is still a critical problem for the American workforce. One illuminating New York Times article illustrated how the men and women who scrub toilets and do other low-skilled work for companies like Apple are hired from contracting companies which set the terms of their employment. Those workers are cut off from the benefits and upward mobility that the company’s engineers and marketers enjoy. Because the workers are contractors, the big tech companies feel no pressure to raise their wages, and aren’t responsible for offering health-care coverage. 

In a new economy that mints billionaires overnight, giving millions of dollars away for experimentation is the easy part. It’s taxpayers, after all, not individual tech companies, who would have to pay for a basic income should one ever come to pass.

A legislated basic income is in the realm of fantasy at the moment. Even among its proponents there is almost no agreement about the fundamentals, starting with how much money would be an optimal basic income. 

Ioana Marinescu, a professor at the University of Pennsylvania’s School of Social Policy and Practice, who researches basic income, says that research on the Alaska fund is enlightening, but not dispositive. “We know $2,000 a year makes a real difference to many people,” Marinescu says. “But would something lower still make a difference? We don’t know.”

Others argue that the problem with a universal basic income is the “universal” part. In a world in which every American gets a check, some of that money would necessarily be squandered on rich people. Some libertarian groups like the Cato Institute support the idea, seeing it as a way to replace the country’s existing social safety net programs like Medicare, Medicaid, and food stamps, an idea liberals deplore.

Even in a fever dream scenario in which a basic income could pass in Congress, there is so far little evidence that it would help the “forgotten men and women” whom Trump described in his campaign. After all, $2,000 a year hardly feels like an adequate substitute for a disappeared $50,000 union job at the local steel mill.

Still, if anything is to be learned from the experiment, it’s this: To imagine that a basic income, or something like it, would suddenly satisfy the disillusioned, out-of-work Rust Belt worker is as wrongheaded as imagining it would do no good at all, or drive people to stop working. There is a third possibility: that an infusion of cash into struggling households would lift up the youth in those households in all the subtle but still meaningful ways Costello has observed over the years, until finally, when they come of age, they are better prepared for the brave new world of work, whether the robots are coming or not.


  1. Used to be that we were post-industral, information age and a service economy. Now they promote the new economy, the gig economy, the shared economy, which from my observance is all hype that is just unsustainable. This directly goes to Thomas Frank's view of the supposed creative class.

    What incentive are college-educated people being given now? Just network enough, and you'll succeed! Where has the ability to go to differing levels of schooling, based on your likes, gone from today's failing economy. As a former musician, the "gig" means hooking up with someone you know for something temporary, not what you know and could potentially bring to the group for potential long-term employment.

    Everyone needs a basic income to pay bills, survive and hopefully have the opportunity to have a family. It's just sad that we're now at the stage where basic income is now presented as a bandaid to a dysfunctional economics, which is the root of our problems today.

  2. You hit on some really good points, at least from your perspective. Call me an optimist. I see the basic income as a new idea, and not a band-aid to a changing society. Who would have thought full-time employment would suddenly become a relic of the past? It will be a dysfunctional economy until we adopt the idea of a basic income or roll out something even better.

    When Walmart changes its business model to go after Amazon, and mall stores are closing all over the country, the writings on the wall for the forgotten service workers who are now joining blue collar labor who turned away from our disappearing factories.