Transitioning to a Skills-Based and Borderless Economy.
By: Helen Martinez
Where do your co-workers live and why does it matter? I live in Orlando, Florida and my “co-workers” (or whatever that term means these days!) live as close as Seattle, WA and as far as Lahore, Pakistan. I spend most of my days on Google Hangouts with my co-workers in Bangalore, Buenos Aires and Ukraine. Strangely, the time zone difference doesn’t seem to matter. Nor does the language barrier. Innovation has allowed us to meet, work, and collaborate effectively.
Now to an equally important question, WHY does it matter where your co-workers live?
It certainly matters, both for reasons you might expect, and for reasons you might not. Yes, you now know that we live in a global economy and you expect to connect with people over the internet, Skype, GoToMeeting and other platforms allow us to connect. However, you may not anticipate the rate at which this is happening or the implications. The implications of remote work signal two primary things: we are quickly becoming (1) a skills-based and (2) borderless economy.
A Skills-Based Economy:
There are now few compelling reasons why you or your co-workers need to live or even work in the same place. As a result, it no longer matters where employees live. What does matter are the skills that they perform. We are quickly moving to a skill-specific economy. Even though this transition is in its infancy, there are even several ahead of the curve companies (namely, Freelancer.com, Skilledshift.com, Upwork.com, etc.) who are facilitating this transition to a skill-specific economy. These companies are helping employers to reliably and relationally connect with skilled employees for short and long term contract work. These companies are emerging as a result of the fact that employers are hiring fewer and fewer full-time employees, and alternatively hiring contractors for specified skill specific contract roles and reserving full-time roles for only mission critical business functions. In fact, some estimate that by 2020 over 51% of the workforce in the United States will have transitioned from employee to independent contractor or freelancer. 53 million workers in the United States are already engaging or seeking some type of contract or freelance work.
Compounding the implications of a skills-based economy is the emerging skills gap. A recent Wall Street Journal article in September 2016 (“U.S. Companies Turn to German Training Model To Fill Jobs Gap”) highlighted that many companies in the United States cannot find the skilled labor they are seeking. The likely culprit? The stigma tied to skills-based schooling in the United States. In recent decades many have shunned vocational or apprentice-type training in favor of a traditional four-year college education. Unfortunately, there are unexpected consequences for these workers, namely that graduates of 4 year liberal arts institutions earn an average of $300,000 less over their lifetimes. Another consequence is that today’s high paying employers cannot find the skilled labor they need within their own borders to satisfy their existing needs. Which leads these employers to search beyond their own borders. Cue the transition to a borderless economy.
A Borderless Economy:
A borderless economy has far more immediate implications than the oft noted concern that automation by smart machines and AI will soon take over our planet and with them our jobs. Smart machines can augment our work, but so far, they are a long way from achieving emotional intelligence and participating in water cooler talk, which prevents them from replacing us entirely. Rather, a borderless economy has far more immediate legal, ethical and economic implications for our existing labor market.
Although it has already begun to transpire, it will only become more obvious that a remote workforce will likely make state and country borders irrelevant in relation to their ability to effectively regulate the labor marketplace. One of the actual and imminent risks of the borderless economy is that people will be taken advantage of, some will be left out altogether and traditional governmental structures and authorities will be challenged to keep up with individuals and entities that are quite literally and metaphorically beyond their reach.
The million-dollar question is how can we regulate to create economic strength and sustainability while simultaneously protecting workers? I suspect it will take some trial and error and some measure of private/public partnership. I also suspect that the most successful companies will self-regulate and accommodate worker needs because they have to – as their new contract labor will demand it. If one company won’t provide a benefit, another one certainly will. Therein lies the benefit for workers in a borderless economy. In a borderless economy, competition for talent reaches a fever pitch and to retain the best talent, companies will have to provide new sources and types of benefits such as a social safety net formerly reserved for more traditional employees. Although I cannot predict what the future of work will look like with complete certainty, I am convinced that a lot of social experimentation and change will occur in the coming decade, which will transform our labor market into something that will be unrecognizable by today’s standards.
I am equal parts concerned and optimistic about the risks, possibilities and opportunities in the future of work. I suspect, like in most things, the early adopters and those who fully and quickly embrace this new model will thrive! In the meantime, you’ll find me on Skype with my co-worker, Arpit, chatting about his upcoming wedding in Jaipur and his insistence that I be there for it. And I’m planning on it.