Small Business Labs

Purpose and a Paycheck and the New Retirement

Purpose and a Paycheck is a new book from Chris Farrell, a leading expert on retirement and workforce issues facing people over the age of 50. 

The book covers the "new retirement".

This is the growing trend towards older workers delaying retirement and continuing to work, either in traditional jobs or by starting their own businesses.

Regular readers know this is a topic we cover often (see our Baby Boomer section). 

In fact, back in 2013 we wrote:

We've written so often for so long about Americans - and especially baby boomers - delaying retirement that we're honestly getting tired of the topic. 

But since then it has grown in importance. 

The reasons are encapsulated in the book's tagline: finding meaning, money and happiness in the second half of life. 

Lots of research, much of which is cited in the book, shows that staying engaged and active in retirement leads to greater levels of health and happiness. 

Older Americans have figured this out and more and more are choosing to work longer — or have to, given that many haven't adequately saved for retirement.

This makes Purpose and a Paycheck a timely look at this topic.

The book's first few chapters debunk "the myth of creative decline" by pointing to extensive research showing that older people are as creative, innovative and entrepreneurial as their younger peers.

Farrell also covers research showing that older workers are generally just as productive and younger workers, and often more productive. 

The rest of the book focuses on the different ways older workers are staying attached to the economy. This includes self-employment, entrepreneurship, full-time jobs, part-time work, flexible employment and encore careers in both the for and non-profit sectors.

Throughout the book Farrell includes personal stories of people who’ve successfully continued working well past the traditional retirement age.

These stories include practical advice that anyone considering the new retirement will find useful.

The book also contains an analysis of the economic impact of an aging society as well as policy suggestions on how to deal with ageism and other age related issues.

Anyone considering working past the age of 55 will find this book of great value.

So will anyone who is older and not working, or younger and planning on not working when they get older. 

While choosing a life of leisure sounds great. The reality is those who stay engaged and contribute to society live better lives.

"Job Crafting", Independent Work and the American Dream

"Job crafting" describes the ways in which employees redesign and customize their jobs to foster greater work satisfaction and engagement.

This is done by breaking a job into tasks and then deciding what to do less and more of. 

The New York Times article How to Make Work Better covers job crafting and suggests greater use of it by those with traditional jobs would make work much better. 

It also points out that the academic researchers who came up with the concept were "inspired by what freelancers and entrepreneurs do." 

And, of course, independent workers and entrepreneurs are natural job crafters.

Our research, and the research of others, has consistently shown having work autonomy, control and flexibility is a key reason people become and stay self-employed.

Work freedom and control means independents can craft their work to their needs and desires. They can focus on the tasks they like to do and work when, where and how they like to work. 

We don't just want flexibility, control and autonomy in our work. It's also a central part of the American dream.

Another New York Times article - The American Dream is Alive and Well - covers a study by the American Enterprise institute that included asking Americans their view on the American Dream. Key quote on what the study found:

When Americans were asked what makes the American dream a reality, they did not select as essential factors becoming wealthy, owning a home or having a successful career. Instead, 85 percent indicated that “to have freedom of choice in how to live” was essential to achieving the American dream.

The chart below is from the AEI study and shows how Americans rank the components of the American Dream.

A recent Harris Poll also found that "six in 10 Americans (60 percent) said freelancing is the modern version of the American dream."

As we pointed out last week the trend towards desiring greater levels independence - and the autonomy, control and flexibility that comes with it - takes many forms. 

Job crafting is one form. Self-employment is another. And for many, so is pursuing the American Dream.

Modern Homesteading and the Trend Towards Greater Independence

The trend towards desiring greater levels independence - and the autonomy, control and flexibility that comes with it - takes many forms. 

Since we track the future of work, we spend most of our time researching the growth of independent work (freelancing, independent contracting, self-employment, etc.).

But there are other aspects to this trend. For example, the growing FIRE (Financial Independence, Retire Early) movement is all about independence. 

Another example is modern homesteading, which the Small Town Homesteading blog defines as:

Homesteading is a lifestyle of the pursuit of self-sufficiency and sustainability. It is often characterized by subsistence agriculture, livestock production, home preservation of foodstuffs, and it may or may not also involve other tasks such as; the small scale production of textiles, clothing, and craftwork for household use or sale.

Data on how many people are pursuing this lifestyle is non-existent. But according to the book The Modern Homesteader:

Dreams of self-sufficiency, independence, and tranquility continue to pull in a new generation of modern homesteaders.

We believe the movement is growing, although it continues to be small.

We also think that much like the digital nomad movement, most followers are "armchair homesteaders" who will never become real ones.

Instead, they will do things like raising chickens in their back yards or spinning yarn. 

For those interested in modern homesteading, there are a number of events you can attend to learn more. We're going to try to go to the DIY Homesteader Festival, which is being held outside of Winnipeg, Canada this August. 

We've never been to Winnipeg and figure if we're going to go, August is the month to do so. 

Modern homesteading is an edge community that has formed, in large part, around the desire for greater independence. This makes it interesting to us. 

Colliers on Coworking - It's "Established, Expanding and Evolving"

Colliers International, a global real estate services and investment management company, recently released their 2019 U.S. Flexible Workspace Outlook Report.

According to the report's introduction, its purpose is "to help office occupiers and investors alike to better understand:

• The rationale behind using flexible workspace
• Examples of leasing models
• Types of experience models
• The volume and characteristics of flexible workspace in leading U.S. markets
• Key issues facing the sector"

This by itself is quite interesting.

It wasn't that long ago when real estate investors, enterprise occupiers and the services firms, like Colliers, that work with them weren't interested in coworking. 

But coworking and flexible workspaces have reached the size and scale that its impacting and even changing commercial real estate. So now there's lot of interest from these firms.

The growth of flexible workspaces is nicely shown in the report chart below. The amount of coworking and flexible workspace in 19 major U.S. cities grew by almost 50% in the 18 months between 2016 and Q2 2018. 

Despite this growth, coworking comprises only 1.6% of commercial office space. This means it still has a lot of room to grow.

Other key report highlights include:

• Flexible workspace continues to grow at a rapid pace, now accounting for one-third of office leasing in the last 18 months alone (bolding ours; we think it's an important point). 
• Firms are leasing shared space for everything from surge space to touchdown space for traveling executives to incubators for new products and project teams, among others.
• Flexible workspace providers are shifting their focus to target larger corporations and enterprise clients.
• Flexible workspace is impacting traditional leasing models and firms’ occupational portfolios, together with the nature of how office space is designed and utilized. Traditional owners are responding with their own flexible space and lease options.

Overall the report is quite good and well worth reading for anyone interested in coworking/flexible workspaces or the commercial real estate sector.

Rig Up and the Growth of B2B Niche and Specialty Gig Talent Marketplaces

Rig Up, an online talent marketplace that connects oilfield workers who are looking for a job with oil and gas companies, recently announced it had raised $60 million in VC funding. 

The company was founded in 2014 and it pre-qualifies contract oilfield workers and helps them find gigs quickly and easily with energy firms. 

Thanks to fracking, U.S. oil and gas production has been growing steadily for the last decade, with oil production at an all time high.

This is leading to strong demand for oilfield workers.

Rig Up's gig marketplace helps oilfield services firms find and hire workers quickly while tracking contractor compliance and minimizing administrative work.

Consumer oriented Gig platforms like Uber, Airnbnb and Lyft tend to get all the media attention.

But B2B specialty platform targeting industry niches (like oilfield services) and/or professions (like legal or accounting) are rapidly growing in number, scope and scale.

Another example is Jyve, a gig platform that connects workers with retail work.

Jyve just came out of stealth mode with their announcement they've raised $35 million. They claim to already be supplying contract talent to 4,000 stores.

At this point there are many B2B gig platforms that are as large or even larger than Uber in terms of the number of gig workers working through them (but an important caveat is they are not nearly as large in terms of gross revenue generated).

So when you think gig economy, you need to think way beyond the consumer space.

Coworking Goes to the Dogs (it had to happen)

Allwork's DOG-FOCUSED COWORKING: A Q&A WITH WORK & WOOF FOUNDER JILLIAN DRETZKA talks about Work & Woof, a combo coworking and doggie day care space in Austin, Texas.

Dog friendly coworking is common.

But Work & Woof takes it to a whole new level. Over the half of the facility's space is an interior play yard for the dogs. There's outside play spaces too.

Work & Woof also offers grooming and doggy day care. Key quote from the article on these services:

"We do everything but cutting on-site, so nail trim, baths, blowouts, brushing, we do in that back room. We also do daycare for the day, so you don’t have to cowork and leave your dog, you can just leave your dog."

One-third of Work & Woof's members are dog entrepreneurs. The space even hosts dog entrepreneur meetups. 

Regular readers know we closely follow both the pet humanization trend and the growth of niche and specialized coworking spaces. 

And from our point of view, it was just a matter of time before these trends merged. 

If you're at all surprised that one-third of Work & Woof's members are dog entrepreneurs, see our Pet Trends section for more on the large and growing pet industry.

The Gig Economy Fills a Need for Low Friction, Highly Flexible Gig Work

One area of the gig economy that is finally starting to get attention is it expands the number of low friction, highly flexible work options. 

By "low friction" we mean it's quick and easy to start earning money and it requires little or nothing in terms of an initial investment.

With most of the online gig platforms you can sign up and be earning money in just a few days or less.

Most also don't require upfront money to get started, although you do often need a asset of some sort (a car, a spare bedroom, etc.). 

By "highly flexible" we mean you can work as little or as much as you want and when you want.  This means you can work whenever works for you.

This type of work, which is mostly done part-time or occasionally, is very attractive to several large segments of Americans:

Those in need of supplemental income: As the recent government shutdown has highlighted, a lot of Americans live paycheck to paycheck.

One recent survey showed 54 percent of Americans say they would have trouble paying their bills if they were forced to go without more than two paychecks and 20% say they would have trouble if they missed one paycheck. 

Most Americans also don't have strong financial reserves. According to the Federal Reserve, 40% of Americans say they cannot cover a $400 emergency expense, or would do so by borrowing or selling something. 

So if faced with a financial hardship, people often need to generate income quickly. This makes the working in the gig economy attractive.

In fact, 20% of the online work and talent platform users we surveyed reported they turned to online gig work due to a financial hardship. Recently furloughed government workers did the same.

But it's not just those with financial hardships that need supplemental income.

Stagnant wages, reduced hours with unpredictable schedules and the hollowing out of middle class jobs have all led to more people turning to 2nd and even 3rd sources of income to make ends meet.  

And if you need supplemental income - which by definition means you have a different primary income source - you likely also need a high degree of schedule flexibility. This makes gig work attractive. 

Those in need of high levels of schedule flexibility: Most traditional part-time jobs have schedules of some kind. But there are many people - care givers, parents, students, those with chronic illnesses - who can't work unless they have a highly flexible work schedule that's completely under their control. This requirement locks them out of most traditional employment options.

Those pursuing part-time passion businesses: Online gig work has opened new avenues for those pursuing a passion. Sites like Fiverr lets those with creative talents find part-time work while sites like Etsy provide creative artisans a low cost place to find customers for their wares.

Again, these sites let the user have complete control over their schedule and level of activity. They also are low friction in terms of starting up.

Those seeking new skills: One of the more interesting findings of our gig economy studies is about 16% of online gig workers report doing this work to learn a new skill or expand their existing skills.

This group includes a wide range of people (students, care givers, homemakers, etc.) including full-time traditional employees who are moonlighting to learn new skills that they hope will lead to career enhancement. 

The need for low friction, highly flexible work is not new.

The direct selling industry (also called multi-level marketing) has been providing this type of work to millions of Americans for decades. But not everyone who needs to supplement their income wants to do direct selling or has the ability to succeed at it. 

But thanks to the growing number of online gig marketplaces and platforms, there are many more options to secure this type of work.

People often tell us that Uber or Airbnb created the online gig economy.

We disagree. We believe the growing need for low friction, highly flexible work created Uber and Airbnb. 

BCG on the New Freelancers

Last week the Big 3 strategy consulting firm BCG released THE NEW FREELANCERS: TAPPING TALENT IN THE GIG ECONOMY, a study on "those who find temporary work through digital labor-sharing platforms."

As part of the study BCG surveyed 11,000 workers in 11 countries: the US, the UK, Germany, France, Spain, Sweden, Japan, India, Indonesia, China, and Brazil.

BCG took a different approach to their survey than others have. They designed their survey to exclude highly educated workers—those with bachelor’s degrees, master’s degrees, and above—and to include a large share of people with lower incomes. 

They did to "to reflect the views, needs, and employment circumstances of the workers potentially most vulnerable to disruption ...". 

Despite this approach, their findings in terms of the percentage of workers using online labor platforms and marketplaces and why they use them are consistent with other studies.

They're also consistent in finding most gig workers chose gig work and most prefer it over other options. Key quote:

Many of the new freelancers we surveyed are embracing the trend as a path to greater autonomy and more flexible and meaningful work.

As the study chart below shows (click to enlarge), most gig work is done to generate supplemental income. 

Because of their (intentionally) skewed sample, we can't precisely project how many people these percentages equate to. But for the U.S. we'd estimate 14% is somewhere around 20-25 million Americans.

The report also identifies 4 tribes of new freelancers. These are illustrated in the chart below.

The study points out that about half of the new freelancers - especially the "digital nomads" and "fly-in experts" - are doing skilled work. Again from the study:

Our worker survey, as noted earlier, was designed to include a significant sample of less-educated, lower-paid workers. But the perception that the gig economy is dominated by poorly paid work—such as ridesharing, delivery, clickwork, and microtasks—also proved false. Low-skill, low-wage freelance tasks accounted for only about half of the freelance work sourced through platforms. Much of the remainder comprised higher-skill, higher-paid work, such as software development and design.

This study is yet another confirmation that the gig economy is big, growing and that most gig workers choose and prefer gig work.  It also shows that the gig economy includes many skilled workers doing higher-paid work. 

Accountants Save Small Businesses Time, Money and Stress at Tax Time

According to a recent Intuit survey, about 60% of small businesses with fewer than 20 employees use outside accountants to help them with their taxes. 

And as the study chart below shows, this saves the vast majority of them time, money and stress.

This raises the question why don't the other 40% use outside accountants?  The study chart below shows the answers given by the survey respondents.

There have been multiple studies showing accountants add value relative to the cost for their small business clients.  We think the SMB's not using them should reconsider.

After all, we could use a bit less stress.

Disclosure: Intuit is an Emergent Research client but we didn't contribute to this study.

Does It Pay to Be a Freelance Writer? Yes, But Not Well For Most

Several recent surveys focused on the pay rates on income of independent and freelance writers.

The Authors Guild’s 2018 Author Income Survey collected pay data from over 5,000 published book authors. They found that the median pay for full-time book authors was $20,300 in 2017, and that number decreased to $6,080 when part-time writers were included. 

They report this is a 42% decline in authors earnings over the past decade.

The Authors Guild cites the growing dominance of Amazon, lower royalties and advances for all but best selling books and extremely low royalties paid on the increasing number of deeply discounted books and ebooks for the decline.  

However, if an author can get in the top 10% of earners things are pretty good. 

Among the top 10%, those who self-publish earned a median income of $154,000 and those who are traditionally published earned a median of $305,000. 

The second survey comes from The Make a Living Writing blog. The Pay Survey 2019: What 1,400+ Freelancers Get Paid to Write study surveyed writers of all types, with most writing articles and blog posts.

As the study chart below shows (click to enlarge) nearly one-third of writers report they earn under $20 an hour for their work. 

But again there is good news. 10% report they earn more than $76 an hour, and another 17% earn $50-$75 per hour. 

The article has a number of suggestions on how writers can increase their earnings. These are beyond the scope of this post, but if you're a writer you should visit The Make a Living Writing blog for this information.

Storr Raises $4 Million to Democratize Retail by Letting Anyone Sell Brand-Name Products

Storr is a new digital marketplace that lets anyone set up an online store and sell brand-name products. 

According to their press release announcing their $4 millon seed round:

"Now people can buy new, brand-name products directly from their friends or people they follow."

This is sort of an influencer marketing meets social selling.

Storr's head of business development describes this approach as a “transactional Pinterest” in a Glossy article on the company. 

People can set up a store, which is mobile device oriented (click on image to enlarge) and get commissions of 15-25% from any of the 125 brands they sell.

The store owner is only responsible for the sale. Shipping, handling and returns are done by the brands. 

There's been a steady array of new ways for individuals to sell things to their friends, families and followers. 

Multi-level marketing (MLM), of course, has been around since the 1950's and over 5 million Americans are active in MLM programs and selling products to a customer base (think Avon, Mary Kay, Arbonne, Herbalife, etc.).

Affiliate programs started in earnest in the late 1990's during the first Internet boom. They provide commissions to websites who refer customers who buy things.

It's now a big business and most companies have some form of this type of a program. See Amazon's affiliate program for an example.

And influencer marketing came of age over the past decade. These programs compensate influencers who recommend their products. The compensation if often cash. But it can be free products or other forms of compensation.

Pretty much anyone who has an following and pitching things on sites like Instagram, YouTube, Pinterest, blogs, etc. are participating - or wanting to participate - in these programs.

They can be quite lucrative with a few people earning six and even seven figure incomes. But most earn pizza and beer money. 

We'll see how Storr does. There's already a bit of a backlash against online selling to family and friends. See the Atlantic article Beware of Selling Yoga Pants on Facebook for more on this.

But we like the concept and think it likely has legs for the same reason the gig economy is thriving - it's a low friction, highly flexible way to generate income. 

In case you are wondering, Small Business Labs doesn't participate in any of these programs. As an analyst and consulting firm we aren't allowed under our conflict of interest rules. 

Brookings 2019 Trends to Watch

The Brookings Institute is a large and influential DC public policy think tank. They recently released a report with their 2019 Trends to Watch.

The report is targeted at government policy makers and lists the issues Brookings experts "expect will shape the world this year and the solutions to address them."

Although targeted at policy makers, many of the trends are on technology, trade and other issues related to business.

And one trend and related analysis really jumped out at us. 

The trend is Emerging Technologies and the trend description is written by John R. Allen, who is the president of Brookings. The trend is listed first in the Biggest Policy Trends in 2019 section of the report.

Here's what Allen said about emerging technologies:

Emerging and new technologies—to include artificial intelligence, supercomputing, biotechnology, and many more—represent some of the greatest policy opportunities and challenges of 2019 and will, in no uncertain terms, define the remainder of the 21st century. Unlike anything that has come before, these technologies represent a true revolution in human affairs and will redefine our current understanding of society, governance, and even the human condition.

Unfortunately, I fear liberal democracies are too slow to adapt, and are not currently equipped to grapple with the implications of these technologies. Meanwhile, near-peer and other illiberal competitors like Russia and China are already pursuing them with little regard for the ethical, legal, and societal implications they will introduce. In an environment of truly breathtaking technological advances, perhaps the greatest policy issue of our generation will be how the principled, values-based community of nations embraces technology for the benefit of humankind, making this a major priority in 2019.

This is a scary assessment.

And unfortunately we agree. In our work we regularly see examples of how our policy makers and government agencies can't keep up with the speed of technological change. 

We don't have any answers to this problem. But we think Allen is correct that this should be a major priority in 2019.

See the report for the other trends. 

Ride Sharing Continues Rapid Grow

Pew Research recently did a study on the use of ride sharing services by Americans. Key quote on their findings:

"The share of Americans who use ride-hailing services has increased dramatically. Today, 36% of U.S. adults say they have ever used a ride-hailing service such as Uber or Lyft, according to a Pew Research Center survey conducted in fall 2018. By comparison, just 15% of Americans said they had used these services in late 2015, and one-third had never heard of ride-hailing before."

Not surprisingly, younger Americans are more likely to use ride sharing services than older Americans.

About half of Americans ages 18 to 29 (51%) say they have used a ride-hailing service, while 24% of those ages 50 and older say they have. 

But as the article chart below shows, ride sharing use is common across most age, income and educational cohorts.

   

The Pew study points out that only a small percentage of Americans regularly use ride sharing. Key quote:

"... a mere 4% of the U.S. adult population today uses ride-hailing apps on a weekly basis – a share that is largely unchanged from 2015, when 3% of Americans reported being weekly riders."

Researchers like us and Pew tend to use phrases like "a mere 4%" or "only a small percentage" when discussing data like this.

But it's important to note that 1% of the adult population in the US equals about 2.5 million Americans. Which means "a mere 4%" means about 10 million Americans are using ride sharing services at least once per week. 

This makes it a very big market. 

We've long been perplexed by the common media narrative that ride sharing isn't a viable business. Yes, Uber and Lyft currently lose a lot of money. And yes, they face many regulatory hurdles and challenges.

But the demand for their services is undeniably very large and growing. It seems to us it's highly likely these firms, or others, will find a profitable way to serve this demand.

Is the Gig Economy a "Big Nothingburger"?

The Mother Jones article The Gig Economy is a Big Nothingburger is an excellent example of the response to a new paper - Understanding Trends in Alternative Work Arrangements in the United States - from the economists Lawrence Katz and Alan Krueger.

In their paper Katz and Krueger say the estimates of the size and growth of the gig economy in their 2015 study were too high.

This was due to data challenges and business cycle effects. 

So does this new paper show that the gig economy is a big nothingburger?

No.

Although Katz-Krueger say they overestimated the growth of the gig economy (which they call "alternative work arrangements") by 60%-80%, they still found millions of Americans are gig workers.

They also found the gig economy grew modestly, but faster than the overall labor force, during the 2000s. Key quote from the paper's conclusion:

"We conclude that there likely has been a modest upward trend in the share of the U.S. workforce in alternative work arrangements during the 2000s ..."

So despite the headlines – such as Fortune's The gig Economy Never Really Happened, Say the Economists Who Predicted It - the study still found that over the study period the gig economy was big and growing.

Also, the Katz - Krueger study only looked at those whose primary job was working in the gig economy and those who worked during a specific reference week.

It excluded those who work in the gig economy to supplement income from other jobs and those who work in the gig economy, but didn't happen to work during the reference week.

It's very common for workers to moonlight in the gig economy to supplement their income. It’s also common for gig workers to work occasionally and sporadically, resulting in many not working during any specific week.  

While the Katz-Krueger study looked at primary jobs, another recently released study, Making Ends Meet: The Role of Informal Work in Supplementing Americans’ Income, took a broader view.

Based on data from the Federal Reserve Board's annual Survey of Household Economics and Decision Making (SHED) study, it included those who work in the gig economy to supplement their primary source of income as well as those who work occasionally or sporadically.

This study found "28 percent of adults age 18 and older participated in informal work for pay during the survey reference month."

This equates to roughly 70 million Americans. This study also found that the income generated by gig work "appears to be important in helping many households make ends meet." 

These results are consistent with a number of other studies, including studies by The Federal Reserve Board, McKinsey, Upwork/Freelancers Union, MBO Partners (an Emergent Research client), Pew Research and others. So it's hard to dismiss the findings. 

It's also hard to call the gig economy a nothingburger when 70 million Americans are part of it. 

We’ll have more on this topic in the near future.

Study Says Over Half of Older Workers Suffer Involuntary Job Loss

ProPublica's If You’re Over 50, Chances Are the Decision to Leave a Job Won’t be Yours covers a fascinating study looking at the job paths of workers aged 50 or older.

The study used data from the University of Michigan Health and Retirement Study. Since 1992, this study has followed a nationally representative sample of about 20,000 people from the time they turn 50 through the rest of their lives.

Researchers from the Urban Institute analyzed this data with a focus on workers who enter their 50s with stable, full-time jobs and who’ve been with the same employer for at least five years.

The study findings are not pretty. 

As the article chart below (click to enlarge) shows, most of the study participants (56%) experienced at least one employer driven job loss after the age of 50, with many (18%) experiencing more than one. 

In addition, most of those who lost jobs never fully recovered financially. Key quote on those who experienced involuntary job loss:

"Only one in 10 of these workers ever again earns as much as they did before their employment setbacks, our analysis showed. Even years afterward, the household incomes of over half of those who experience such work disruptions remain substantially below those of workers who don’t."

This is because many either don't find a new job or, if they do, it's a lower paying job. Again from the article:

... laid-off workers in their 50s and beyond are more apt than those in their 30s or 40s to be unemployed for long periods and land poorer subsequent jobs, the HRS data shows. “Older workers don’t lose their jobs any more frequently than younger ones,” said Princeton labor economist Henry Farber, “but when they do, they’re substantially less likely to be re-employed.”

The article points to age discrimination as the key reason this is happening - and it's hard to disagree. In our work we regularly talk to older job seekers who feel they've been discriminated against. 

This is yet another reason why more older workers are choosing (or being forced into) independent work. See our Baby Boomer section for more on this.

We'll have more on this topic in the near future.

Academic Studies Show Gig Economy Larger Than Government Data Suggests

Several papers related to the gig economy presented last week at the American Economic Association annual meeting caught our eye. 

Making Ends Meet: The Role of Informal Work in Supplementing Americans’ Income looked at data from the Federal Reserve Board's Survey of Household Economics and Decision Making (SHED).

The study found "28 percent of adults age 18 and older participated in informal work for pay during the survey reference month." This equates to about 70 million Americans.

The study also found that the income generated by gig work "appears to be important in helping many households make ends meet." 

The chart below (click to enlarge), taken from the study presentation, shows the types of gig work performed and the importance of gig income.

These finding are not surprising.

The Federal Reserve itself, in their 2017 Report on the Economic Well-Being of U.S. Households, reported that 31% of Americans do some form of gig work and that gig work income was important to many. This study was also based on SHED data.

A large number of other studies, including ours, have similar findings. 

But despite a preponderance of studies showing that the gig economy is large and growing, this has not been accepted as true by many in the academic and policy making communities.

A key reason for this is data from the U.S. Bureau of Labor Statistics (BLS) hasn't shown growth in self-employment, second jobs or contingent work.

The BLS 2017 Alternative Employment Arrangement Survey results even showed the share of U.S. gig/contract workers in the U.S. workforce had declined since 2005. 

Which gets us to the second paper that caught our eye.

Independent Contract and Informal Work: Preliminary Evidence on Developing Better Measures in Household Surveys covers research on whether or not the way questions are asked in government surveys like the Current Population Survey (CPS) result in the underreporting of gig work.

They found it does. Key quote from the paper:

In summary, our preliminary findings support concerns that household surveys like the CPS may be missing a significant amount of work activity, particularly in the form of secondary jobs, and thus may have missed a significant shift towards self-employment or nonemployee work.

This, of course, is not new news to those who have been following industry research on the gig economy. 

For example, we reported in 2014 on our research that showed the questions asked in government surveys led to an underreporting of gig work. We first realized this in 2007, during a series of studies of what at that time we called "personal businesses".

And, of course, many others - including The Fed - have for years been using survey methods and questions that get around the underreporting problem. 

But for a variety of issues that would take too long to explain here, the BLS surveys continue to understate the size of the gig economy.

The very good news is this issue is (finally) being recognized by the academic community - and, hopefully, the BLS and other government agencies responsible for collecting labor data.

The other very good news is there (finally) appears to be a consensus that the gig economy is large, growing and an important income source for most of its participants. 

32 Million Americans Say They Will Start a Business in 2019. Most Won't.

According to a recent Job Creators Network Foundation survey, "Sixteen-percent of Americans say they are likely to start a new business in 2019 ...".  This works out to about 32 million Americans.

Most won't. 

Over the past couple of years about 400,000 to 500,000 employer small businesses and about 2.5 million solopreneur businesses have been started each year.

So it's much more likely that about 1.6% of Americans will start a small business in 2019 instead of 16%.

This is an example of the false positive problem with survey data. 

When you ask people aspirational survey questions about what they will do in the future, many more people will say they are going to do something than will actually do it.  

And starting a small business is aspirational. According to the same survey and shown in their chart below (click to enlarge), 62% of those surveyed said they'd like to run their own business.

Given this data, it's not surprising 16% would say they will do so in 2019, even though relatively few will. 

We've asked a similar question in the annual MBO Partners State of Independence study for the past 8 years.

Consistently 13%-15% of those surveyed over this study period have said they will start a small business over the next 2-3 years. And again, we estimate only about 8%-10% of those who say they will have actually done so.  

An important point is despite the false positive problem, this data is still quite useful. Tracking this data over time provides insight into the interest in starting a business by Americans.

But, and this is a big but, if you don't adjust the results for the false positive problem you end up with unrealistic numbers.

BTW, the JCN survey had another example of the false positive problem on a topic unrelated to small business.

Their survey found "Thirty-four percent of Americans said they are likely to buy a new car next year". This translates to about 70 million or so Americans.

The peak U.S. car and light truck sales year was 2016 when 17.6 million cars and trucks were sold. 

It seems fairly certain that 2019 will not beat 2016 in terms of auto sales. So it seems even more certain no where close to 70 million Americans will buy a new car. 

The false positive problem crops up in many surveys (including ours). Users of survey data need to be aware of this issue and take it into account when reviewing survey results. 

Happy Holidays!

We'll see you in 2019.

Gig Workers and Economic Anxiety

Marketplace and Edison research recently released Americans and the Gig Economy, a survey of gig workers. 

The survey covered a lot of ground, including finding about 24% of American 18 and older are gig workers. This works out to a bit more than 60 million. 

The survey also asked a series of questions about economic anxiety.

They found gig workers, on average, experience more economic anxiety than those with traditional jobs.

The report describes their anxiety index as:

... a tool designed by Edison Research and Marketplace to measure the amount of stress a person feels about their individual financial situation. A series of twelve questions is asked regarding job security, saving and expenses, and general financial anxiety. The higher the number, the more stress a person is experiencing.

They also found gig workers are more likely to report being "not financially secure" than those with traditional jobs.

And they are more likely to say they are financially anxious than those who are in traditional jobs.

As we've often pointed out, the yin and yang of independent work means trading off financial security for work autonomy, control and flexibility.

The results of this study reinforce this.

Connecting Artisan Makers With Retailers and Customers a Rapidly Growing Industry

Two companies that connect artisan makers with retailers and customers announced large funding rounds last week.

The wholesale marketplace Faire raised $100 million while the wholesale and licensing business Minted said they raised $208 million.

Both firms connect retailers, who are often small independents, with small and solopreneur maker businesses.

Faire reports having "15,000 stores actively buying on the platform — more retail locations than Walgreens, Walmart, Sephora, and Nordstrom have combined — as well as more than 2,000 makers fulfilling orders."

Minted is an online marketplace for printed goods, like wedding invitations, greeting cards, notebooks, stationery and wall art. The company sources the designs and products from independent illustrators, textile designers, painters and other artists. 

We're hardly surprised that these firms are growing rapidly and attracting capital. We've been following the trend towards what we call The New Artisan Economy for over decade. 

The trends we reported on in 2008 as driving the growth of the new artisan economy still hold true today:

1. Growing numbers of consumers are looking for unique, unusual, personalized or locally produced products.  

2. The Internet and online marketing has made it much easier to find or be found by people interested in buying niche products.  

3.  Technology is lowering the costs of serving niche markets and making artisans able to compete with even the largest of firms.  

Both Minted and Faire are excellent examples of all three trends. 

BTW, so is Etsy.

It too is doing well connecting artisan makers with customers. As the chart below shows, Etsy's stock is up 270% YTD and the company is worth $6.5 billion. 

We believe we're still at the beginning of The New Artisan Economy. See our Artisan Economy section for more on this topic.

Disclosure: the partners at Emergent Research happily own shares in Etsy. 

Yet More on the Changing Nature of Retirement

We've covered the changing nature of retirement so often in our Baby Boomer section we feel like we're feeding a fed horse by covering it again.

But it's an important trend and there continues to be a flurry of interesting articles on working in and/or delaying retirement. So ... 

Quartz's Perennials, not millennials, will trigger the next wave of talent retention efforts provides a good description of the trend towards later retirement:

"Increased life expectancy across the industrialized world means that more people have more years of healthy life than ever before. Women who deferred careers while raising children may only be hitting their professional stride in their later 50s; men and women who spent decades in engaging roles may be reluctant to abandon the social and intellectual stimulation of work for decades of leisure time.

Meanwhile, the corporate shift from defined-benefit retirement plans, which guaranteed a steady income, to defined-contribution plans, which place the onus of saving on workers, has left many older people financially unable to quit work without a substantial drop in their standard of living."

The article suggest that corporations need to change their policies to retain older workers instead of losing them and their skills and knowledge. The article's closing summary is:

"Of course, there are still plenty of employers that are reluctant to rethink approaches to benefits, pensions, and hours for older workers. But eventually, the labor market is going to force them to do so."

The NY Times' The New 50s: Far From Retirement focuses on how older workers can contribute by becoming "new elders". Key quote:

"... everyone working past middle age today needs to become a modern elder, simultaneously sharing wisdom while embracing fresh ideas and ways of thinking."

Also in the New York Times, Bringing Older Americans Back Into the Fold, focuses on the broader topic of reintegrating older people into the lives of younger ones.

The article points out we've been treating retirement like a second childhood that is focused on leisure activities. But that doesn't necessarily lead to happiness. Key quote:

"When you look at what developmental research on happiness and purpose in later life shows, it fits together like a piece in a jigsaw puzzle. Older people who mentor and support young people are three times as likely to be happy as those who fail to do so."

Given how rapidly the world is aging it's not surprising there's a lot of interest and media coverage of this topic. The New York Times even has a special section with even more articles devoted to The New Retirement.

Despite the saying, demographics really isn't destiny. But global aging the new retirement will continue to be important trends driving economic and societal changes - and  the growth of the independent workforce.

Funding for Education Technology Startups Continues to Boom

Crunchbase's Aceable Scores $47M, As Startups Look To The Future Of Education (And Work) covers the continuing growth of venture capital investment in Edtech. 

The article chart below (click to enlarge) shows some (but not all) of the bigger Edtech funding rounds in 2018.

Key quote on why this is happening:

College is more expensive these days, the way that we think about work and training is shifting, and existing positions are requiring more tech skills than ever before. All of these changes are giving way to differentiated approaches to education, whether that be supplying an alternative way to go to school or offering courses to improve upon the skills people already have.

The article also references a prior Crunchbase article, China’s Education Startups Continue To Pull In Massive Funding Rounds. It covers Chinese firms that have raised hundreds of millions of dollars, mostly to help Chinese kids with their homework or learn English.

The idea that education would be disrupted by technology was one of the most common futurist forecasts during the Internet boom of the late 1990s. And after a very long gestation period it appears to happening, especially in China.

It's also happening in independent worker space, with a growing number of companies offering Edtech based training to help independent workers upskill. As we said in a recent article on this topic:

On-demand learning platforms play an important role in helping independent workers (and others) build marketable skills. We believe they will continue to grow in importance in the coming years.

Why We Aren't Doing a Coworking Forecast This Year

This is the time of year we normally release our annual coworking forecast. And this year would have been our 10^th annual forecast (click here for our 2018 forecast).  But after a great deal of deliberation, we've decided not to do one this year. 

Don’t get us wrong. We’re still going to be researching coworking. We’re just no longer going to do an annual space and membership forecast.

There are several reasons for this:

First and foremost, we're no longer sure how to define coworking in a way that allows us to do a meaningful forecast.  As we pointed out last week, there's a lot confusion around what is and is not "coworking". 

We still like the definition we've used since 2010.  But the industry has continued to expand, evolve and mutate in a wide variety of ways. This is leading to new definitions of coworking, or at least the expansion of the definition to include a wide variety of spaces.

As Laurent Dhollande, Cloud VO CEO and long time flexible workspace expert, explained on the workspace-as-a-service LinkedIn group:

"... the terminology of “coworking" is now strongly identified with flexible and on-demand office spaces of all kind by landlords, brokers, large Enterprises, and the public at large ..."

He's right. And this means we no longer have a clear definition of coworking. And without a clear definition, it's hard to do a forecast. 

Secondly, however you define it, the global coworking industry is big and growing fast. It's always been very challenging tracking and forecasting the coworking industry.

It's been the forecasting equivalent of chasing a runaway train. And that train has gotten very big and is moving rapidly. 

For example, JLL is forecasting that there will be 13 million people working in coworking spaces in India alone in 2020. This is more members than we were projecting the entire world would have in 2020 just a couple of years ago. 

Coworking is also booming in China, Japan and many other places -  including New York, where CBRE data shows (click to enlarge the chart below) the demand for flexible space has dramatically increased in 2018.

The global coworking industry has reached a scale where we're no longer confident in our ability to collect and analyze the massive amount of global city-by-city and country-by-country data required to do an accurate forecast.

And last but not least, coworking is no longer emergent, it has emerged. As you can tell by our name, Emergent Research, our focus and expertise is on identifying, researching and forecasting emerging shifts and trends.

Because coworking is now a large, established global industry, it has attracted the attention of traditional industry analyst firms (CBRE, JLL, Yardi Matrix, etc.) that are better positioned to provide ongoing multinational coworking forecasts. 

As we said at the top of this article, we will continue our research on coworking.

We've always considered coworking a window into the future of work. It's a great laboratory for studying a wide range of emerging social, demographic, economic and technological trends. 

And we’ll keep providing updates on our research here and elsewhere.

JWT Intelligence's Top 100 Trends for 2019

The 2019 edition of one of our favorite trend reports - JWT Intelligence's annual forecast of 100 trends to watch in the coming year - is out. 

Yes, it really covers 100 trends across 10 broad categories. The chart below (click to enlarge) shows 5 of the categories and around 50 of the tracked trends.

JWT Intelligence is part of the giant advertising and marketing group J. Walter Thompson. So it's no surprise they focus on consumer trends.

But they also cover other types of trends, including a couple of work related ones:

Trend 96 - Workanomics - suggests:

"Reduced working hours, even down to a four-day work week, could become the reality for most workers this century."

Trend  36 - Freelancer First Services - is described as:

The writing is on the wall (including the acres of exposed brickwork of rapidly mushrooming WeWork co-working spaces). As self-employment continues to explode, a wave of freelancer-first networks and platforms is emerging, offering help and advice to self-employed workers.

But most are consumer oriented trends.

Some are the usual suspects and carry overs from prior years. For example there are several trends about the long tracked shift to experiences.

Of these, our favorite is trend 72 - Wanderlux - which is described as:

“Luxury used to be about gold, marble and chandeliers, big lobbies and glitzy hotels. It’s now about the experience. It’s about the destination. It’s about what I, as a guest, am getting out of this from an educational point of view and an emotive point of view ...”

Some are new and unusual. Bread 2.0 (trend 44) is an example:

“Carb” was a dirty term in the health and wellness world for a long time. But even with the gluten-free mania that’s sweeping the scene, a new generation of bakers is repopularizing bread, taking it in a healthier—and more inventive—direction.

We didn't know bread was gone, much less gone and back. 

Always fun to read, the report is well worth wading through for anyone interested in trends.

GM's Restructuring Illustrates Multiple Trends

GM recently announced a restructuring plan that includes laying off about 14,000 employees and halting production at five of its North American auto plants.

The announcement got a lot of attention, most of it rightly focused on the impact on workers and what it might mean for the broader economy. 

But since we track and forecast trends, we focused on how GM's moves are being driven by a mix of businesses and technological trends.

These trends, which are in black below, include:

The need for increased business agility and flexibility: GM makes it clear in their press release on the restructuring that a key goal is to increase their agility and flexibility. They especially want to be able to more quickly adjust to industry changes and shifting consumer demand. Key quote:

“The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future,” said GM Chairman and CEO Mary Barra. “We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.”

We long covered the need for greater business flexibility and agility and consider it one of the new economy megatrends. 

This also is another example of a company restructuring despite strong financial results.

With business conditions changing rapidly and the growing intensity of global competition, firms are no longer waiting until they get into financial trouble before making major changes. They do it in both good and bad times.

One impact of this is decreased job security, another trend we track. It used to be if the company was doing well, your job was safe. This is no longer the case. 

The shift from car ownership to mobility services. Many of the articles on GM's restructuring cover this topic. Bloomberg's Peak Auto Claims Another Victim and Wired's GM's Job Cuts are Another Sign of a Future With Fewer Cars both do a nice job on this. 

The key points these articles make is the rise of ride, scooter and bike sharing coupled with increases in urban living, ecommerce and working from home are combining to reduce the demand for cars.

The chart below, from the Bloomberg article, nicely illustrates the long-term trend away from car ownership in the U.S.

This trend is expected to accelerate over the next decade as autonomous cars become practical. 

GM is investing in this area even as it cuts elsewhere. Their Cruise autonomous car group has grown from 40 to over 1,000 employees over the past few years with more hiring and investments planned for next few years. 

The shift to electric cars. GM, along with most everyone else, see electric cars as the future. The company said last fall that it would launch 20 new electric cars by 2023 and is investing heavily to make this happen. 

The growing need for highly skilled talent - and especially technical talent - means companies have to constantly upgrade and change their employee skill sets. While training existing employees can help, the reality is this unfortunately means letting some people go to make room for new people with different skills. 

GM's press release sums this up when it says "The company is transforming its global workforce to ensure it has the right skill sets for today and the future ..."

For workers this means the need for continual learning and improving skill sets. 

We rarely see so many trends illustrated in a single corporate action. It's an interesting case study.