Every week, policymakers, economists, business, and labor leaders anxiously await the release of the latest unemployment data, one of the most widely used indicators of the country’s economic health and vitality. Administration officials tout low unemployment numbers as evidence of their policies’ success. The Federal Reserve uses the metric to make decisions about interest rates, and business leaders adjust strategies based on employment data. While useful, aggregate employment numbers fail to tell the deeper story of what working actually looks and feels like for many people.
To understand the latter, you need to dig underneath the data and talk to people about what their work involves, how it is structured, and how it relates to other aspects of their lives and their families’ wellbeing. This is what Institute for the Future (IFTF) did in its recent study, “California Worker Voices: Anticipating the Future from the Frontlines.” We looked at work from the workers’ perspective, i.e., the human context, or the meaning beneath the numbers. We also wanted to situate workers’ stories within a wider context—why are they experiencing work in ways they describe? We employed a methodology called “ethnographic foresight,” a form of qualitative research that reveals how people are living the present in ways that are likely to grow and have increasing importance in the future. This method combines two techniques—ethnographic interviews to uncover workers’ values, behaviors, challenges, and aspirations, and IFTF’s research on key societal, technological, economic, environmental, and political (STEEP) forces shaping organizations and work. A broader understanding of future forces allows us to put ethnographic research into a larger context—in other words, what are the systemic drivers shaping workers’ experiences? Are these drivers likely to grow and widen in impact? Ethnographic foresight helps us uncover emerging, hard to quantify patterns, as well as opportunities and challenges. Our research revealed systemic forces that have been unfolding for decades yet today are making many workers’ lives stressful and economically insecure.
Workers’ Voices: Fragmented, Precarious, Insecure Work
Over the course of a month, IFTF’s research team conducted in-depth panels and interviews with 60 people, all making less than $15 an hour, from different regions in California. The group was diverse in terms of age, race, and gender composition as well as professional backgrounds and levels of education. However, what we found is that their experiences with work are remarkably similar. Instead of steady 9 to 5 jobs with predictable schedules and decent pay, all were cobbling together incomes from various part-time jobs, gigs, contracts, online surveys, and competitions.
One person might work 23 hours a week at a warehouse job, drive Uber at night, get gigs moving furniture via TaskRabbit, and teach yoga online. The variety and sheer number of jobs many people were juggling and piecing together were impressive. Bartending a few times a week, assembling furniture, house painting, doing landscape work, and sometimes doing delivery—all in the span of one person’s week. Time is one of the few assets low-income people have, and they are finding ingenious ways to turn this asset into money to survive. Forget about 40-hour work weeks, forget about weekends or nights off. The people we interviewed are either on the lookout for work or working all the time.
In fact, being able to get more work, or more precisely, more paid hours, is seen by many as a reward in its own right. Take Raquel*, a 23-year fast-food worker from Southern California. At the fast-food chain restaurant where she works, teams compete with each other and the best performing team gets a free takeout lunch. Competition is not limited to teams. Individual employees also compete with one another, and Raquel actually enjoys the game—it makes her otherwise repetitive job a little more exciting. However, when Raquel wins, and she does so often, she does not get a day off, a bonus, or a raise—traditional rewards for good performance. Instead, she “wins” something even more precious for her—more work hours, i.e., the chance to work more! She and her colleagues work hard for the privilege of working more to make ends meet.
In our interviews, we heard that “no one can survive on just one job in America,” that spending 1-2 hours a day looking for work or a gig is the norm, and that complaining about low wages or poor working conditions can cost you your job. As one person put it, “You could get replaced like this, there is a whole line outside the door who wants your job.”
Most people we interviewed were living in this state of overwork and precarity long before the pandemic—facing instability and insecurity in incomes and housing, managing multiple tradeoffs between work, caring for families, going to school, and shouldering debt obligations. The only difference the pandemic made is in the kind of gigs they are willing to take.
Before the pandemic, in addition to a regular 40-hour job, one person told us, he spent 10-20 hours on weekends and at nights working “good” gigs—doing carpentry via platforms such as TaskRabbit or Handy, where he could set his own rates. After the pandemic, he is willing to do any gigs, at any price, on any platform.
For years now, at numerous Future of Work conferences, you could hear the same theme—we need to have a highly agile and adaptable workforce that is continuously learning and upgrading skills to keep up with rapidly changing technologies and business conditions. Well, in our research we found that people have taken this to heart—agility and adaptability are necessities for survival in a highly unpredictable and insecure work environment. In fact, the most frequently used word and the most prized skill people kept coming back to is “hustle.” Even a social worker needs to learn how to hustle better because she can’t survive on her current income without selling cosmetics on the side. A young woman boasted about her superior hustling skills, something she saw as essential, having watched her parents toiling in low-paying jobs and barely making ends meet. A laid-off worker was learning how to hustle by paying online “mentors” of dubious quality.
Not only did the people we interviewed show remarkable levels of inventiveness and agility, they were also constantly working on themselves—taking online classes, finding online mentors, reading “how to” books, goingto college. It is hard to think of individuals who can do so many things—bartend, do carpentry, assemble furniture, do house painting and landscaping—as not having enough skills.
Almost everyone we interviewed had many, often unrelated skills, and almost everyone was doing something to improve themselves. This included those who already had degrees but still worked for less than $15 an hour (reality for almost 15 percent of those with a bachelor’s degree).
In other words, the workers have fulfilled their part of the bargain—they are agile, skilled, adaptable, investing time and money into improving themselves. In the process, they have become more overworked, more stressed, and less economically secure. Why?
Drivers of Bad Work: New Operating System for Organizing Production
When asked what actions need to be taken to improve their lives, every single person we interviewed pointed to themselves. What we heard was, “I need to learn how to save better” (a hard thing to do when you are making less than $15 an hour), “I need to learn how to ‘hustle’ better,” “I need to get a certificate,” or “I need to learn an X, Y, Z skill.”
The answers were eerily similar to how many responded to the obesity epidemic: “I need to exercise more…I need to eat healthier food…I need to stick to the diet.” People blamed themselves instead of focusing on a larger system that incentivizes the production and consumption of unhealthy foods and lifestyles. Low-income workers are similarly internalizing blame for their precarious work conditions. Working in a highly atomized way, disconnected from many traditional institutional support structures, not only do many blame themselves, they also see themselves as the only thing they have the power to change.
For a while now, researchers have been tracking the rise of fissured work—various types of contracting, outsourcing, and franchising relationships in which workers perform their duties through loose networks of intermediaries or as free agents instead of directly for the corporations that ultimately profit from their labor. The experience of the majority of workers we interviewed can be seen as an extension or an intensification of fissured work. However, what makes the latest iteration unique is that it is even more fragmented and even less predictable (there is no such thing as a stable wage on many task-based platforms, external demand conditions changes what people earn hour by hour, sometimes minute by minute). Instead of jobs or longer term contracting arrangements, a lot of this platform work happens through algorithms, with hardly any human interaction.
Why is this way of working on the rise, and why do we believe it goes back much further than the pandemic? To answer this question, it is helpful to take a wider historical perspective and remember that the way we create value—the way we work—has changed dramatically over time. We did not always sustain livelihoods by selling our labor to large formal organizations. In fact, in the long history of human existence, making a living through such organizations is a relatively recent invention. So why and how did this way of working emerge and become central in many people’s lives?
For an answer to this question let’s to turn to Ronald Coase, a Nobel Prize economist, who in his 1937 seminal paper “The Nature of the Firm,” asked a provocative question: Why do we need corporations (large institutions)? Why not just produce and trade as individual agents? The answer Coase arrives at is that aggregating resources, including people, under one organizational umbrella allows us to minimize transaction costs, i.e., the expense of planning and coordinating production activities (finding buyers and suppliers, negotiating prices, etc.) while increasing scale and garnering greater profits. In this sense, large organizations can be seen as a social technology for scaling up activities while minimizing costs.
Before the invention of large corporations, people weren’t sitting around doing nothing. They were creating goods and services, but their activities were limited in scale. They produced relatively small quantities and sold or traded primarily with others in close geographic proximity—neighbors, family, or tribe. To achieve scale, organizations needed to hire more people and put in place structures and processes for efficiently coordinating various aspects of production activities. We can think of formal organizations as a kind of social technology for scaling production of goods and services. With the help of this technology, supported by scientific management theories, the twentieth century became an era in which we conquered scale.
However, the new generation of companies is based on a different social technology, a new operating system for achieving scale and delivering profits. Using digital networking, mobile and computational technologies, algorithms, and data analytics tools, they can coordinate activities and generate profits without hiring large numbers of people. These companies are part of a new digital coordination economy. In this economy, companies deploy algorithms to identify and match those in need of some service with those who can fulfill their needs. There are no career ladders to climb for the new class of on-demand or platform workers and often no human bosses holding them accountable. Your “manager” might even be an algorithm that breaks down jobs into individual tasks and automatically routes them to the most “optimal” and available worker.
Professor Gerald F. Davis has written extensively about disappearing public corporations, like GM and P&G in the 1950s and ’60s, that hired large numbers of employees to achieve scale.
American corporations listed on U.S. stock markets, 1991-2015, from the report “California Worker Voices: Anticipating the Future from the Frontlines.”
Unlike their predecessors, the new generation of companies are not in fact large job creators. According to Davis, “The combined global workforces of Facebook, Yelp, Zynga, LinkedIn, Zillow, Tableau, Zulily, and Box [were] smaller than the number of people who lost their jobs when Circuit City was liquidated in 2009. Throw in Google, and it’s still less than the number who worked at Blockbuster in 2005.”
Using the latest technologies and operating in domains where regulations and constraints have not been established, they follow the Coasean logic of minimizing transaction costs while scaling delivery of products and services as well as delivering unprecedented rates of returns to investors. Instead of hiring and investing in many people involved in contributing to their operations, these companies “rent” people for a day, an hour, a minute.
For some workers, the non-institutional work arrangements are not new. Excluded from mainstream employment, Black and Latinx people, particularly women, have had to resort to such arrangements out of necessity. Today, the new organizational logic is driving many more people into the ranks of the marginalized, including those considered highly skilled. As hedge funds acquire many physician practices, doctors’ working conditions start to bear a surprising similarity to that of Uber or Lyft drivers. A growing number of emergency room physicians no longer work directly for hospitals or clinics. Instead, they are owned by various financial entities and often are sent on-demand to different medical establishments to provide services. During the course of one day, a doctor may work in three or four different medical settings.
In short, larger systemic forces have been driving the rise in unstable and unpredictable work since long before the pandemic, and without understanding and shaping these forces, many more workers at all levels of skill and education will find themselves in precarious work conditions.
What’s to Be Done: Designing and Investing in Equitable Enterprise Structures
Many philanthropic efforts to improve working people’s economic conditions have focused on the workers themselves—increasing their levels of skills and training, widening educational opportunities, and creating alternative pathways to degrees and credentials. These are all positive and needed interventions. However, not enough attention has been paid to the Operating System driving the current generation of companies and creating precarious working conditions.
We have to first recognize that the corporate forms that dominate the economy today are at the root cause of much worker disempowerment and economic insecurity. They are major contributors to wage stagnation, growing wealth inequalities, and the disappearance of good jobs that provide basic health and retirement benefits as well as widely distributed equity ownership. The situation is likely to worsen with the growth of many on-demand platforms, such as TaskRabbit, Uber, and Postmates, which increasingly become the primary means of earning or supplementing incomes for millions of people. While such platforms are bringing substantial returns to investors and founders, they are simultaneously generating asset-poor or asset-depriving jobs—that is, work that not only lacks good wages but also prevents people from building up important assets for longer term economic security.
But we can’t only blame technologies for this. In Germany, for example, the same ridesharing platforms that operate in the United States are required to work exclusively with professional and licensed private-hire vehicle (PHV) companies in which drivers and cars have the necessary licenses and permits to transport passengers. Some cities have outlawed ridesharing apps or have created locally controlled and operated ones the use the same technologies but are shaped by very different policies, norms, and regulations, leading to very different worker outcomes.
The workers we interviewed are experiencing particularly deleterious impacts of non-institutional work as a result of mainly U.S.-specific factors—a social safety net which ties many benefits to formal employment, capital flows, and tax mechanisms that favor large capital holders rather than wage earners, gaps in regulatory oversight, lack of representation and power centers to promote the interests of non-institutional workers—i.e. the larger economic system that sets the conditions in which work takes place.
As mentioned earlier, the “organization” is a kind of a social technology. Like any technology it is not preordained but designed. It is a product of multiple factors—social and cultural norms around what is fair and morally acceptable (slavery was outlawed as a result of moral outrage even though it was essential to the economy of the South), available technological and scientific knowledge (IT outsourcing would not be possible without the existence of an extensive global communications infrastructure), legal and regulatory regimes (anti-monopoly, fairness in hiring, safety rules, and many other regulations create boundaries within which organizations are allowed to operate), levels of education, and availability of the labor force.
Systemic problems require systems-level solutions. Just as we turned manufacturing jobs into “good jobs” in the 1950sthrough union-negotiated decent wages and benefits,we should ensure that the work most people do in today’s technological infrastructure is dignified and economically secure. To achieve this, we need to take action on multiple fronts. On the policy side, we have to upgrade our social safety net to guarantee a basic set of economic rights and benefits that are not dependent on an employer or a particular employment status. We also need to develop appropriate sets of regulations governing platform work that consider new kinds of risks related to earnings instability, workers’ privacy, as well as data collection and use. We need to expand existing or create new forms of worker organizations that aggregate voices and represent non-institutional workers.
A systemic approach to improving work also requires a deep change in the role, structure, and expectations of business. We need to promote a new generation of equitable enterprises that put the workers’ or the larger society’s interests above profits. Such an equitable or mutualist business arrangement—as exemplified by various types of cooperatives, employee-owned, steward-led and limited profit companies, community trusts, and other mutually beneficial enterprises—exist today but they operate on the margins of mainstream business activities. The difference they make is particularly stark during the COVID-19 pandemic and the accompanying economic downturn. While many businesses responded by laying off workers and cutting pay, none of the workers in the close to 100 co-ops that belong to the Mondragon Corporation in Spain lost their jobs. Cooperative enterprises such as Mondragon have to generate profits in order to stay in business, but the main mission of this enterprise form is to provide good livelihoods and economic security for worker owners, not lavish dividends and shareholder returns.
Equitable enterprises operate at a huge disadvantage today—they have trouble accessing capital, they face many tax and regulatory barriers, and there is a dearth of information and knowledge about how to start and manage such enterprises (there are no business schools for aspiring leaders of equitable enterprises).
Philanthropy can play a big role in moving equitable enterprise forms from the margins to the center of our economy by giving them greater recognition, providing them with capital, elevating knowledge about them, and advocating for changes in tax and regulatory systems that hinder their creation and growth.
We recently marked the 50-year anniversary of Milton Friedman’s famous declaration published by The New York Times: The only social responsibility of business is to increase shareholder profits.
After 50 years of living Friedman’s dictum, it is time to issue a new declaration: The only responsibility of business is to maximize the equitable distribution of economic returns from its activities. And philanthropy can lead this transformation.
*Workers names have been changed, and in some cases the workers are composites created from multiple interview subjects.