Small Business Labs

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.

Coworking is Disruptive Innovation

The term disruptive innovation was coined by Harvard professor Clayton Christensen and popularized by his classic 1997 book The Innovator’s Dilemma.

According to Christensen:

Disruptive innovation describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors.

The Christensen Institute adds that a disruptive innovation

... is formed in a niche market that may appear unattractive or inconsequential to industry incumbents, but eventually the new product or idea completely redefines the industry.

Coworking clearly fits this model.

The early coworking spaces (circa 2008) were targeted at a niche (freelancers and other independent workers) that was considered unattractive and inconsequential to the commercial office space industry, including the executive suites industry sub-sector. 

The spaces were also definitely low end.

The pictures below (click to enlarge) were taken in 2011 at Citizen Space, one of our favorite early coworking spaces. Located in an old building in a low rent SF neighborhood, you entered Citizen Space through a loading dock.

 

And inside it wasn't anything like today's coworking spaces.

 

But as Christensen points out in his 2015 HBR article What is Disruptive Innovation:

... as incumbents focus on improving their products and services for their most demanding (and usually most profitable) customers, they exceed the needs of some segments and ignore the needs of others. Entrants that prove disruptive begin by successfully targeting those overlooked segments, gaining a foothold by delivering more-suitable functionality—frequently at a lower price. 

And while early coworking spaces weren't elegant, they delivered the functionality their overlooked customers were looking for at a price well below other alternatives.

Fast forward to today and it's clear coworking has not only become a successful industry, it's disrupting and changing the entire commercial office real estate industry.

Repeating a quote from our post yesterday:

Everything that we know about landlords and how workplaces are designed, built, managed and staffed is being disrupted ...

When we first started tracking coworking back in 2007 we thought it had the potential to disrupt the commercial office space industry. It's now clear it's doing so.

Coworking Doesn't Need a New Name, But the Office Space Industry Does

There's a mini controversy going on around whether or not coworking needs a new name. 

The recent Allwork article Why Coworking Needs a New Definition covers the new name side.

Key quote from Joyce Bromberg, chief strategy officer at Convene:

Everything that we know about landlords and how workplaces are designed, built, managed and staffed is being disrupted, necessitating a new name for what Bromberg predicts will become the way people work and how real estate will be consumed.

“Continuing to call it coworking is doing a disservice for what it has become.”

Liz Elam, long time coworking space owner and founder of GCUC, responded to this with her article Coworking Does Not Need a New Definition.

She stresses that the traditional principles, values and definition of coworking are still important and relevant and that a new name is not needed.  

Allwork responded to Liz's article with Coworking Might Not Need a New Definition, but it Needs to Broaden the One it Has. It suggests the term "flexible workspace" might be the way to go. Key quote:

The industry has come a long way since it first took off in the early 2000s. As coworking spaces have evolved from open space to hybrid space, more people and organizations are increasingly using the term flexible workspace. 

We agree that the term "coworking" is too limiting for what's going in the commercial office space industry. Firms like Industrious, WeWork, Serendipity Labs and many others no longer just provide workspaces where people work alone together. 

They design and build out space to the specific needs of their enterprise clients. They provide ongoing facilities management, community features and a variety of other services, including IT and data on office usage patterns. They also build out and manage space that is completely occupied by the client's employees.

And very importantly, they provide more flexible lease terms than commercial real estate has traditionally provided.

Although these spaces are based on and share many attributes with coworking, they aren't coworking spaces. Instead, they're outsourced workspaces provided by an office services company. 

This is part of a much broader trend - the servitization of products - that's impacting most industries. In the case of office space, this means a shift towards customized, turn-key, scalable, consumption-based commercial office space delivered as a service. 

For this broader shift, we like the term "workspace-as-a-service". There are several reasons we like this name. 

As-a-service is already a common way to describe the servitization of products. It also fits with what's going on in the commercial office space industry.  And, of course, it's already being used by many in the industry - there's even a LinkedIn group with that name. 

To us, coworking is a sub-sector of the workspace-as-a-service industry. It's the name for workspace-as-a-service spaces that embrace the principles of the coworking movement - community, openness, collaboration, accessibility and sustainability.  

And BTW, coworking spaces that embrace these principles are not going away. Just the opposite, niche and community oriented coworking spaces are growing in number and thriving. We're forecasting this to continue. 

Back in 2010 we said one of the most interesting things about the coworking industry was how rapidly it was expanding, evolving and mutating. It's still true today.

But we've also said we think the industry should begin to use a more reflective and descriptive term. 

But from our point of view, it's not the coworking industry that needs a new name. It's the commercial office space industry. 

A Look at Non-Employer Businesses from the SBA

The U.S. Small Business Administration's (SBA) Office of Advocacy recently released A Look at Non-Employer Businesses, a one-page summary of key data on non-employers businesses.

"Non-employer" is the terms used by government agencies to describe businesses that have a business owner, but no traditional (W2) full or part-time employees.

The data is collected by the U.S. Census and comes from tax data. Most non-employers are independent workers (freelancers, independent contractors, gig workers, etc.), but some are shell companies of various kinds. 

Two charts from the one-pager jumped out at us.

The chart below shows that the number of non-employer businesses has been growing about 2% a year of the past 15 years, reaching 24,813,048 in 2016. Over the same period, the number of employer businesses has more or less stayed the same at a bit under 6 million.

Their are a number of reasons the number of non-employers has been increasing. The main ones are it's easier and cheaper to start and operate a non-employer business and more people are starting part-time non-employer businesses to supplement their income and/or pursue a passion. 

See the MBO Partners State of Independence report for much more detail on why there are more non-employer businesses. 

There's also a number of reasons why employer SMB numbers aren't increasing, but it's a longer story and we'll go into it in a later article. 

But one reason is very small businesses no longer need to hire traditional (W2) employees as much as they used to. Instead, they can use contract labor, outsourcing and automation.

So one reason the number of employer SMB's isn't growing is because the number of non-employers is growing.

The other chart we find interest cover the demographics of non-employers and the owner of employer small businesses. As you can see from the chart below, non-employers are much more diverse.

For more on non-employer businesses, see the SBA one-pager.

More on the Changing Nature of Retirement

There's been a recent flurry of articles on retirement, mostly focusing on older people staying in the workforce longer than prior generations.

An examples is Harvard Business Review's When No One Retires. It covers the fact that the world is rapidly getting older, as is shown in the article chart below.

It also goes into detail on what this means for corporations and their workforces. Key quote:

This societal shift will undoubtedly change work, too: More and more Americans want to work longer — or have to, given that many aren't saving adequately for retirement. Soon, the workforce will include people from as many as five generations ranging in age from teenagers to 80-somethings.

CNBC's article Baby boomers face more risks to their retirement than previous generations focuses on the "many aren't saving adequately for retirement". 

It points out that aging boomers hold less wealth, are deeper in debt and will face higher expenses than current retirees. This data comes from a study by the Stanford Center on Longevity. 

Key article quote on what could happen due to boomers lacking the retirement savings they need:

That many people could exit the workforce unprepared, the researchers note, could have profound consequences for the well-being of these individuals and society. “Boomers who run out of funds towards the end of life will either fall back on children, who by then will be in their 50s and 60s, or the social safety network,” said Jialu Streeter, a research scientist at Stanford.

Another issue is where are all these old people going to live and who's going to take care of them.

The New York Times article The future of Aging Just Might be in Margaritaville looks at these issues. It covers a new retirement community named after and based on the Jimmy Buffet song Margaritaville.

And yes, as the article picture below illustrates, the residents do appear to be having fun and "wasting away" there.

We've long covered the trend towards aging baby boomers working past the age people used to retire. A good example is the 2016 article For Boomers, Work is the New Retirement. It's conclusion is still relevant today:

It's quite clear growing numbers of older Americans are going to stay in the workforce. It's also clear that many of these older Americans will choose independent work. 

This assumes they aren't partying too much to work. 

Social Network Support Helps Turn Knitting Hobbyists into Hobbypreneurs

A recent academic paper - Knitting Community: Human and Social Capital in the Early Transition into Entrepreneurship - covers research on the process hobby knitters go through to decide to turn their hobby into a business.

The study found that many of the hobbyists that started a knitting business had been encouraged to do so by people they knew, such as husbands, friends and other knitters.

The research was based on digging through the data at the knitting community site Ravely.com, which is known as the "Facebook for knitters".

Key quote from a Washington Post article on the study:

...analyzed almost 100 interviews and 403,168 profiles of knitters and crocheters. She found that even on one of the Internet’s great niche social networks, offline encouragement and feedback helped most talented hobbyists recognize their ability and take the first steps toward monetizing it. Success on the Internet was propelled by real-life interactions.

The in-person networking that was found to be most effective at encouraging entrepreneurship was membership in a Stitch n' Bitch group.

These are formal or informal knitters clubs where members meet, knit, socialize and share knitting advice. Again from the Washington Post:

People who joined a so-called “stitch n’ bitch” group to craft socially were 25 percent more likely than otherwise identical knitters to take the plunge into entrepreneurship. This is true even when correcting for geography, experience, skill level and productivity.

We've long studied the shift from hobbyist to hobbypreneur. It's clearly a growing source of new and especially part-time small businesses.

See the 2009 Inuit research brief Today's Hobbyists are Tomorrow's Hobbypreneurs for more on this topic. We worked with Intuit on this report and while the research is 9 years old, we think the findings are still relevant.  

BTW and not particularly relevant is yes, AI is starting to be used in knitting. See the Atlantic's SkyKnit: How an AI Took Over an Adult Knitting Community for more on this.

Online Platforms Enabling the Rise of Global Micro Outsourcing Firms

Oxford's Internet Institute's research paper The Global Platform Economy: A New Offshoring Institution Enabling Emerging- Economy Micro-Providers covers how online platforms are creating an alternative to traditional outsourcing. Key quote from the paper:

In recent years, a new offshoring mode appears to have emerged alongside these two established modes: one-person micro-providers that serve clients around the world in transactions conducted via online platforms.

The paper describes 3 key drivers of this trend:

Platformization is the growing use of online labor platforms such as Upwork, Fiverr, etc. that connect labor supply and demand across the Internet connected world.

The demand, generally speaking, comes from the developed world while the supply is generally located in established offshoring destinations as well as in emerging economy countries not previously associated with offshoring.

Glocalization refers to the integration of local differences in the cost and availability of skills to a standardized global structure that enables their use. This is also referred to as geoarbitrage, which is tapping into lower cost labor from lower cost countries.

The Oxford paper, for example, reports that a graphic designer in the Philippines earns an average of $8.47 per hour, while a graphic designer from the United States earns an average of $19.53 per hour.

The Oxford paper argues this wage differential helps those in developing countries. Others say the wage differential hurts workers in developed countries. From our point of view, both points of view are correct. But we don't yet know the full net impact of this form of outsourcing and more research needs to be done on this topic.

Individualization, which the paper describes as "the puzzling elimination of returns to scale, resulting in a supplier base that consists of one-person micro-providers."

While we agree that returns to scale have been reduced and in many cases eliminated, we don't find this puzzling.

As we pointed out in the 2008 Intuit report The New Artisan Economy, a combination of new technologies and business models mean returns to scale are no longer the key to success in many industries. Key quote:

… by the beginning of the 21^st century, ownership of large-scale infrastructures no longer determined business success in a growing number of industries. Brick and mortar and heavy iron gave way to speed, flexibility and innovation. New technologies, collaborative supply chains and outsourced manufacturing created lightweight infrastructures – smaller, cheaper and more agile.

The paper focuses on the use of freelancers and micro firms in the developing world by businesses from developed countries. 

But U.S. based freelancers and independent workers are also working for firms outside the U.S. in greater numbers. As the chart below from the 2018 MBO Partners State of Independence study shows, about 1 in 5 U.S. independent workers report having clients outside of the U.S.

The paper closes with the important point that platforms are not just enabling freelancers who provide labor, but also apply to product businesses:

Although in this study we focused on labor platforms, our theory of global platforms as institutions is likely to be equally applicable to other factor and product markets, where platforms will have similar implications. For instance, Alibaba has emerged as a significant platform for international trade in intermediate and final products, especially among SMEs and microenterprises.

The growth of platforms is a key reason we believe small, micro-businesses and independent workers are driving the next wave of globalization.

Liveops Distributed, Work at Home, Independent Call Center Workforce

Liveops provides cloud-based call center services that utilize an on-demand workforce of agents who live in the U.S. The agents are independent workers who contract with Liveops and work remotely, mostly from home.

We met with Liveops last week and learned they have about 20,000 independent agents providing customer service and sales support to over 400 enterprise clients. They serve a mix of industries, including retail, healthcare, insurance, travel & hospitality and others.

One of their key selling points is the skill of their agents.

As the Liveops chart below shows (click to enlarge), their home-based virtual agents are older, more experienced and better educated than traditional call center workers.

And because their agents live in the U.S., they avoid the language and cultural issues that come with using offshore agents.

The independent agents choose to work with Liveops for the same reasons as others choose independent work – for the work flexibility, autonomy and control.

In particular, Liveop agents like the ability to work at home and choose their hours.

Like others working remotely via online platforms, the majority of Liveops agents work part-time. Many are parents or care givers and about 1 in 5 are semi-retired.

Liveops is yet another example of the growth of low friction, highly flexible work. It’s also an example of the growing use of a distributed, remote workforce.

And, of course, it’s another example of a firm using skilled independent workers. 

Poverty in America

In September the U.s. Census Bureau released the Supplemental Poverty Measure: 2017. It reports that 13.9% of Americans lived in poverty in 2017, which is statistically the same as in 2016.

This leads to the obvious question what is - and why is there - a supplemental poverty measure.

The reason is the "official" poverty measure was designed in 1963 and defined as three times the "subsistence food budget" for a family of any given size. Because of data limitations, the "subsistence food budget" was based on 1955 data on food consumption. 

If a family's gross income before taxes is less than 3 times the subsistence food budget, the family is considered poor. 

This methodology has a number of flaws. For example, It's based on pre-tax income. But bigger issues include is it doesn't factor in other cost of livings (rent, etc.), it doesn't include support programs like food stamps or the earned income tax credit and it assumes the cost of living is same everywhere in the U.S.

It also assumes we eat the same things as we did in 1955 and, relatively speaking, they cost the same.

Due to these problems, the supplemental poverty measure was developed in 2010. The chart below shows how the both the official and supplemental poverty rates from 2009 to 2017.

The good news is the poverty rate has been drifting down since 2011. The bad news is kids 18 and under have the highest poverty rate - 15.6%. This means about 1 in 6 American kids live in poverty.

More on the FIRE (Financial Independence, Retire Early) Movement, Independent Work and Edge Communities

Last month we covered the growing Financial Independence, Retire Early (FIRE) movement and how it relates to the rise in independent work. 

The quick summary of that article is the trends driving the interest in the FIRE movement are similar, and in some cases the same, as the trends driving the growing interest in independent work.

In particular the desire for increased work/life autonomy, control and flexibility are key drivers of both movements.

While the FIRE movement is definitely gaining momentum, it's not without it's critics. Famed personal fiance guru Suze Orman, for example, doesn't like it. 

In fact, in the interview below she says:

“I hate it. I hate it. I hate it. I hate it.”

Her main reason for hating it is if you retire early, you have to live a long time off your savings because you aren't generating income. She believes this is very risky and if something goes wrong, it could lead to financial ruin.

This seems like a reasonable criticism.

FIRE movement proponents have answered that it's not about not working, it's about financial independence and the freedom that comes with it. 

For example, according to the Mr Money Mustache (one of leading FIRE movement blogs) article What Everyone Gets Wrong About Fire,

Financial Independence does not mean the end of your working career ... Instead it means, “Complete freedom to be the best, most powerful, energetic, happiest and most generous version of You that you can possibly be.”

It goes on to point out that most of those achieving their FIRE point (what they call the point at which a person have saved enough money to live off) plan to continue to work in some form.

This is very similar to what we hear from independent workers. They want the freedom and flexibility to pursue work they enjoy.

The Fire Movement is a great example of an edge community, which are relatively small groups of people who are doing something that is behaviorally out of the mainstream. 

Much of our time is spent studying edge communities. We do this because that's where new trends and ideas often start. 

Another interesting feature of edge communities is some/many of the people participating in them are doing things that are considered anywhere from odd, to nutty, to even dangerous by the mainstream. 

But over time some edge community behaviors move into the mainstream. Examples include Christianity, hula hoops, yoga, rock and roll and many, many others. 

We're not suggesting that yet for the FIRE movement. But it has gained enough adherents and attention to warrant watching.

Bleisure Travel Continues to Increase

We first reported on bleisure travel, which is the the blending of business and leisure travel, back in 2015. 

AAccording to the folks at the expense reporting and management firm, SAP Concur, it continues to gain popularity. 

Key quote from their blog post Do You Bleisure? The Word We Love to Hate is Gaining Popularity Across the Globe:

... according to new SAP Concur travel and expense data gathered between January 2017 and December 2017 ... “bleisure” trips increased by 20% from 2016 to 2017. And during this time, more than 2.2 million bleisure trips were taken by business travelers around the globe, making up 10% of total business trips.

Back in 2015 bleisure travel was considered something that millennials mostly did.

But the SAP Concur data shows these days all ages are taking advantage of bleisure travel opportunities. Again from their post:

On average, millennials make up the largest share of bleisure travelers in the world, accounting for 38% of all bleisure trips in the Americas region in 2017, however Generation X (31%) and baby boomers (31%) are not far behind!

In case you're wondering where people go on their bleisure trips:  "In the Americas the top destinations are NYC, Chicago, and Los Angeles; in EMEA, Tel Aviv, London, and Paris; and in APAC, Tokyo, Singapore, and Shanghai."

These locations are not surprising. They're all major business hubs that also attract a lot of leisure travelers.

Also not surprising is Airbnb is a growing supplier of bleisure travel accommodations. 

According to Conur's data, 70% of expensed trips using Airbnb lodging include a Saturday night stay, compared to just 10% of trips with hotel bookings.

One of the most famous bleisure travelers is Marco Polo, so the the trend is not new.  But it seems to be becoming much more popular.

More on Agility from Gallup and Catalant

After posting on corporations looking to increase their agility on Tuesday, we found two new reports on business agility in our mailbox on Wednesday.

Gallup pointed us to their report The Real Future of Work: The Agility Issue. Here's their pitch on the need for increased business agility:

The old axiom "adapt or die" has never been more relevant than it is today. Consider just three rapid changes organizations are confronting:

• radically shifting customer demands
• lightning-fast advances in technology
• new demands from the emerging millennial (and even younger) workforce

Organizations that don't have the capacity to adapt quickly to trends such as these will be passed by their competitors - or even put out of business. 

In case you think increasing agility is easy, Catalant's report The Obstacles to Agility disagrees. 

According to this report everyone agrees agility is important. But most feel their organizations aren't good at it. Key quote:

According to pre-event survey data, respondents gave the selected drivers of business agility ... an average importance rating of 9/10. Yet, across the board, companies are struggling to achieve agility within their organizations. As noted by the survey results ... In fact, 61% of respondents gave their organizations an average agility performance rating of 6/10 or below.

The Catalant report chart below shows how other agility factors were rated.

This busy week of agility reports shows how big a topic this topic has become. 

Corporations Embracing Agility, Leading to Greater Use of Contingent Labor

Earlier this year McKinsey released another in their series of future of work reports, Skill Shift: Automation and the Future of the Workforce.

The key finding from our perspective is that corporations are increasingly agility as a key business requirement. Key quote on how companies define agility:

Agility has acquired a specific meaning in management terms, as the ability of an organization to renew itself, adapt, change quickly, and succeed in a rapidly changing, ambiguous and sometimes turbulent environment.

And according to the report, an important way to increase business agility is to use more contingent labor. Again from the report:

Another important byproduct of the move toward more team-based work and agile organizations is the potential for companies to hire independent contractors to supply specific skills at specific times. In our survey, greater use of various types of freelancers and temporary workers is one of the top organizational changes. When asked about what types of labor company leaders were planning on using most in the future, 61 percent said they expected to hire more temporary employees.

Because of this, McKinsey believes "the independent workforce could consequently continue its growth in the future."

In addition to greater use of independent workers and contingent labor, McKinsey suggests 4 other actions companies can take to build the workforce of the future. These are:

Retrain. Raise skill levels of employees by teaching them new or more advanced skills.
Redeploy. Shift parts of the workforce by redefining work tasks or redesigning processes to make better use of the skill capacities already available in-house.
Hire. Acquire individuals or teams with the required skill sets.
Release.  A nice way of saying staff reduction.

The report chart below - the major consulting firms are great at charts - shows the skills that will be needed more, and needed less, in the future (click to enlarge).

Not surprisingly physical, manual and basic cognitive skills will be needed less.

The State of the U.S. Heartland

Brookings and the Walton Family Foundation teamed up to produce The State of the Heartland.

It's a detailed study of the U.S. Heartland using 26 socioeconomic variables to assess how the region's economy has been performing since the Great Recession. 

The quick summary is The Heartland is doing just fine.

Their definition of the Heartland, BTW, consists of 19 mostly inland states, with the only surprise potentially being the inclusion of some of the deep south states.

No doubt the Walton Family Foundation's involvement influenced this definition. But we think it's useful to have southern states included. In fact, we'd like to see similar reports for all U.S. regions and states.

The three key study findings, according to the report, are:

1. The Heartland economy is doing better than is sometimes portrayed.  Growth measured by job and output growth have been steady, if not stellar, since 2010 with all of the Heartland states adding jobs and 18 increasing their output. Prosperity has also been slowly rising as all 19 states enjoyed increased standards of living, all 19 posted increases in the average wage, and 12 saw productivity increases.

2. The Heartland, however, is not monolithic: Its economy varies widely across place. In this regard, the region is a checkerboard of sub-regions, states, and local communities where some Heartland places are thriving while others are deteriorating—just as in other regions. 

3. Serious deficits in the region’s human capital and innovation capacity pose the most serious challenges to improving future prosperity. On this front the factbook’s indicators depict a region that is—in most places—struggling to amass the human and technology capacity needed to support broad-based prosperity.

The study website has lots of interactive features that lets you play with the data, including the ability to zoom in by state. It's well worth visiting.

Regular readers know we've long been bullish about the Midwest (we're also biased, since we're from that part of the country). We even included it in our Top 10 Small Business Trends list in 2013. 

We did this because The Heartland has a lot of offer, including low costs and high levels of livability. And as this study states, they need more human capital.

So if you're looking for a place to live, consider The Heartland.

Why Independent Work and Coworking Increase Mental and Physical Well-Being

McKinsey's The overlooked essentials of employee well-being focuses on how companies can improve the well-being of their employees.

But it also explains why the self-employed - and especially those that work in coworking spaces - report higher levels of wellness and work satisfaction than traditional employees do.

It covers two critical factors - job control and social support - that foster physical and mental well-being. Key quote on job control:

"Studies going back decades have shown that job control—the amount of discretion employees have to determine what they do and how they do it—has a major impact on their physical health. Recent research also indicates that limited job control has ill effects that extend beyond the physical, imposing a burden on employees’ mental health, too."

As we've often pointed out, job control is one of the key reasons the independent workers (the self-employed, freelancers, independent contractors, etc.) become and like being independent.

It's also one of the reasons independent workers report being happier and healthier because they're independent. 

But a drawback of independent work is loneliness. As the McKinsey article points out, a lack of social support is not good. Key quote:

Research going back to the 1970s consistently demonstrates a connection between social support and health ... The evidence shows that social support—family and friends you can count on, as well as close relationships—can have a direct effect on health and buffers the effects of various psychosocial stresses, including workplace stress, that can compromise health.

This is where coworking comes in.

As we said in our article Coworking Is Not About Workspace — It’s About Feeling Less Lonely, coworking spaces provide social support. 

The McKinsey article nicely sums this topic up by saying:

Giving people more control over their work life and providing them with social support fosters higher levels of physical and mental health.

This is exactly what the combination of independent work and coworking provide.

Having said all that, we are well aware that not all independent workers have control over their work. We also are fully aware of the downsides and negatives that come with being self-employed. 

But for those who do have control, the combination of independent work and coworking can lead to a healthier life.

The Robot Business is Hard - Rethink Robotics Shuts Down

With all the noise around AI and robotics these days, you'd think this is a great time to be a company that makes robots.

And in many ways, it is.

According to the International Federation of Robotics, an industry body, worldwide sales of robots increased by 31% in 2017. 

But it turns out the robot business is tough and making money isn't easy. 

Because of this, robotics pioneer Rethink Robotics recently shut down. 

Rethink made two robots - Baxter and Sawyer - that were designed to be safe for humans to work around and easy to program. They were also relatively cheap by robot standards, starting at about $22,000. 

They raised $150 million and for awhile Rethink was considered a sure bet to be a winner. For example, we featured Baxter in our 2013 article The Rise of Robo Sapiens because we were so impressed by the company.

Their pitch was their robots were "cobots", meaning they could work along side and collaboratively with humans. It obviously helped their pitch that Baxter and Sawyer both looked cute - including facial expressions. 

But as the Boston Globe's Businesses want robots that are problem solvers stated:

"While robots may be a big part of the future, building and selling them in the present can be exceptionally difficult."

According to the article, Rethink's robots simply didn't solve business problems as well as robots from competitors. The article also pointed to some business missteps, especially around distribution channels.

That Rethink was forced to shut down instead of being acquired means demand for their robots was at best modest and the business not financially sound. 

Rethink's demise shows how hard it is to build and sell robots. But it also shows the robotics industry is maturing - Rethink failed in large part because their competitors were better. 

Despite its demise, Rethink played an important role in moving the robotics industry forward.

As the IEEE Spectrum article Rethink Robotics, Pioneer of Collaborative Robots, Shuts Down (which is where we got the sad Baxter picture above) points out, Rethink "developed a new class of factory robots that could safely work alongside people."

Expect to see more cobots in the future.

The Staffing Industry Analysts on the Gig Economy and Cloud Labor

The Staffing Industry Analysts (SIA) recently released their U.S. Gig Economy - 2018 Edition report. They found that about 48 million Americans are in the gig economy, which is 31% of the workforce.

They also found about 13.7 million Americans are human cloud workers. 

They define the human cloud as:

"... all manner of companies that facilitate direct, digitally-enabled work arrangements, from sourcing a worker through payment."

They've also identified and defined three key human cloud business models: online staffing, crowdsourcing and online work services. These are shown in their excellent chart below.

SIA's clients are staffing firms - including cloud labor firms - and companies that hire workers from staffing and cloud labor firms. This provides them with an insiders view of the gig economy and cloud labor. 

Much of their research, unfortunately, is behind their paywall.

But they do provide a lot of useful research summaries and information for free on their Staffing Stream blog. It's well worth reading.

In terms of subscribing to their full research service, as Ferris Bueller said "if you have the means ...". 

The Rise of the "Elite Expert Segment of the Gig Economy"

How To Be A Rock Star In The Elite Expert Segment Of The Gig Economy is an interesting white paper from The Luxury Institute, which claims to be "the world's most trusted luxury and premium goods and services consulting firm ...".

The Luxury Institute is an expert network firm. These firms provide clients access to industry experts, most of which are independent consultants. 

The Luxury Institute calls their expert network GLEN (Global Luxury Expert Network) and say they have hundreds of independent luxury goods and services experts who are part of it.

The white paper points out highly skilled expert talent is in demand. Key quote:

Whether an individual chooses to be a full-time employee, or an independent expert, it has never been easier to market and sell expert skills across the entire planet. With a tremendous skills brain drain occurring in business as baby boomers have started to retire, leaving in their wake an army of novice millennials to take over in the cockpit, literally, elite experts are in high demand.

And they point out if these people choose to go independent, they can do well. Again from the white paper:

... if someone is a rock star in the gig economy, they will see their market value magnified by going solo rather than being employed. This is simply because they have the ability to sell their expertise to the highest bidders. Similar to fields such as professional sports and entertainment, and now high technology and e-sports, the gig economy will ensure that elite business experts benefit from what economists call a “power law distribution,” where the top achievers earn a highly disproportionate amount of the revenue. 

This echos what we found in our research looking at highly skilled and compensated independent workers. 

As the chart below from the MBO Partners State of Independence study research brief Highly Skilled, High Earning Workers shows, the number of U.S. high earning independent workers (those making $100k or more) has increased by 70% since 2011.

There are many drivers behind the growth of high earning independents - see the research brief for details. 

But the main driver, as is pointed in The Luxury Institute's white paper, is the growing demand for highly skilled workers.

And since firms are increasing their use of highly skilled independent workers, we see no reason why the number of highly skilled independent workers won't continue to grow.

Can Traditional Employment Match the Flexibility of Independent Work?

We've long found in our research that having work flexibility, autonomy and control are key reasons people become and like being independent workers (freelancers, contractors, self-employed, etc.). 

But there's been much debate around whether or not companies - and particularly the online platform marketplaces like Uber and Lyft - could shift their workers to traditional employment and still provide the same levels of work flexibility.

Thanks to a recent California Supreme Court ruling and a new law for cannabis delivery companies, we're starting to see some companies shift their workers from independent contractors to traditional employees.

And we're starting to see how independent workers react to the shift. 

The Sacramento Bee's Bottle & Barlow barbers quit over state high court’s ruling on independent contractors covers a barber shop that switched its contract workers to traditional employees. 

All the contractors quit rather than become employees.

Key quote from the shop owner:

"Many hairstylists get into the trade for its flexible hours and opportunity for entrepreneurship, leaving the prospect of being an employee with set work times and withheld taxes unappealing, Giannotti said."

Another example comes from The Atlantic article What Happens When Gig-Economy Workers Become Employees. It covers the impact of a new California law requiring all cannabis deliver drivers be traditional employees. 

In the case of one company, about half their drivers quit over the shift. Key quote:

"Workers are split on whether they like the changes. Sky Siegel, the general manager for the Perennial Holistic Center in Los Angeles, said about half of his drivers preferred being independent contractors, and quit before the change went into effect so they could find other gig jobs."

Both articles highlight the decline in flexibility associated with traditional employment as a reason many of the gig workers quit rather than become traditional employees. 

So why don't firms offer traditional employees the same level of flexibility they can offer contractor workers?

The quick answer is labor laws, which provide protections to employees that gig workers don't get. But they also require monitoring and management of workers.

Examples of these include providing health benefits if a worker works more than 30 hours a week, overtime pay for more than 40 hours a week and minimum wage requirements. There are many, many more examples (with legal liability issues being a big one).

To insure companies are complying with all the laws and rules (and can do so profitably), companies schedule their workers. This, of course, greatly reduces worker flexibility.

In addition to legal compliance there's also a practical matter. Simply put, managers see their jobs as managing their employees. 

And as anyone who has had a boss knows, they reduce your work autonomy, control and flexibility. 

We spend a lot of time looking at the differences, advantages and disadvantages between traditional jobs and independent work - and how people decide which they want. 

For those seeking high levels of work autonomy, control and flexibility independent work is the clear winner.

But as we've pointed out many times, in exchange independent workers face income volatility, a lack of benefits and labor protections and greater overall risk.

We think companies can provide more flexibility than they currently do. But we also think they are unable both legally and culturally to provide the same level as independent work does.