Small Business Labs

The Problems Fashion Freelancers Face

Most gig economy and freelance studies cover a broad range of independent workers, so it's interesting when someone does a segmented, vertical market study on a freelancers.  

Vogue's Fashion's freelancer problem exposed covers a recent survey on the effects of the pandemic on fashion industry freelancers'.  

The survey results show that the pandemic had a strong negative impact on them, with 66% of fashion freelancers reporting their financial situation has been unstable during the pandemic, compared to 19 percent before the pandemic. 

Also, 76% of the respondents reported their financial situation has negatively impacted their mental health.

The Vogue chart (click to enlarge) below shows the impact by issue.

These results are similar but more negative than the 2020 MBO Partners State of Independence study results, which found 61% of independent workers said that COVID-19 set them back financially.

The article also cited other problems that fashion freelancers face. Key quote:

Among the reasons cited by respondents were: fewer freelance opportunities, lack of contract clarity, poor pay, lack of supplemental jobs, uncertainty with clients and late payments. The most common issues included the irregularity of work, extreme pressure and stress, clients canceling jobs with no notice or compensation, and ageism.

So one may ask, why do they do it?

The article explains why:

Giulia Mensitieri is an anthropologist and author of The Most Beautiful Job in the World, which exposed a culture of exploitation across the industry. She says that fashion is upheld by the illusion of "the dream": if you can first endure hardships and free labour, you'll be awarded on the other side by a glamorous role.

What is Ultra Wideband?

Apple recently announced AirTags, which they describe as:

AirTag is a supereasy way to keep track of your stuff. Attach one to your keys, slip another in your backpack. And just like that, they’re on your radar in the Find My app, where you can also track down your Apple devices and keep up with friends and family.

These use a wireless communications technology called ultra wideband, or UWB.  

Like Bluetooth and Wi-Fi, ultra-wideband is a short-range, wireless communication protocol.

But unlike its Bluetooth and Wi-Fi, it operates at very high frequencies and can be used to  very quickly (nanoseconds) capture highly accurate spatial and directional data.

The way it works is once UWB enabled objects are near each other, they start "ranging" - sending short pulses (two nanoseconds) back and forth between each object. 

This pulsing provides highly accurate tracking information, including motion and relative position, including height (z-axis).  

So you can think of UWB as a very accurate (within 1/2 inch) short-range GPS that works both indoors and outside.

CNET's Apple AirTags rely on UWB. Here's how ultra wideband will make your life easier covers a range of potential future applications, so we won't bother repeating their work. 

But it's clear UWB could enable a wide range of new and interesting consumer and business applications and services. 

But one application they didn't cover is UWB provides the speed, accuracy and motion detection capabilities to enable doors to open and close like they do in Star Trek. 

We wouldn't consider that a world changing application, but it would be fun.

The Post Pandemic YOLO Movement

YOLO is an acronym for "you only live once", which was popularized by the rapper Drake a decade ago.

We learned this interesting fact from the New York Times article Welcome to the YOLO Economy.  

The article describes the growing number of people who are, in the words of the article, "quitting prestigious and high-paying jobs to pursue risky passion projects."

Key quote from the article:

Several people in their late 20s and early 30s — mostly those who went to good schools, work in high-prestige industries and would never be classified as “essential workers” — told me that the pandemic had destroyed their faith in the traditional white-collar career path. They had watched their independent-minded peers getting rich by joining start-ups or gambling on cryptocurrencies. Meanwhile, their bosses were drowning them in mundane work, or trying to automate their jobs, and were generally failing to support them during one of the hardest years of their lives.

And because they've lost faith in the traditional career path, they've decided to strike out on their own in some way.  

There is a growing body of evidence indicating that the number of independent workers (freelancers, self-employed, gig workers, etc.) has increased substantially since last fall.  

Among the examples, most of which are anecdotal, is the surge in new business applications by solopreneurs.

The pandemic clearly has many people re-evaluating their lives. 

And while we don't think the vast majority of traditional jobholders will leave them for self-employment, it's becoming clear many are.

We'll have more on surge in self-employment in the near future.

Post Pandemic, the Hybrid In-Office, Remote Work Model is the Most Favored

By late last summer, it became clear that most companies would likely move to a hybrid working model, which combines increased levels of remote work with in-office work.

The Washington Post's recent article The hybrid office is here to stay. The shift could be more disruptive than the move to all-remote work covers the growing number of companies announcing they're going hybrid.  Key quote:

"The post-vaccine workplace is taking shape, and for many it’s going to be a hybrid model, allowing more remote work but with clear expectations that some days a week will be in the office."

The reason hybrid work is winning is surveys consistently show most workers and their bosses think hybrid is the best way to go.

For example, PWC's study It’s time to reimagine where and how work will get done found that "less than one in five executives say they want to return to the office as it was pre-pandemic."

As the study chart below shows, most executives think employees need to be in the office between 2-4 days.

The PWC study also found that most employees think they should be in the office 2-3 days.

Not surprisingly, most companies agree and say when they return they expect their employees to be in the office 3 days a week.

The Washington Post article's title mentions that this shift will be disruptive.  But the focus of the article is on it being disruptive for companies.

The shift to hybrid work models will also have major economic and societal impacts due to dislocations caused by changing commuter patterns and shifts in where people choose to live.

And we're just beginning to understand what these 2nd order impacts are and what they will mean.  

The Rising Net Worth of the Less Affluent

Bloomberg's The Comeback of the Bottom Half covers Federal Reserve data showing that the less-affluent 50% of Americans saw their net worth rise the fastest over the past decade.

Key quote:

The rich had a great run, but they didn’t even come close to the percentage gains in real wealth seen by the bottom 50%. These amounted to 21.9% over the past year, 125.6% over five years and 526.2% over 10 years, compared with the one-percenters’ 10.3%, 33.8% and 83.9%.

The article chart below shows the dramatic increase in the bottom 50%'s wealth since the Great Recession.

While very good news, the article points out there is still long way to go.  The strong decade of growth only gets the lower 50%'s share of household wealth back to about half of where it was in 1992.

The rise in wealth for the lower 50% over the past decade is certainly good news and, hopefully, it will continue.

We're Nearing Peak Fossil Fuel Demand

McKinsey's Global Energy Perspective 2021 suggests the global demand for fossil fuels will peak in 2027 and steadily fall afterwards.  

As McKinsey's report chart below shows (click to enlarge), global coal demand peaked in 2014 and they are projecting oil demand to peak in 2029, and natural gas demand peaking in 2037.

Other forecasts are even more aggressive.  A recent report by the International Energy Agency suggests oil supply and gasoline demand may have already peaked.  Key quote from their report:

 "Gasoline demand is unlikely to return to 2019 levels, as efficiency gains and the shift to electric vehicles eclipse robust mobility growth in the developing world." 

The drivers of these changes, of course, are the steady declines in the cost of renewable energy sources and their increased use.

As forecasters we're fascinated that the term "peak oil" now refers to the point in time when global oil demand begins to fall.

It wasn't that long ago when "peak oil" was used to describe the point in time when oil supplies started running out. 

There were even a bunch of forecasts in the 2000's suggesting a lack of oil would lead to the collapse of modern civilization, with many suggesting the collapse would happen by 2020 - or even earlier.  

Instead of running out of oil, it's now likely vast amounts will end up staying in the ground.  

The last issue keeping renewables from fully replacing fossil fuels is storage.  But that's quickly changing.

Large battery storage systems are coming down in price and "green hydrogen" systems are becoming viable.  

So expect to see the declines in the use of fossil fuels continue - and maybe fall even faster than McKinsey estimates.  

The Legal and Tax Complications Faced by Digital Nomads and Their Employers

Thanks to the pandemic, employers and employees have both embraced the advantages of remote work. 

Even IBM, which got a lot of attention several years ago when it ended its remote work programs, is now embracing remote work.

But the surge in remote work has spotlighted a potential set of problems for both remote workers and their employers. 

It turns out that U.S. labor and tax laws are not designed for, or very accommodating to, remote work.  

Recode's Did you work remotely last year? A surprise tax might be waiting for you nicely covers the various tax issues workers face when they live work remotely. 

A quick summary of the article is if you're working remotely, it can be pretty complicated and potentially expensive from a tax perspective.

But remote work is even more legally challenging for employers.

The large corporate labor and employment law firm Littler recently released its first Global Transformation Initiative report (warning - it's long and written by lawyers for lawyers).  

The report covers the various ways "wandering workers" - Littler's term for remote workers - can get their employers into legal trouble. 

Key quote from the report's landing page:

The Wandering Worker phenomenon raises a host of employment considerations:

• Recruiting, hiring, onboarding, managing, and firing employees is going virtual.
• Employment taxes and withholding become increasingly complex when the employer and Wandering Worker do not work in the same location.
• Determining which state and local benefits apply is particularly tricky.
• Employers are struggling to implement systems for tracking and compensating working and travel time for non-exempt employees, among other wage and hour concerns.
• Privacy and data security issues emerge, particularly as the trend towards global workforces accelerates.
• Union organizing is rapidly adapting to the new work regime.

In all these areas, there are potential legal landmines remote workers could easily trigger that would create legal problems for their employer.

Our work with MBO Partners has found that the number of digital nomads substantially grew in 2020 as more workers found themselves untethered from the office due to the pandemic.

As the MBO Partners report chart below shows, this growth was mostly driven by digital nomads with traditional jobs.  

We expect these numbers to grow again in 2021.  

As Littler points out, digital nomads expose their employers to tax and legal risk, with traditional employee digital nomads being much riskier for their employer than digital nomads who are independent workers.  

But all digital nomads and those employing them need to be aware of these issues.  

JungleScout's State of the Amazon Seller

JungleScout provides a platform that helps small businesses find, launch, and sell products on Amazon.  They recently released their 2021 State of the Amazon Seller Report.

This report covers who Amazon's small business sellers are, what and how they’re selling, how they are responding to the pandemic induced increase in ecommerce and their future plans.

Amazon has about 2.4 million active global sellers on their platform and they generate roughly $208 billion in revenue, which is about 54% of Amazon's total revenue.  Of the 2.4 million sellers, almost half (49%) are based in the U.S.

And according to the report, most sellers (73%) are solopreneurs.  Only 27% report having one or more traditional employees.  

Also interesting is 36% of sellers report having a full-time job in addition to their Amazon activities.  In other words, over one-third of small business sellers selling on Amazon are side giggers.

Over half of the sellers report selling their goods on other platforms (eBay, Etsy, etc.), in stores, or on their own ecommerce site.

We found the data on how they plan to expand quite interesting.  

As the report chart below shows, Walmart is the top platform they plan to expand to.

   

Roughly 1 in 5 (21%) also reported they plan to start their own ecommerce site.  

Having a proprietary ecommerce site and not being beholden to the large platform companies is an increasingly popular option.  

This is one reason why Shopify has become so successful.

Shopify gives merchants access to services such as payments and fulfillment, but lets them maintain more control of their branding and customer relationships.  Shopify's fees are also generally lower than Amazon's.

Having your own site is too valuable not to do it - if you can make it work.  And increasingly, small businesses are making it work.