We're All Business Owners Now

Don’t miss this week’s magazine cover story: The Disposable Worker. It documents companies’ shift from relying on full-time employees to a contingent workforce of temps, freelancers, contractors, and part-timers. Not just in low-skill jobs or easily outsourced tasks, either. One of the people profiled is Sydney Reiner, a University of Chicago MBA who does short-term stints as an “interim chief marketing officer” for companies like Godiva Chocolate and POM Wonderful.

For employers, the shift to a contingent workforce means labor becomes a variable rather than fixed cost. For workers, it means “no health insurance, no retirement benefits, no sick days, no vacation, no severance, and no access to unemployment insurance,” particularly in low-end jobs.

Contingent workers are all, to some degree, managing their own single-person businesses. They have to worry about everything from paying taxes as freelancers to building personal brands. Many of them may have separate businesses to generate extra income: Etsy stores, handyman work, consulting. Many people even find working for themselves more secure than relying on a single employer for all their income. With 7.2 million jobs gone in the past two years, and payrolls still shrinking, it’s not hard to see why.

The shift to a temporary workforce is a long-term trend accelerated by the recession, not created by it, as my colleagues Peter Coy, Michelle Conlin, and Moira Herbst write:

Their situation isn’t likely to improve soon; some economists predict it will be years, not months, before employees regain any semblance of bargaining power. That’s because this recession’s unusual ferocity has accelerated trends—including offshoring, automation, the decline of labor unions’ influence, new management techniques, and regulatory changes—that already had been eroding workers’ economic standing.

Here’s my takeaway, in two pieces.

1) Every worker needs the capabilities of a small business owner: to find business, think and work creatively, understand and manage risks. LinkedIn founder Reid Hoffman talked about this in May: “Every individual is now an entrepreneur, whether they recognize it or not.”

2) The less-covered implication is that our institutions have not caught up to the changing labor economy. The way we prepare young people to enter the workforce — from high schools to MBA programs — should reflect how important entrepreneurship has become. Our employer-based health insurance, retirement plans, tax laws, and unemployment assistance were all built for a 20th century economy. Most people worked for big employers, and stayed in their jobs for long periods. Those days are gone, and forward-thinking policymakers need to reshape those institutions for a more entrepreneurial economy.

All that needs to happen for this shift to benefit individuals and not just corporate bottom lines. What changes would you like to see? Read the story, and let us know.

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