If “build back better” isn’t just rhetoric, it will need to acknowledge that pandemic or no pandemic, people’s relationship to work is being transformed — and often degraded — in fundamental ways in the new digital economy. And it doesn’t stop with jobs that are deemed replaceable.
New technologies, which enable “algorithmic management,” are reconfiguring many more jobs into tasks, making work more precarious, workers more insecure. While providing some people greater flexibility, the transformation is also fueling the highest levels of income and wealth inequality in a century in the US.
It’s time we take stock of the key shifts happening to our economy and rethink what enterprise means in the 21st century. In short, we need to ask, What does it look like, in our new digital economy, to build enterprises that are equitable?
In short, we need to ask, What does it look like, in our new digital economy, to build enterprises that are equitable?
We can begin by looking closely at the record numbers of new business applications filed in the U.S., two-thirds of which are non-employee businesses — in other words, one person operations. Who are these “one-person LLC’s”? Among them are “influencers” — creatives able to use a variety of platforms, from TikTok to Instagram and Patreon — to run their own businesses, doing what previously took a whole organization to do — maintain a website, produce and deliver content, reach customers, raise money, and manage finances. However, one-person LLC’s are not just for young influencers. According to data from Visier, between the first quarter of 2021 and 2022, the greatest growth in resignations was among people aged 40 to 60. Some might have lost jobs during the pandemic and decided to become self-employed. But for many others this was a choice. As an article in Vox points out, “Among the more financially stable set, quits are being driven by everything from a desire to continue working remotely to a greater search for meaning to simply having the means to do so.” In fact, a survey conducted by payroll company Gusto found substantial growth in new business applications in professional services — accountancy, management consulting, marketing, among them.
The new army of one-person LLC’s joins a large but often invisible army of existing informal workers who have either been excluded from the formal economy or have had to resort to informal work out of necessity, often combining part-time work with gigs on multiple online platforms — Uber, Thumbtack, DoorDash — just to make ends meet.
It’s easy to look at the shifts and focus on the wrong thing: worker autonomy. Instead, the changes are a reflection of a different business logic at work in our new economy.
It’s easy to look at the shifts and focus on the wrong thing: worker autonomy. Instead, the changes are a reflection of a different business logic at work in our new economy. This new business logic allows, and even demands, that companies achieve scale and market dominance with relatively few employees. This is the story of Uber, Facebook, Google, and thousands of other companies that came into existence in the last twenty years. While all three are dominant industry players, none of them come close to having the workforce of General Motors — around 800,000 employees at its peak.
Older companies are also re-organizing along the same logic, bringing in the same sets of tools and practices into their organizations. Take United Airlines, for instance. In 1960, 46.5% of its revenue went to employees while 7.3% went to shareholders. By comparison, in 2019 20.9% of revenue went to employees while 38.7% went to shareholders (Wartzman, 2022).
Those numbers hide a bigger problem: what today’s workers are being deprived of is not just incomes but vital assets essential for longer term economic security — health insurance, retirement, paid vacations, training, and many other benefits.
…what today’s workers are being deprived of is not just income but vital assets essential for longer term economic security…
It doesn’t have to be this way. The way we work is a product of a whole host of factors — institutional, economic, technological and cultural arrangements and norms — that shape how technology is deployed. The same set of technologies powering Uber are used very differently in Germany, India, and the US and produce very different outcomes for workers and consumers precisely because of the differences in institutional arrangements and norms within which these enterprises operate. In Germany, for example, ride-sharing platforms must work exclusively with professional and licensed private-hire vehicle (PHV) companies in which drivers and cars have the necessary licenses and permits. And, of course, the extensive social safety net makes all work, including gig work, in Germany, much less precarious. In other words, the way we work and the way businesses are organized are not pre-ordained or set in stone.
In other words, the way we work and the way businesses are organized are not pre-ordained or set in stone.
That said, the challenge ahead of us is multi-dimensional: we are living in a new digital economy but with many institutional arrangements created for the era of industrial production. Our employer-based social safety net was designed and worked in an era when most people worked for large companies like GM, General Electric, or Kodak. It does not work for millions of independent and informal workers whose numbers are rising today. Our regulatory system which offered protection to workers and ensured safe working conditions is missing a large portion of today’s workers who are working on their own, not organized into unions or guilds that would afford them collective power and voice.
Transformations in the nature and structures of work are comparable in impact to the tectonic changes wrought by climate change, if less visible. How do we bend this transformation towards equitable outcomes? How do we shape digital technologies to create more equitable enterprises? What institutional arrangements do we need to put in place to ensure broad economic security
Transformation in the nature and structures of work are comparable in impact to the tectonic changes wrought by climate change, if less visible. How do we bend this transformation towards equitable outcomes? How do we shape digital technologies to create more equitable enterprises? What institutional arrangements do we need to put in place to ensure broad economic security?
These are precisely the questions we set out to address in IFTF’s Equitable Enterprise Initiative (EEI). Our recently released map outlines a framework and identifies six key levers — elements of the institutional infrastructure that would promote more equitable work arrangements and incentivize creation of more equitable enterprises.
Each of the levers on the map point to key issues we need to address and includes concrete examples, i.e. signals, of people and organizations that are already building pieces of the new institutional infrastructure for equity. For example, on the Labor side, we need to address the needs, challenges, and possibilities of the new army of independent workers. How do we give them voice and representation? How do we protect them from exploitation, wage theft, and other abuses? For some promising efforts look to Guilded, a membership coop for independent workers who collectively own the company and use it to increase workers’ purchasing power and access to benefits. Capital is another important, if not a key piece of the institutional infrastructure. How do we create capital sources and institutions that incentivize community, not just individual wealth building? Here we can look at the growth of the public banking movement around the country. Cities like Los Angeles already approved legislation to set up a public bank, with the mission to direct capital to community wealth building, granting the public oversight over the bank’s operations. We are also seeing a renewed interest in more distributive enterprise forms, that provide ownership and access to key assets for economic security to wider groups. These include coops, community trusts and limited-profit companies — in housing, food, and farming. The Kensington Corridor Trust in Philadelphia is an example of this, establishing a community trust and acquiring, with the support of philanthropic and government funders, real estate in a Philadelphia neighborhood, turning it to community in order to “de-commodify real estate assets and transition them to neighborhood control. This pioneering model of neighborhood ownership, governance and local economic development has the potential to keep control within the neighborhood and ensure long-term affordability.”
These are just some examples of actions groups are already taking to build the institutional infrastructure for more equitable enterprises and a more equitable economy. Together they point to possibilities of a new system and a different logic for building enterprises in the 21st century.
As futurists we firmly believe that we are not passive bystanders or victims of the future. We have agency to shape our future. We see an urgent need to build an institutional infrastructure that would create more equitable enterprises and ultimately more equitable societies. We hope the map will serve as a guide for doing so.
For more information on IFTF’s Equitable Enterprises Initiative, join us here.