Re: An Army of Davids: How Markets and Technology Empower
Posted: Sat Nov 02, 2013 8:46 pm
2: SMALL IS THE NEW BIG
Awhile back, blogger Jeff Jarvis noted a press release saying that eBay's sellers were threatening to overtake Wal-Mart's employment numbers:
Yes, this is something of an apples-and-oranges comparison, but not entirely. And it captures an important point: lots of people don't like their jobs, their bosses, or their offices -- just read any selection of Dilbert comic strips.
What's more, a lot of people responded to the 2000 recession by starting their own businesses. For some it was a case of necessity -- "If I can't get a job, I'll make one!" for others It was a case of being given a push toward something they wanted to do anyway. In fact, quite a few formerly unemployed people arc now reporting that they're self-employed. Though an economist quoted by the New York Times discounts this phenomenon as "involuntary entrepreneurship," [2] it seems likely that-voluntary or otherwise- we'll see a lot more of this son of thing.
As Slate's Mickey Kaus notes: "If we're entering a new economic era-one in which traditional cyclical employers won't start rehiring, ... isn't it likely. even, that workers will adjust by pursuing entrepreneurial opportunities? And if entrepreneurship is real, what does calling it 'involuntary' mean? I might prefer to have a full-fledged 'job' at Microsoft, complete with stock options, health insurance, etc. Instead, I'm d freelance contractor. Calling my entrepreneurship 'involuntary' might be accurate, but it doesn't mean I'm not working and feeding myself. In the 'newer' economy, you'd expect such self-employment to increase, no?" [3]
Yes.
For whatever reason, many people have decided to join the ranks of the entrepreneurial classes, and technology has made it a lot easier. What's more, a lot of people really want to live that way. If they didn't, I wouldn't see and hear so many advertisements offering people ways to work at home. Sure, the ads are often scams -- but the demand they're responding to is quite genuine.
Before the Industrial Revolution, artisans worked in or alongside their homes, often with children observing and even helping. After the Industrial Revolution, workers were segregated in factories, where specialized facilities took advantage of new technologies and of the economies of scope and scale that those technologies made available. Blacksmiths could make steel or work iron in small quantities, but foundries could do it better, and cheaper.
The results of this shift reverberated through every level of society. Of course, with the workers off at factories learning the kind of skills-like punctuality and the ability to follow orders -- that factories required, something had to be done with the kids. This led to two major changes: women often specialized in childrearing to a much greater extent than previously, when childrearing was just part of the household work; and children were segregated into massive "educational factories" of their own: public schools organized, quite explicitly, to mimic factories and assembly lines, with students envisioned as the products. (What's more, the student-products were designed to be good factory employees themselves.)
And that was mostly a good thing. The techniques of industrialization took precedence because they worked better and faster than the methods they replaced. And that made everyone richer and, overall, freer. The social transformations -- in families, in workplaces, and in neighborhoods -- that came on the heels of these changes, on the other hand, were adopted not because they worked better than what they replaced but were necessary to survive in and accommodate this new work environment.
Now, it may be that things are starring to change. I was struck by this passage from the writer John Scalzi's blog, describing the impact of Wi-Fi on his life, and how it has freed him from depending on his home office:
I've noticed much of the same thing in my work. I work at home more often now, thanks to the combination of a laptop computer and wireless Internet. I work allover the house, often sitting in a chair while my daughter plays with dolls or does homework. She spends a lot more time around me than I spent with my dad, and this is one reason why.
It's a mixed bag, of course. You can look at it as getting to spend time with your family while you take care of work, or you can look at it as having to work when you're with your family, and no doubt both perspectives are valid from time to time. But it's certainly better for many kids than the frequent absences required by the much less flexible office job.
I'm not alone in this. Many people are doing the same thing as technology makes it easier to do many kinds of jobs at home. How far we'll move in the direction of what Dan Pink calls a "Free Agent Nation" [5] isn't clear: obviously, some jobs are more amenable to the cottage-industry approach than others. Our neighbors tried running a coffee service from home but met with some neighborly resistance when coffee-bearing semitrailers began backing down the street at all hours. Operating a car-repair business or a blast-furnace out of your home might also pose challenges.
But many jobs will move back home, at least in part. And if you believe, as Virginia Postrel suggests, [6] that more jobs in coming years will have an aesthetic component (which is the son of work that lends itself to a cottage-industry approach), then that trend may accelerate even more. New advances in computer-aided design and manufacturing, along with things like nanotechnology further down the line, may help the trend as well.
How will this change society at large? Schools, of course, will have to adjust to train kids for different career options. But this will just be part of it. The new freedom and flexibility will also change the mix of political issues somewhat: self-employed people tend to hate red tape and taxes (pundits have been predicting a "1099 revolt" for a while, as the percentage of self-employed people grows), but on the other hand, the difficulty of getting things like health insurance when you're not affiliated with a large company (as Jeff Jarvis noted) might make them more amenable to some proposals from the Democrats.
COMING ATTRACTIONS
We'll save that speculation for another time, though, because I want to look at some social changes that may come with increasing self-employment and home-based work. The Industrial Revolution, after all, remade our society -- and the boom in white-collar jobs after World War II did it again. Now a new revolution is dawning: How will it change us for good or ill? Here are some thoughts:
Crime: Crime in the suburbs increased once the population of stay-at-home moms was diminished. Neighborhoods had fewer sets of adult eyes around, teenagers got less supervision, and two-career couples were more distracted. Will that change? Likely. "Latchkey" kids are increasingly coming home to a parent who works at home, or whose schedule is irregular enough that his/her absence can't be taken for granted. And irregular schedules mean that thieves can't assume that neighborhoods will be deserted during the day. That's certainly true in my neighborhood, where quite a few of the people are professionals who set their own calendars, and who can often be found mowing the lawn, or lounging by the pool, in the middle of a weekday because they'll be working at night or on the weekend or whenever their schedule best fits.
Family: One of the standard negative depictions from the Gray Flannel Suit era featured a disconnect between the world of work and the world of family. Fathers trudged off en masse to downtown office buildings where they performed inscrutable tasks, from which they returned exhausted and in need of martinis. Kids had little idea what their fathers did; fathers knew little about what their kids did. Husbands and wives moved in different worlds.
The entry of women into the workforce in large numbers has helped this a little, I suppose, but not a lot, especially where the kids are concerned. But kids who get to watch their parents work up close -- the way that kids did in the pre-Industrial Revolution, cottage industry days -- are likely to have a much greater appreciation of how the world of work operates. Perhaps, like the kids in the pre-Industrial Revolution days, they'll mature more quickly as a result, though here I may be overly optimistic. At the very least, however, they'll see work behavior modeled in their presence. Instead of "take your daughter (or son) to work" day, it'll be "take work to your kids" every day. Spouses also tend to know a lot more about the work of their self-employed beloveds, for better or worse. I'm not enough of a sociologist -- or a psychic -- to analyze all the changes that may result from this phenomenon, but I feel pretty confident that many of these significant changes will be for the better.
Nobody was that thrilled with the Gray Flannel Suit era.
Economy: If more people are free agents, working at home or out-and-about rather than in traditional offices, then businesses that provide them with useful services and amenities will flourish. We're already seeing some of that, with businesses featuring amenities like free wireless Internet connections in order to attract "gypsy workers" who aren't chained to offices and who like to combine work with pleasure. (I often write at one or another local establishments offering free Wi-Fi along with other lures, and I've noticed that I'm not the only one.)
Obviously, other businesses catering to the self-employed crowd -- from Kinko's to Office Depot -- are likely to do well too. On a macro level, self-employment will make economic statistics more difficult to decode: instead of the binary distinction between "employed" and "unemployed," we'll have the fuzzier distinction between "good year" and "not-so-good year" that small businesses tend to experience. As the reports from Jeff Jarvis and Mickey Kaus quoted above indicate, this will make it harder to figure out what's going on in terms of employment.
Traffic: Proponents of light rail and other sorts of mass transit tend to portray these systems as the wave of the future. But the "commuter-rail" model assumes the presence of, well, commuters: traditional gray-flannel-suit types who head downtown in flocks, spend a day at the office, and then return home. The driving pattern for work-at-home types is different: lots of quick, parcel-laden errands to different destinations (like Office Depot or Kinko's). It's much harder to design a commuter-rail system that works for people like that. As Ralph Kinney Bennett notes, the automobile's flexibility and independence are unmatched by other forms of transportation. [7]
Politics: This topic deserves a chapter of its own, and I'll come back to it later. But here's one note: people who are self-employed are far more aware that there's no such thing as a free lunch and far more likely to look at the bottom line. As more of the electorate becomes self-employed, this is likely to produce an overall attitudinal shift in politics, over and above any changes in specific policies. Both state and local governments -- now basically organized along a Henry Ford sort of model -- might want to take a lesson from eBay and Wal-Mart and look for ways in which they can help individuals do their own thing more effectively.
Likewise, political parties, and other political organizations designed around old-fashioned industrial approaches to politics, are unlikely to flourish in a new world of fluid coalitions and issue-oriented constituencies. They, too, may want to look more like eBay, and less like Ford, if they are interested in holding on to their members and influence.
DOWN WITH DILBERT?
Will people miss things about the old-fashioned employment market? Absolutely. Though "job security" under the old system was always a lot less than it appeared (ask any steelworker or airline pilot), the constant need to hustle up new business that successful self-employment requires is a very different way of life. And though big companies are subject to Dilbert-style inefficiencies and stupidities, they take advantage of division of labor in a way that the self-employed can't. On the other hand, most people who are self-employed, in my experience, tend to like it. Most people who work for big organizations don't. So perhaps, overall, job satisfaction will be higher. I hope so. Because, for good or for ill, this is the trend. And I think that it's here to stay awhile.
Jarvis's initial observation about big and small raises some interesting points of its own. It turns out that eBay does make health insurance available to its "Power Sellers" -- basically, people who sell over $1,000 a month for three months and get good customer reviews-on terms that aren't bad. [8] (Wal-Mart's benefits also aren't as bad as Jarvis makes them sound.[9]) It's not the best deal in the world, but it's better than many full-time employers offer, and-unlike, say, auto workers-eBay Power Sellers don't have to worry about being laid off or fired because they've offended a boss.
Amazon.com has similar online programs for independent sellers via its zShops affiliates (which let individuals and small companies sell through its website) and its Amazon Associates program, which pays people referral fees for sales by customers they refer to Amazon.com's website. Their PR people were pretty unforthcoming when I asked them for information, but they did tell me that there are hundreds of thousands of people in both programs. No health insurance yet, but that could change.
This really isn't a question of big versus small; the key is to have both working together. It's easier to be small because outfits like eBay are big: eBay's buying power lets it make group insurance policies available to its sellers on terms they'd be hardpressed to equal on their own. And by aggregating lots of minor sellers into one big marketplace, eBay makes it much easier for individuals to make a living buying and selling things via the Internet. Likewise, other big operations like Wal-Mart, Sam's, Office Depot, Staples, and Costco -- which offer low prices, big selections, and support to small businesses -- do the same kind of thing. By being big, they make it easier for other people to be small.
I think that there's a big future in this cooperation between the two. Many people like the idea of being self-employed, especially as technology makes it so much easier. But while you may not want to work for Dilbert's pointy-haired boss, you probably would want Dilbert's health plan. In a way, sites like eBay and Amazon are replacing or "disintermediating" the pointy-haired boss, and all other organizational layers between the people who do the work, and the actual customers. Similarly, music sites like GarageBand.com (which I'll discuss in more detail in Chapter Four) are disintermediating the record companies (and producers and A&R people) who sit between the musicians and their audiences.
But they're also re--intermediating by putting themselves in the role formerly occupied by the companies and management. To the extent that they're doing things that traditional companies used to do -- dickering with health insurance companies and providing a trusted reputation that makes customers feel better about dealing with strangers they'll never meet -- they're filling that niche. But they're doing so in a very different way, with very different implications for the economy, and for employment.
The secret to success in big business and politics in the twenty-first century, I think, will involve figuring out a way to capitalize on the phenomenon of lots of people doing what they want to do, rather than -- as in previous centuries -- figuring out ways to make lots of people do what you want them to. The eBay and GarageBand examples are just the beginning. I suspect that more enterprising folks will figure out ways to make money along the same lines.
ARE YOU BEING SERVED?
Another way that small is the new big, of course, doesn't have much to do with the Internet. As people have more money and more stuff, they often become more interested in buying services: purchases that buy time, like a cleaning service, or a certain kind of experience, like a spa retreat. Sometimes those services ate substitutes for goods that people once bought, and sometimes -- and I think this will be the wave of the future -- the services are bound up with the goods themselves. And sometimes when we buy the goods, it's really the service we're after.
I'm a big fan of Virginia Postrel's work, not least because it seems to resonate with things that happen in my everyday life. Not long ago, her New York Times column eerily predicted a weekend shopping expedition of mine with my daughter.
I've bought my ten-year-old daughter countless shoes at big discount places: Target, Kohl's, Shoe Warehouse. When she was little, that was fine. Now that she's older, she's become a bit harder to please. Finding shoes that she likes, shoes that fit well (it's harder to keep her size straight now), is not so easy. So one Saturday we went to Coffin's Shoes, a venerable Knoxville outfit that's been selling shoes the old-fashioned way since the 1920s. A friendly salesman, who had obviously been doing his job for quite a while, measured her feet, listened to her talk about what she liked, had her try on a couple of shoes made on different-shaped "lasts" to get an idea of what she found comfortable, and then disappeared into the back, reemerging with a tower of shoes for her scrutiny.
After about half an hour of individual attention, we departed with two new pairs of shoes that she pronounced "the best shoes ever." And, she reported, they were comfortable. Of course, they cost more than it would have cost to buy shoes -- even the same shoes, if that had been possible -- at Target. But we wouldn't have gotten the service.
Now comes Postrel's column in the New York Times, where she notes that Americans are consuming more services and relatively fewer goods. "Listen to the economic debate carefully, and you might get the idea that the problem with the economy is that Americans just are not materialistic enough," she writes. It's a counterintuitive notion. So how does that square with reality? Pretty simple, really. "We spend too much of our income on restaurant meals, entertainment, travel and health care and not enough on refrigerators, ball bearings, blue jeans and cars.... As incomes go up, Americans spend a greater proportion on intangibles and relatively less on goods. One result is more new jobs in hotels, health clubs and hospitals, and fewer in factories." According to Postrel, between 1959 and 2000 the percentage of income that Americans spent on services jumped from about 40 percent to 58 percent. And, she says, "That figure understates the trend, because in many cases goods and services come bundled together." [10]
In fact, that's what I was really buying at the shoe store: goods and services bundled together. At places like Target, they're unbundled-you get goods, but not much in the way of service. (You get even less service at Wal-Mart or Costco). I bought the shoes at an old-fashioned shoe store. In the process I paid extra for the service, and I got my money's worth.
But that's only part of the story. There's more to this than simply choosing to spend money for a massage instead of a TV As consumers become more interested in the total buying experience, the appeal of Big Box stores -- whose approach consists of giving you much less service in exchange for somewhat lower prices -- may decline; in turn, the appeal of old-fashioned specialty stores, where the salespeople know their products and their customers, may come back.
If people want a "dining experience" more than they want a cheap meal -- and, as Postrel notes, nowadays they often do -- then they're likely to want a shopping experience, not just cheap shoes. And they'll be willing to pay to get it. This won't mean the end of Big Box discounters any more than the desire for dining experiences has meant the end of fast food. (Some Big Boxes, as I've mentioned above, actually facilitate small businesses). But it may mean the reappearance of a certain kind of shopping -- and certain kinds of jobs -- that some people thought the Big Boxes would wipe out forever. And because people can get the basics of life cheaply at places like Wal-Mart, they'll actually have more money available to spend on that sort of shopping where non-basics are concerned.
Services can also replace goods. We tend to treat manufacturing as authentic and services as, somehow, bogus -- not real economic activity. That's a traditional view of service industries harking back to Adam Smith. Manufacturing produces something tangible. The results of services are much less obvious.
Postrel, in fact, almost seems to accept this critique in another column: "By missing so many new sources of productivity, the undercounts distort our already distorted view of economic value -- the view that treats traditional manufacturing and management jobs as more legitimate, even more real, than craft professions or personal-service businesses. Still, more and more people are recognizing that true value can come as much from intangible pleasures as it can from tangible goods." [11]
But services can produce more than just "intangible pleasures." They can displace tangible goods. In fact, even "personal services" like massage therapy can displace goods, as I can attest from personal experience.
When practicing law in Washington back in the 1980s, I was one of the early laptop computer users, and I paid the price. I developed all the usual computer problems: numbness and shooting pains in my wrists and hands, backaches, neckaches, and headaches. My health plan then was the George Washington University HMO. So I got great care at a fancy teaching hospital that, since it could use me as a guinea pig to train medical residents, had no interest in cutting corners on treatments that did me no good at all. I was examined by neurologists, immunologists, occupational medicine specialists, and orthopedists. I had nerve conduction studies and electromyelograms. I was given powerful NSAIDs that upset my stomach but provided little relief. I was tested for lupus, myasthenia gravis, and Lou Gehrig's disease.
Then I went to a massage therapist, who dug her thumb into my back just inside a shoulder blade and asked, "Does this trigger your symptoms?" It did. She prescribed some stretches and exercises, and I got much better.
A pill that gave me an equivalent amount of relief would be considered a "product," and the worker who made it would occupy a "manufacturing job." But the pill would have side effects, and it would come out of a factory that consumed resources and energy, and produced pollution and waste, in a way that a massage therapist doesn't.
So the massage therapist is, in a sense, a replacement for that manufacturing job. What's more, the reason there are more massage therapists now, in part, is that more people can afford them. And more people can afford them because increasing productivity makes manufactured stuff -- computers, clothing, food -- cheaper. So when companies shift to automation or outsourcing to lower their costs, it in fact does help to produce new jobs at home.
To pick another example, consider the manufacture of cheap plastic dolls -- whether Barbies, Bratz, or, God forbid, Liam Flavas (a manpurse-carrying metrosexual consort to the Flava line of urban dolls). My daughter used to spend most of her allowance money on that sort of thing. But more recently she's been spending her money at places like Club Libby Lu, a Sak's franchise where she gets "starlet makeovers" and the like. These cost about as much as a doll but, to my delight, they don't add to the mountain of trash at my house that has grown big enough to worry my garbagemen. Isn't the American economy actually better off when cheap plastic dolls made in China are replaced by services performed at home? Heck, I think it's better even than my daughter's money going toward cheap plastic dolls made in America: there's no environmental damage (except for the tenacious glitter-powder) and no addition to my trash pile. And makeovers are harder to move offshore.
And where, to belabor a point, do we get the money to pay for these services? In part, money is available because technology makes manufactured goods and food cheaper. And as society becomes richer, time and energy are spent doing things rather than in production. It's probably not a coincidence that many services (massage therapy, for example) actually work better on a smaller scale. Somehow I don't think a McMassage or a Wal-Mart Massage Center would do as well. Still, your masseuse may hold prices down by buying equipment at Wal-Mart, and you may be able to afford a massage because you were able to buy a six-pound bag of pasta for $2.29 at Sam's Club. As the big guys get better at being big, it's actually easier for the little guys to stay small. That's a kind of synergy we're likely to see more of.
Awhile back, blogger Jeff Jarvis noted a press release saying that eBay's sellers were threatening to overtake Wal-Mart's employment numbers:
eBay is fast becoming one of the largest employers in America. Of course, it hardly employs anyone, but it enables a lot of people to employ themselves and run their own businesses: 724,000 people are using it as their full- or part-time employment, up 68 percent from a year ago; another 1.5 million use it to supplement their income. Wal-Mart is America's largest employer with 1.1 million workers. Sure, the eBay-self-employed don't have Wal-Mart's crappy benefits and uniforms (if eBay were really smart, they'd institute group health insurance!) but all those folks are their own bosses. As industry gets bigger and bigger, small becomes more and more of an economic force. [1]
Yes, this is something of an apples-and-oranges comparison, but not entirely. And it captures an important point: lots of people don't like their jobs, their bosses, or their offices -- just read any selection of Dilbert comic strips.
What's more, a lot of people responded to the 2000 recession by starting their own businesses. For some it was a case of necessity -- "If I can't get a job, I'll make one!" for others It was a case of being given a push toward something they wanted to do anyway. In fact, quite a few formerly unemployed people arc now reporting that they're self-employed. Though an economist quoted by the New York Times discounts this phenomenon as "involuntary entrepreneurship," [2] it seems likely that-voluntary or otherwise- we'll see a lot more of this son of thing.
As Slate's Mickey Kaus notes: "If we're entering a new economic era-one in which traditional cyclical employers won't start rehiring, ... isn't it likely. even, that workers will adjust by pursuing entrepreneurial opportunities? And if entrepreneurship is real, what does calling it 'involuntary' mean? I might prefer to have a full-fledged 'job' at Microsoft, complete with stock options, health insurance, etc. Instead, I'm d freelance contractor. Calling my entrepreneurship 'involuntary' might be accurate, but it doesn't mean I'm not working and feeding myself. In the 'newer' economy, you'd expect such self-employment to increase, no?" [3]
Yes.
For whatever reason, many people have decided to join the ranks of the entrepreneurial classes, and technology has made it a lot easier. What's more, a lot of people really want to live that way. If they didn't, I wouldn't see and hear so many advertisements offering people ways to work at home. Sure, the ads are often scams -- but the demand they're responding to is quite genuine.
Before the Industrial Revolution, artisans worked in or alongside their homes, often with children observing and even helping. After the Industrial Revolution, workers were segregated in factories, where specialized facilities took advantage of new technologies and of the economies of scope and scale that those technologies made available. Blacksmiths could make steel or work iron in small quantities, but foundries could do it better, and cheaper.
The results of this shift reverberated through every level of society. Of course, with the workers off at factories learning the kind of skills-like punctuality and the ability to follow orders -- that factories required, something had to be done with the kids. This led to two major changes: women often specialized in childrearing to a much greater extent than previously, when childrearing was just part of the household work; and children were segregated into massive "educational factories" of their own: public schools organized, quite explicitly, to mimic factories and assembly lines, with students envisioned as the products. (What's more, the student-products were designed to be good factory employees themselves.)
And that was mostly a good thing. The techniques of industrialization took precedence because they worked better and faster than the methods they replaced. And that made everyone richer and, overall, freer. The social transformations -- in families, in workplaces, and in neighborhoods -- that came on the heels of these changes, on the other hand, were adopted not because they worked better than what they replaced but were necessary to survive in and accommodate this new work environment.
Now, it may be that things are starring to change. I was struck by this passage from the writer John Scalzi's blog, describing the impact of Wi-Fi on his life, and how it has freed him from depending on his home office:
At the moment, I'm writing this in [my daughter] Athena's room, on the Boor, the computer propped up on my lap; Athena is behind me on her bed making up a Powerpuff adventure. Three weeks ago I would have to be in my [home] office to type this and Athena would be coming in about every six seconds to ask me something or to ask me to do something or whatever, which means I would actually have a difficult time getting work done when she was around; now she's happy to let me work because I have proximity to her. She still asks me questions and such, bur once I've answered she's off on her own thing.
Interestingly, this also works with Krissy [his wife]: she's more content to let me do work if I'm in line of sight. There's a real psychological difference between being in the office all the time, away from the family while I'm doing work, and being in the room, doing work while the family is doing stuff around me. It's useful for me (especially when I'm on deadline, like I am right now), and it's better for the family. [4]
I've noticed much of the same thing in my work. I work at home more often now, thanks to the combination of a laptop computer and wireless Internet. I work allover the house, often sitting in a chair while my daughter plays with dolls or does homework. She spends a lot more time around me than I spent with my dad, and this is one reason why.
It's a mixed bag, of course. You can look at it as getting to spend time with your family while you take care of work, or you can look at it as having to work when you're with your family, and no doubt both perspectives are valid from time to time. But it's certainly better for many kids than the frequent absences required by the much less flexible office job.
I'm not alone in this. Many people are doing the same thing as technology makes it easier to do many kinds of jobs at home. How far we'll move in the direction of what Dan Pink calls a "Free Agent Nation" [5] isn't clear: obviously, some jobs are more amenable to the cottage-industry approach than others. Our neighbors tried running a coffee service from home but met with some neighborly resistance when coffee-bearing semitrailers began backing down the street at all hours. Operating a car-repair business or a blast-furnace out of your home might also pose challenges.
But many jobs will move back home, at least in part. And if you believe, as Virginia Postrel suggests, [6] that more jobs in coming years will have an aesthetic component (which is the son of work that lends itself to a cottage-industry approach), then that trend may accelerate even more. New advances in computer-aided design and manufacturing, along with things like nanotechnology further down the line, may help the trend as well.
How will this change society at large? Schools, of course, will have to adjust to train kids for different career options. But this will just be part of it. The new freedom and flexibility will also change the mix of political issues somewhat: self-employed people tend to hate red tape and taxes (pundits have been predicting a "1099 revolt" for a while, as the percentage of self-employed people grows), but on the other hand, the difficulty of getting things like health insurance when you're not affiliated with a large company (as Jeff Jarvis noted) might make them more amenable to some proposals from the Democrats.
COMING ATTRACTIONS
We'll save that speculation for another time, though, because I want to look at some social changes that may come with increasing self-employment and home-based work. The Industrial Revolution, after all, remade our society -- and the boom in white-collar jobs after World War II did it again. Now a new revolution is dawning: How will it change us for good or ill? Here are some thoughts:
Crime: Crime in the suburbs increased once the population of stay-at-home moms was diminished. Neighborhoods had fewer sets of adult eyes around, teenagers got less supervision, and two-career couples were more distracted. Will that change? Likely. "Latchkey" kids are increasingly coming home to a parent who works at home, or whose schedule is irregular enough that his/her absence can't be taken for granted. And irregular schedules mean that thieves can't assume that neighborhoods will be deserted during the day. That's certainly true in my neighborhood, where quite a few of the people are professionals who set their own calendars, and who can often be found mowing the lawn, or lounging by the pool, in the middle of a weekday because they'll be working at night or on the weekend or whenever their schedule best fits.
Family: One of the standard negative depictions from the Gray Flannel Suit era featured a disconnect between the world of work and the world of family. Fathers trudged off en masse to downtown office buildings where they performed inscrutable tasks, from which they returned exhausted and in need of martinis. Kids had little idea what their fathers did; fathers knew little about what their kids did. Husbands and wives moved in different worlds.
The entry of women into the workforce in large numbers has helped this a little, I suppose, but not a lot, especially where the kids are concerned. But kids who get to watch their parents work up close -- the way that kids did in the pre-Industrial Revolution, cottage industry days -- are likely to have a much greater appreciation of how the world of work operates. Perhaps, like the kids in the pre-Industrial Revolution days, they'll mature more quickly as a result, though here I may be overly optimistic. At the very least, however, they'll see work behavior modeled in their presence. Instead of "take your daughter (or son) to work" day, it'll be "take work to your kids" every day. Spouses also tend to know a lot more about the work of their self-employed beloveds, for better or worse. I'm not enough of a sociologist -- or a psychic -- to analyze all the changes that may result from this phenomenon, but I feel pretty confident that many of these significant changes will be for the better.
Nobody was that thrilled with the Gray Flannel Suit era.
Economy: If more people are free agents, working at home or out-and-about rather than in traditional offices, then businesses that provide them with useful services and amenities will flourish. We're already seeing some of that, with businesses featuring amenities like free wireless Internet connections in order to attract "gypsy workers" who aren't chained to offices and who like to combine work with pleasure. (I often write at one or another local establishments offering free Wi-Fi along with other lures, and I've noticed that I'm not the only one.)
Obviously, other businesses catering to the self-employed crowd -- from Kinko's to Office Depot -- are likely to do well too. On a macro level, self-employment will make economic statistics more difficult to decode: instead of the binary distinction between "employed" and "unemployed," we'll have the fuzzier distinction between "good year" and "not-so-good year" that small businesses tend to experience. As the reports from Jeff Jarvis and Mickey Kaus quoted above indicate, this will make it harder to figure out what's going on in terms of employment.
Traffic: Proponents of light rail and other sorts of mass transit tend to portray these systems as the wave of the future. But the "commuter-rail" model assumes the presence of, well, commuters: traditional gray-flannel-suit types who head downtown in flocks, spend a day at the office, and then return home. The driving pattern for work-at-home types is different: lots of quick, parcel-laden errands to different destinations (like Office Depot or Kinko's). It's much harder to design a commuter-rail system that works for people like that. As Ralph Kinney Bennett notes, the automobile's flexibility and independence are unmatched by other forms of transportation. [7]
Politics: This topic deserves a chapter of its own, and I'll come back to it later. But here's one note: people who are self-employed are far more aware that there's no such thing as a free lunch and far more likely to look at the bottom line. As more of the electorate becomes self-employed, this is likely to produce an overall attitudinal shift in politics, over and above any changes in specific policies. Both state and local governments -- now basically organized along a Henry Ford sort of model -- might want to take a lesson from eBay and Wal-Mart and look for ways in which they can help individuals do their own thing more effectively.
Likewise, political parties, and other political organizations designed around old-fashioned industrial approaches to politics, are unlikely to flourish in a new world of fluid coalitions and issue-oriented constituencies. They, too, may want to look more like eBay, and less like Ford, if they are interested in holding on to their members and influence.
DOWN WITH DILBERT?
Will people miss things about the old-fashioned employment market? Absolutely. Though "job security" under the old system was always a lot less than it appeared (ask any steelworker or airline pilot), the constant need to hustle up new business that successful self-employment requires is a very different way of life. And though big companies are subject to Dilbert-style inefficiencies and stupidities, they take advantage of division of labor in a way that the self-employed can't. On the other hand, most people who are self-employed, in my experience, tend to like it. Most people who work for big organizations don't. So perhaps, overall, job satisfaction will be higher. I hope so. Because, for good or for ill, this is the trend. And I think that it's here to stay awhile.
Jarvis's initial observation about big and small raises some interesting points of its own. It turns out that eBay does make health insurance available to its "Power Sellers" -- basically, people who sell over $1,000 a month for three months and get good customer reviews-on terms that aren't bad. [8] (Wal-Mart's benefits also aren't as bad as Jarvis makes them sound.[9]) It's not the best deal in the world, but it's better than many full-time employers offer, and-unlike, say, auto workers-eBay Power Sellers don't have to worry about being laid off or fired because they've offended a boss.
Amazon.com has similar online programs for independent sellers via its zShops affiliates (which let individuals and small companies sell through its website) and its Amazon Associates program, which pays people referral fees for sales by customers they refer to Amazon.com's website. Their PR people were pretty unforthcoming when I asked them for information, but they did tell me that there are hundreds of thousands of people in both programs. No health insurance yet, but that could change.
This really isn't a question of big versus small; the key is to have both working together. It's easier to be small because outfits like eBay are big: eBay's buying power lets it make group insurance policies available to its sellers on terms they'd be hardpressed to equal on their own. And by aggregating lots of minor sellers into one big marketplace, eBay makes it much easier for individuals to make a living buying and selling things via the Internet. Likewise, other big operations like Wal-Mart, Sam's, Office Depot, Staples, and Costco -- which offer low prices, big selections, and support to small businesses -- do the same kind of thing. By being big, they make it easier for other people to be small.
I think that there's a big future in this cooperation between the two. Many people like the idea of being self-employed, especially as technology makes it so much easier. But while you may not want to work for Dilbert's pointy-haired boss, you probably would want Dilbert's health plan. In a way, sites like eBay and Amazon are replacing or "disintermediating" the pointy-haired boss, and all other organizational layers between the people who do the work, and the actual customers. Similarly, music sites like GarageBand.com (which I'll discuss in more detail in Chapter Four) are disintermediating the record companies (and producers and A&R people) who sit between the musicians and their audiences.
But they're also re--intermediating by putting themselves in the role formerly occupied by the companies and management. To the extent that they're doing things that traditional companies used to do -- dickering with health insurance companies and providing a trusted reputation that makes customers feel better about dealing with strangers they'll never meet -- they're filling that niche. But they're doing so in a very different way, with very different implications for the economy, and for employment.
The secret to success in big business and politics in the twenty-first century, I think, will involve figuring out a way to capitalize on the phenomenon of lots of people doing what they want to do, rather than -- as in previous centuries -- figuring out ways to make lots of people do what you want them to. The eBay and GarageBand examples are just the beginning. I suspect that more enterprising folks will figure out ways to make money along the same lines.
ARE YOU BEING SERVED?
Another way that small is the new big, of course, doesn't have much to do with the Internet. As people have more money and more stuff, they often become more interested in buying services: purchases that buy time, like a cleaning service, or a certain kind of experience, like a spa retreat. Sometimes those services ate substitutes for goods that people once bought, and sometimes -- and I think this will be the wave of the future -- the services are bound up with the goods themselves. And sometimes when we buy the goods, it's really the service we're after.
I'm a big fan of Virginia Postrel's work, not least because it seems to resonate with things that happen in my everyday life. Not long ago, her New York Times column eerily predicted a weekend shopping expedition of mine with my daughter.
I've bought my ten-year-old daughter countless shoes at big discount places: Target, Kohl's, Shoe Warehouse. When she was little, that was fine. Now that she's older, she's become a bit harder to please. Finding shoes that she likes, shoes that fit well (it's harder to keep her size straight now), is not so easy. So one Saturday we went to Coffin's Shoes, a venerable Knoxville outfit that's been selling shoes the old-fashioned way since the 1920s. A friendly salesman, who had obviously been doing his job for quite a while, measured her feet, listened to her talk about what she liked, had her try on a couple of shoes made on different-shaped "lasts" to get an idea of what she found comfortable, and then disappeared into the back, reemerging with a tower of shoes for her scrutiny.
After about half an hour of individual attention, we departed with two new pairs of shoes that she pronounced "the best shoes ever." And, she reported, they were comfortable. Of course, they cost more than it would have cost to buy shoes -- even the same shoes, if that had been possible -- at Target. But we wouldn't have gotten the service.
Now comes Postrel's column in the New York Times, where she notes that Americans are consuming more services and relatively fewer goods. "Listen to the economic debate carefully, and you might get the idea that the problem with the economy is that Americans just are not materialistic enough," she writes. It's a counterintuitive notion. So how does that square with reality? Pretty simple, really. "We spend too much of our income on restaurant meals, entertainment, travel and health care and not enough on refrigerators, ball bearings, blue jeans and cars.... As incomes go up, Americans spend a greater proportion on intangibles and relatively less on goods. One result is more new jobs in hotels, health clubs and hospitals, and fewer in factories." According to Postrel, between 1959 and 2000 the percentage of income that Americans spent on services jumped from about 40 percent to 58 percent. And, she says, "That figure understates the trend, because in many cases goods and services come bundled together." [10]
In fact, that's what I was really buying at the shoe store: goods and services bundled together. At places like Target, they're unbundled-you get goods, but not much in the way of service. (You get even less service at Wal-Mart or Costco). I bought the shoes at an old-fashioned shoe store. In the process I paid extra for the service, and I got my money's worth.
But that's only part of the story. There's more to this than simply choosing to spend money for a massage instead of a TV As consumers become more interested in the total buying experience, the appeal of Big Box stores -- whose approach consists of giving you much less service in exchange for somewhat lower prices -- may decline; in turn, the appeal of old-fashioned specialty stores, where the salespeople know their products and their customers, may come back.
If people want a "dining experience" more than they want a cheap meal -- and, as Postrel notes, nowadays they often do -- then they're likely to want a shopping experience, not just cheap shoes. And they'll be willing to pay to get it. This won't mean the end of Big Box discounters any more than the desire for dining experiences has meant the end of fast food. (Some Big Boxes, as I've mentioned above, actually facilitate small businesses). But it may mean the reappearance of a certain kind of shopping -- and certain kinds of jobs -- that some people thought the Big Boxes would wipe out forever. And because people can get the basics of life cheaply at places like Wal-Mart, they'll actually have more money available to spend on that sort of shopping where non-basics are concerned.
Services can also replace goods. We tend to treat manufacturing as authentic and services as, somehow, bogus -- not real economic activity. That's a traditional view of service industries harking back to Adam Smith. Manufacturing produces something tangible. The results of services are much less obvious.
Postrel, in fact, almost seems to accept this critique in another column: "By missing so many new sources of productivity, the undercounts distort our already distorted view of economic value -- the view that treats traditional manufacturing and management jobs as more legitimate, even more real, than craft professions or personal-service businesses. Still, more and more people are recognizing that true value can come as much from intangible pleasures as it can from tangible goods." [11]
But services can produce more than just "intangible pleasures." They can displace tangible goods. In fact, even "personal services" like massage therapy can displace goods, as I can attest from personal experience.
When practicing law in Washington back in the 1980s, I was one of the early laptop computer users, and I paid the price. I developed all the usual computer problems: numbness and shooting pains in my wrists and hands, backaches, neckaches, and headaches. My health plan then was the George Washington University HMO. So I got great care at a fancy teaching hospital that, since it could use me as a guinea pig to train medical residents, had no interest in cutting corners on treatments that did me no good at all. I was examined by neurologists, immunologists, occupational medicine specialists, and orthopedists. I had nerve conduction studies and electromyelograms. I was given powerful NSAIDs that upset my stomach but provided little relief. I was tested for lupus, myasthenia gravis, and Lou Gehrig's disease.
Then I went to a massage therapist, who dug her thumb into my back just inside a shoulder blade and asked, "Does this trigger your symptoms?" It did. She prescribed some stretches and exercises, and I got much better.
A pill that gave me an equivalent amount of relief would be considered a "product," and the worker who made it would occupy a "manufacturing job." But the pill would have side effects, and it would come out of a factory that consumed resources and energy, and produced pollution and waste, in a way that a massage therapist doesn't.
So the massage therapist is, in a sense, a replacement for that manufacturing job. What's more, the reason there are more massage therapists now, in part, is that more people can afford them. And more people can afford them because increasing productivity makes manufactured stuff -- computers, clothing, food -- cheaper. So when companies shift to automation or outsourcing to lower their costs, it in fact does help to produce new jobs at home.
To pick another example, consider the manufacture of cheap plastic dolls -- whether Barbies, Bratz, or, God forbid, Liam Flavas (a manpurse-carrying metrosexual consort to the Flava line of urban dolls). My daughter used to spend most of her allowance money on that sort of thing. But more recently she's been spending her money at places like Club Libby Lu, a Sak's franchise where she gets "starlet makeovers" and the like. These cost about as much as a doll but, to my delight, they don't add to the mountain of trash at my house that has grown big enough to worry my garbagemen. Isn't the American economy actually better off when cheap plastic dolls made in China are replaced by services performed at home? Heck, I think it's better even than my daughter's money going toward cheap plastic dolls made in America: there's no environmental damage (except for the tenacious glitter-powder) and no addition to my trash pile. And makeovers are harder to move offshore.
And where, to belabor a point, do we get the money to pay for these services? In part, money is available because technology makes manufactured goods and food cheaper. And as society becomes richer, time and energy are spent doing things rather than in production. It's probably not a coincidence that many services (massage therapy, for example) actually work better on a smaller scale. Somehow I don't think a McMassage or a Wal-Mart Massage Center would do as well. Still, your masseuse may hold prices down by buying equipment at Wal-Mart, and you may be able to afford a massage because you were able to buy a six-pound bag of pasta for $2.29 at Sam's Club. As the big guys get better at being big, it's actually easier for the little guys to stay small. That's a kind of synergy we're likely to see more of.