Tech Will Transform the Job Market. Someday.
The world of work is being transformed by digital technology. Jobs are out. Gigs are in. Everybody knows that. Except for, you know, most of the American labor force.
That’s one conclusion you could draw from the McKinsey Global Institute’s new report on “connecting talent with opportunity in the digital age.” It isn't the conclusion you’re supposed to take away -- the intended big news from the report is the estimate that so-called online talent platforms will create the equivalent of 72 million full-time jobs and boost global gross domestic product by $2.7 trillion a year a decade from now. The projected gains are so big in part because not all that much has happened yet. “We think there’s clear evidence that these platforms are only now hitting critical scale,” said Susan Lund, one of the report’s authors, when I asked her about it Wednesday.
“These platforms” range from job-posting sites that have been around since the last millennium, such as Monster.com, to newer work marketplaces that range from the general -- Upwork, TaskRabbit -- to the very focused -- Uber, UrbanSitter. The broadness of the definition can at times be a little maddening for readers of the report, but the idea is that all of these have the effect of making labor markets more fluid and more efficient than they were before.
The most important online job player in the U.S. and several other countries now is LinkedIn (the “world’s largest professional network”), which helped MGI -- the consulting firm’s research arm -- with survey data for the report. But LinkedIn has only become ubiquitous in the past couple of years, and the thinking is that its potential is only beginning to be explored. As for workers relying on gigs arranged by Upwork, TaskRabbit and their ilk, MGI estimates that they “currently make up less than 1 percent of the U.S. working-age population.”
The population of what writer Dan Pink once dubbed “Free Agent Nation” is much bigger than that, but it isn't exactly exploding either. About 40 percent of the U.S. workforce labored in 2010 in something other than traditional full-time permanent jobs, the Government Accountability Office estimated in April. But 40 percent of those workers (40 percent of the 40 percent, that is) were simply part-timers in otherwise conventional jobs, and there’s no evidence in the GAO’s admittedly spotty data of significant growth in the ranks of the self-employed or independent contractors.
I’ve been struggling for a few years now to reconcile the rhetoric about the changing job market with the less-than-dramatic evidence in the employment statistics. Part of what’s going on may be that declines in old-line self-employment fields such as farming and retailing are masking increases in white-collar independent work. Part of it may be that our government’s data-collection efforts are moored in an earlier era. Part of it may be that the rhetoric is overblown.
There’s a similar tension between the broader talk of tech-fueled economic change and disruption and the less-than-impressive evidence in economy-wide growth, productivity and business-dynamism data. Disruption is everywhere, it seems, except in the economic statistics. But maybe the statistics are missing out, or we’re just very early in the transformation. You know this debate -- Tyler Cowen and Robert Gordon on the pessimistic side; Erik Brynjolfsson, Andrew McAfee and a whole lot of Silicon Valley enthusiasts on the other.
It’s clear which side the McKinsey Global Institute people are on -- Brynjolfsson, a professor at the Massachusetts Institute of Technology, is one of MGI’s academic advisers. And the report tells a credible story about the ways in which online job platforms remove inefficiencies from the hiring process and give would-be workers better feedback on the educational and career paths that are most promising. Most of the economic gains MGI projects will come from making the traditional hiring process work better. But online marketplaces that farm out work in discrete chunks will play a growing role too, both by boosting labor-force participation and increasing productivity.
On-demand service platforms such as TaskRabbit and Uber have also been criticized for the quality of the work they offer and because their contingent workers get none of the benefits of employees. But the optimistic MGI take is that at least they provide “avenues for earning income” -- and that over time the online-marketplace model will prove more empowering than exploitative for workers.
That’s already the case for those with highly valued skills. Lund, a McKinsey partner with a Ph.D. in applied economics from Stanford, said she hears about once a week from headhunters who have come across her LinkedIn profile. Not that she’s much of a job-hopper. Near the end of the report, she and her co-authors declare that “the days of joining an employer, rising through the ranks, and staying for decades are over.” Really? Lund has been at McKinsey for 18 years; the report’s other lead author, James Manyika, has been there for 21.
“I know,” Lund said, laughing, when I brought this up. “The days of staying at one employer are over -- except for me.” There are still lots of attractions to working within an organization, and doing so for long enough to become familiar with its ways. Still, it’s nice to get those LinkedIn queries every week.
These calculations do not factor in the possibilities that (a) global macroeconomic struggles will continue or (b) the robots will take all our jobs.
You should listen to Noah Smith, people.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
To contact the author on this story:
Justin Fox at firstname.lastname@example.org
To contact the editor on this story:
James Greiff at email@example.com