White Collar Blues is an Unaddressed Economic and Political Issue

Washington    A line in an Associated Press story in the local papers caught my eye:  “Since 2008, roughly a third of major US metro areas lost a great percentage of white-collar jobs than blue-collar jobs.”

That’s not the political and economic headliner that most people are following.  The Trump administration is trying to save the jobs of the last coal miners and their segment of the angry, underemployed factory workers in heavy industry.  General Motors announced layoffs of 14,000 workers recently, 8000 were white-collar and 6000 were blue collar.  Most of the focus has been on production facilities being shut down in the United States and Canada, but it seems that a huge number of the white-collar jobs shed by the company are highly skilled and well-paid engineers.  The much heralded and rocky transition from fuel injected combustion engines to self-driving and in many cases, battery operated vehicles means that mechanical engineers are being scuttled for software jockeys of a coming generation of workers.

These white-collar workers, just like the millions of blue-collar workers, are trainable and many of them are highly educated and proficient, but that doesn’t mean transitioning them to new skills and new jobs solves the problem of age, location, and simply the time necessary to learn and become proficient.

Where is the investment being made by federal and state governments in those retraining programs?  For decades it has been a poorly recognized scandal that virtually no level of government has built a replicable training and reskilling model. The Amazon search was interesting in bringing attention to a couple of cities that had made real progress in this area, but nationally we aren’t Germany.  We are still training hairdressers and auto mechanics in some communities!  I’m not sure how many of these white-collar workers are going to be voting Republican if the only job training is getting a certified nursing assistant certificate.

As candidates start to look at platforms that might make a difference in upcoming elections, these high-road training options need to be front and center.   Some politicians are getting this.  Talking to a friend in Wisconsin recently, it was encouraging how a newly elected governor and his staff were already reaching out for help and advice to the best and brightest with experience in the areas of exactly this kind of economic development, way past the daily news about trade spats and blaming other countries for our lack of investment in our people.

This is a fast-moving disaster coming our way with huge implications everywhere for everyone.  We need to move this closer to the top of the list.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

The Achilles Heel of the Gig Economy is that Workers Can’t Make Enough Money

New Orleans   Uber is the canary in the coal mine. After years of listening to the reports that held up Uber as the herald of the future, creating a new business model where an application would substitute for an employer, the accounting is finally coming due. Its drivers were touted as the vanguard of the gig economy, complete with claims that this was what the “new” worker really wanted from employment. Now it turns out Uber may be the canary dying in that coal mine because the Achilles heel of the gig economy is increasingly revealed: it’s not sustainable. No matter what Uber and others want to call them, they depend on workers, and workers are voting with their feet that they can’t make it on temporary work, so they have to keep moving, and that means working for another company. The gig economy doesn’t work when people can’t make a living on Uber and similar gigs.

Uber has lost $4 billion over the past 18 months for lots of reasons, but largely because it can’t make its workforce either happy or stable. They are like a bait-and-switch operation offering incentives, prizes, tips, and extra bonuses, but increasingly hitting the brick wall where their drivers are realizing they still are barely making minimum wages per hour. In fact the Wall Street Journal reported that Uber cooperated with a study done by a New York University professor that,

“found that no matter which directions fares go, drivers invariably take home about the same earnings over time…[because] When there is a fare cut, drivers’ pay per trip falls but riders flood the service, offering more business. A price rise eventually lures more drivers than Uber needs and scares away riders. The changes are short-lived as an equilibrium is reached after about eight weeks, and drivers’ average pay comes out the same.”

This means that Uber, the harbinger of the future, “must lean heavily on pricey incentive payments – cash for completely a certain number of rides a week, say – to bring driver earnings above what typically amounts to around minimum wage.”

Wow! I’ll guarantee you, because I know many once upon a time Uber and Lyft drivers that join on the promise of higher wages, and they leave when they finally realize that paying for gas, their car, insurance, and then looking at their pay, it just doesn’t add up. Uber is stuck on a business model that is based on exploitation of workers, that business model, like most of the vaunted “gig economy” is unsustainable, because workers fooled at first, are not fooled forever when it comes to the empty pay envelope.

Uber and the rest of these companies are not a new model, but an old one. They are labor contractors trying to sweat workers with a new tool, but an old scam. This is a piece rate scheme. Some workers can make it, but most can’t. Worse, all of these companies are pushing off their responsibilities as employers to provide social security, unemployment and even bare bones benefits, but making the workers who are their lifeblood into subcontract labor. In Europe and some US cities, that part of the hustle is also falling apart as Uber is increasingly declared an employer.

Workers are being gigged by this model. The canary is dying in red ink. A business model that depends on exploiting workers is doomed, even if it takes some time to die.

Facebooktwittergoogle_plusredditpinterestlinkedinmail