The Industrial Economy finally sputtered out in 2008, but the chaos of a faltering international banking system on the verge of collapse obscured the consequences of that historic event.
In case you don’t remember or are too young to recall that agonizing slow motion train wreck, here is how Mohamed El-erian characterized those days in his fascinating examination The Only Game in Town:
“In the last three years plus, central banks have had little choice but to do the unsustainable in order to sustain the unsustainable until others could do the sustainable in order to restore sustainability.”
We now live in a new economy, one in which the old rules and way of doing things no longer work as they once did. The way we measure economic output and activities no longer works like it once did. I recently wrote about this in a blog article, Why the Fed is playing with fire when it increases interest rates.
The same challenge is happening in management, and recruiting.
(See this recent LinkedIn post from a forward thinking recruiter for new ways to address this problem.)
One of the most prominent examples of the move from the past to the future is happening in the education industry. Colleges and universities are replacing traditional full time faculties with part time adjuncts. The trend is not included in strategic planning, but seems to be a gradual piecemeal move towards an all-adjunct faculty. The Chronicle of Higher Education recently published a good overview here.
At the community college where I teach, adjuncts outnumber full time instructors by about 3 to 1, and teach the majority of courses and carry the majority of credit hours offered by the school. The college pays us about one-third the hourly rate of full time professors, but we are limited to about two thirds of the hours. Like most gig work, this is not produce a living wage, has no benefits and offers no job security.
That is typical of higher education and other occupations as well.
How do recruiters include these people in their networks? Is it even realistic to think gig workers might ever hold a traditional full time job?
Probably not, but I hope recruiters address the issue.
If all this seems like it is a relatively minor problem – that 3.8% unemployment number misleads many people – look to the current news on suicide trends. It’s not just fashion designers and celebrity chiefs taking their own lives.
According to CDC statistics, the highest increase in successful suicides over the last fifteen years – roughly spanning the time the economy has been in upheaval – is among men 45 to 64 years old. This is the generation whose most lucrative working years happened to coincide with the collapse of the Industrial Economy and the nightmare of the Great Recession. Those numbers represent the ongoing struggles of people left behind even by the gig economy.
From this perspective, gig workers in the education industry aren’t doing so badly. Questions remain, however.
These highly educated gig workers will likely never afford to pay their student loans; consequently, taxpayers will increasingly foot the current $1.5 trillion student loan bill. This debt is from students to the government, but the government has already transferred this amount to the educating industry. Taxpayers are now reimbursing the government.
(The University of Arizona here in Tucson is a very nice campus.)
How big is the gig economy? How many people are shifting into this labor market?
The short answer is that we don’t know. A 2015 Government Accounting Office (GAO) report estimated about 40% of people classified as employed by the Bureau of Labor Statistics (BLS) as employed were actually gig or “contingent workers”.
A 2018 report from the Federal Reserve Board of Governors puts the number at 31%. Other estimates are from about 10% to 15%.
The confusion stems from the same measurement challenge facing economic analysis examined in the blog post noted above. We have not settled on a uniform way to define and measure the gig economy. Economists are working on the question, (see here and here), but there will likely be no answers any time soon.
The important take away for the recruiting industry is that the first to figure out how to exploit the huge emerging gig labor force could well dominate the industry for decades to come. This is why new ideas such as moving from the existing recruiting model to a networking model holds such promise.
No matter how the recruiting industry addresses these changes one this is certain:
We are living in exciting and interesting times.