Nope, independent work isn’t behind rising inequality, says expert

Jessica Stillman — Thu, 26 Jan 2012 14:00:38 +0000

Last week we highlighted a piece in Canadian magazine Maclean’s that explored the question of whether the rise of independent work was contributing to rising income inequality. And while I argued that it was pretty hard to see how independent work rather than government policy and the globalization of the evolution of tech was the root cause of increasing inequality, the post closed by pondering whether the growing number of independent workers was in some way contributing to the widening gap between the haves and have-nots once the process was under way.

I didn’t have any solid data to answer that question, but one reader did: Steve King, a partner at consulting firm Emergent Research. King shared his insights on coworking with WebWorkerDaily recently and shot us an email suggesting we check out his firm’s research on the question of inequality and independent work. In a blog post explaining his company’s position on the issue, King states unequivocally that there is no causal relationship between the two trends:

As part of the 2011 State of Independence study we looked at independent worker income. We found median per capita income for U.S. independent workers to be roughly the same as the median per capita income for workers overall.

We also found a fair amount of income inequality among independent workers. In particular 3 overlapping groups of independent workers significantly out earn other independents: (1) older independents (55+), (2) independents who have been independent longer than 5 years, and (3) independents that are highly satisfied with independent work.

In other words, income inequality among independent workers somewhat mirrors overall income inequality.

Our explanation — which is based on our interviews and other qualitative work — is independent workers with the right skill sets and experience are thriving and are much more financially successful than those who don’t. This is very similar to what is happening across the workforce in general.

Because of this, we don’t see the shift to independent work as a cause of income inequality.

Instead, Emergent Research feels that independent work and inequality are rising at similar trajectories because both trends are powered by the same phenomenon. Recommending former Labor Secretary Robert Reich’s book Supercapitalism for those who want a deep dive into the subject, King pulls a quote from the book to explain the underlying causes of both trends: “The crisis marks the triumph of consumers and investors over workers and citizens.”

Maclean’s view that “independent jobs are bad and we should return to a world of traditional jobs is widely held,” King commented. “But it’s not going to happen. The shift towards independent work is too far along and too powerful.”

Has King convinced you?

Image courtesy of Flickr user BlaisOne

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Independent work: Another cause of inequality?

Jessica Stillman — Mon, 23 Jan 2012 14:02:09 +0000

Between Mitt Romney’s tax returns, Goldman’s bonuses and Occupy Wall Street, income inequality in America has been getting a lot of attention lately. Experts are debating how much of a problem it is (Americans in general, pollsters tell us, are pretty concerned about rising levels) as well as the root causes of rising inequality, with tax and regulatory policy, and a changing labor market which puts a higher premium on education and has less to offer the marginally skilled often getting the blame.

But recently ,Canadian current affairs magazine Maclean’s offered another possible contributing factor, one that gets a lot of consideration here on WebWorkerDaily. “Could the rise of independent work be partly to blame for the rise of inequality?” the article asks in an article entitled “The End of the Job.”

The rise of the contract worker may also be having a more wide-scale impact than previously realized. A growing gap between rich and poor in countries like Canada has been blamed, in part, on a growing number of poor quality jobs. There’s also mounting evidence to suggest that the rise of the throwaway worker has made recent recessions more painful and longer-lasting. Temp jobs? More like a temporary economy.

“It all amounts to a sea change in corporate attitudes about what constitutes a job in the first place,” concludes the article, noting the death of the job-security-for-loyalty model of previous decades. This move toward more independent and contract work is not only another contributing cause of inequality, but also of the general economic doldrums:

The concern is that all of this impermanence risks creating an economy built not on bedrock, but shifting sand…. Companies see contract employment as the answer to uncertain times, but [professor at the School of Labor Studies at McMaster University Wayne] Lewchuk says it may be a case of the medicine being worse than the disease. People who don’t earn as much money spend less, which isn’t good for the economy. “If people stop buying, then companies stop producing and lay off more workers,” he says. “You get yourself into a quicker and deeper hole. Meanwhile, on the other side of a recession, when you start bringing people back, you’re doing it at lower wages and they don’t have the kind of purchasing oomph necessary to get the economic engine started again.”

Of course, the need for companies to grow leaner, including by utilizing more independent workers, is driven by larger economic forces like globalization and better, cheaper technology, so it’s difficult to argue that independent work itself is the root cause of the problem. Pretty clearly it’s an effect rather than a driver of change. But Maclean’s contention that independent work may be a piece of a destructive cycle that’s both increasing inequality and holding back growth seems worth considering.

How much is the rise of independent work contributing to increased inequality? To economic stagnation?

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Nope, independent work isn’t behind rising inequality, says expert

Independent work: Another cause of inequality?