The Gig Economy, Round 2

The Gig Economy, Round 2

I saw the gay marriage result today and that got me thinking about the gig economy and working conditions. What do gay people have to do with the gig economy? Not sure – but AMP’s Shane Oliver asserted on Twitter that workforce participation would likely pick up now that gay people can marry.

Why would gay people be more likely to work if they’re married? Again, not sure – the converse of this would almost be to argue that workforce participation should decline because the marriage rate among hetero couples has been falling over the past 20 years. Actually, workforce participation has declined since 2008 (except for very recently), and you would probably get a reasonable correlation between workforce participation and heterosexual marriage rate, but that is a pretty edgy connection to make. But that’s why I’m a hack with a blog and Oliver’s the guy getting paid big bikkies.

Extemporaneous rant aside, I am in the early days of an (undisclosed) 10foot investment that will work out extra-well if a stack of people lose their jobs. Management is pretty friendly but I think if a tech-savvy version of Carl Icahn came in, perhaps up to 30% of this company’s workforce could be cut. I was thinking about the difficulties of losing your job in a corporate restructure, and following this line of thought I foresee two big problems for society:

  • Lots of jobs are being destroyed. Heaps of people will be obsolete by 2030. This is often touted as the problem du jour, but I think that’s inaccurate. Plenty of new jobs will be and are continuously being created.  Jobs being destroyed is not actually the problem.


The problems are:

  • An inability to access the new jobs because of difficulty retraining

Education is gradually being wound back and more of the cost is being passed on to students. For example, universities are now allowed to levy a student services + amenities fee (SSAF) to fund extracurricular activities + services at their uni. This is an additional ~$300 per year. Not much, but as a full-time student that could be 2%-3% of your annual wage. The threshold for paying back your loan has also reduced. Previously it was more or less non-recourse debt, but it is increasingly becoming recourse and you can start paying your debt back once your salary exceeds approx $53,000 (not sure exact figure). Instead of being a tool to improve yourself and earn a higher salary, now degrees are becoming mandatory for jobs (at the same time as attaining a degree is getting more expensive) and with the lower salary required for repayment, it’s almost like an additional tax.

A technical degree could cost north of $50,000. Yes, the cost of HELP-debt is low and the person will (should) get paid more yada yada, but universities + the economy are absolutely appalling at allocating students to industries in demand, so a degree far from guarantees a job. Plus, that is an astonishing liability to land on someone and it nibbles away at your income for the rest of your life. HELP debt is also not available to all equally. Some will be unable to retrain either due to their citizenship or family status (unable to afford to work part time while they study, for e.g.).  In my opinion there is a definite class of people that will struggle to access retraining services, for several reasons. New migrants are severely disadvantaged because even if they can afford education (they are not eligible for HELP), the cost for ‘foreign’ students (including recent migrants) is prohibitively high, up to 2x or more the cost of a Commonwealth Supported (i.e., subsidised) Position.

I think that greater effort needs to be made to make retraining services accessible and affordable. Additionally, the need for retraining should probably be taught as early as high school. The one-career-for-life Australia of our parents is irrevocably gone and I would suggest that many of our politicians – who grew up under this model – are woefully out of touch and verging on incompetent when it comes to this issue. If you plan to retrain and consistently set money aside for this purpose, it is not infeasible to do so, but many people are not aware of the need and do not save appropriately. Additionally, the increasing erosion of working rights, including the minimum wage, is going to make it more difficult to save, in my opinion.

  • Distribution of wealth being affected by erosion of worker protections (via gig economy, Uber, and indirectly, corporate tax avoidance, trust structures for wealthy, etc)

I have written about this previously in my post on The Gig Economy. I won’t repeat that post, but underclass roles are growing in their prevalence. When you are in a role that is dependent on constant output from you (e.g. Uber) with no holidays or sick days, it is extraordinarily difficult for you to take a risk on education and a lower income when you have no margin of safety – especially if you are supporting a family. It is also becoming increasingly difficult to build a safety buffer in the first place if you start your working life in an unskilled job. This is exacerbated in Sydney due to property prices but I believe it is a serious problem elsewhere as well – rent might be cheaper outside of Sydney, but unemployment is higher.

In line with this, I think we are seeing the increasing erosion of conditions for workers over time, a process ironically hurried along by some of the more militant unions. You can see snatches of this erosion in the corporate restructuring on the ASX and changes to worker incentive programs. (The cynic in me notes that the CEO remuneration machine chugs along undisturbed…)

The problem is not that jobs are being destroyed, workers are becoming more flexible, or even that the nature of work and employment conditions are changing.

The problem is that many workers appear to increasingly lack a safety net, and this is occurring at the very same time that retraining appears to be getting more difficult due to higher costs of education and so on.

Tangential to this:  There are loads of immensely valuable courses on the web that can be accessed for free and are very flexible. However, an inflexible hiring regime that places emphasis on qualifications rather than achievement or capability is a double whammy – operating deleverage – for those needing to retrain at the same time as retraining services are becoming more inaccessible.

I do not know how to resolve this, but I think that as a country we are at a crossroads on this issue. The next 10 years will decide whether we degenerate into more of a US-style wage-slave corporatocracy, or whether we take a higher road like the Euro countries. I acknowledge that neither is perfect, but I think in a society as prosperous as ours, high standards of social mobility, and a life of dignity for the least of us, should be our hallmarks.

Disclosure:  I don’t have any personal or financial interest in or relationship with either AMP or Shane Oliver.

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