Today, it may be easy to forget just how intertwined humans have become with technology. While at the same time, though, it may be too difficult to ignore just how much more efficient our lives are when we are able to communicate, share, and connect with one another so quickly and seamlessly. Across all ages and through the many different generations, there is a realization shifting in the public perception that a brave new world exists. Seismic shifts societally, culturally, and economically have slowly begun taking place as students in the current American education system hardly know a world in which PCs, tablets, and smartphones did not exist. As this new paradigm shifts, technology will be the means by which humans break away from traditional 20th century concepts, ideologies and philosophies. Leading the charge is the rise of automation and advanced artificial intelligence, and it is a new beginning for humankind. Also, the economy has been restructuring itself for more customization and personally tailored work for corporations and individuals at a volume and frequency that maximizes productivity that humans cannot on their own compete with. By examining the technological and economic breakthroughs of AI from a cost basis holding a long-term view, it comparatively is going to be cheaper than employing humans as it does not need food, water, or sleep. As the rise of multi-stream contract work emerges, demand for traditional jobs and corporate positions will plunge from technological advancements and a new sort of economy will burgeon.
The labor force currently is seeing independent contractors and freelance workers, or “gig jobs,” on the rise as it stacks up to more than 53 million individuals and gains about one-third of the labor force. According to the Wall Street Journal, roughly 50 percent of Millennials are working or participating in the new “gig economy.” In 2017, Lyft and Uber’s ride sharing services provided 50% more daily rides than Yellow Cab with quintuple the number of cars they had in service. It is staggering, especially given that only a few years back the City of New York had more yellow cabs than ride-sharing vehicles than Lyft and Uber combined. This is Exhibit A for the massive, rapid, and intense growth that this “new” economy has over its prior counterparts. It is an early indication that a large majority of the labor in the United States will be freelance in less than a decade. Aside from the economic landscape shifting, there is another arms race occurring in automation and advanced artificial intelligence.
It appears this realization is beginning to influence Wall Street’s mentality according to Goldman Sachs as this March it claimed, “Machines have replaced humans.” Whether or not this true, they will certainly affect the economy and likely have an impact on, or, be the direct consequence of the next financial crisis. Millions of the traditional jobs, many of which are now occupied by skilled individuals and college students or alumni, will be lost. It will devastate people to learn that they have been replaced by a new set of coworkers, bots and robots. It has been a belief for a while in Silicon Valley and on Wall Street that the future will be separated into two main sects: those who tell the machines what to do and the people who be taking instructions from the machines. The mastery of statistical modes of thinking began with the rise of the Internet giants like Facebook and Google, and will continue as the dominant path to the future for these new technologies and forms of intelligence rather than the deterministic calculus of prior centuries.
The future workplace and/or the lack of one will have great consequences on society for better or worse. Topics like Universal Basic Income are just coming back into the realm of public debate as people begin to fear these bots and robots. Others have suggested that digital commodities and cryptoassets could offer a means of a new form of income as they typically are set to a fixed supply and/or on a deflationary schedule by nature of their programming. Industries in the new “gig” economy like ride-sharing, car sharing, residence sharing, food deliveries, smartphone banking and freelance taskers have blossomed and grown immensely in 2017. For example, Airbnb grew from merely 3000 listings in 2009 to 2.3 Million in just last year with bookings growing at a 40 – 50% clip. If you gathered the world’s largest hotels and combined them, Airbnb would have more listings than all of them now as it saw user growth jump from 80 Million in 2016 to over 100 Million users in 2017. This adoption trend is so strong that it is also starting to sweep around the globe beginning in new countries and regions where it can rapidly secure more users and growth.
To get an idea of just how large that may be, Uber has over 2 million drivers around the world of which the United States accounts to be about 65 percent of that figure. TaskRabbit, another booming startup for freelance contract workers, has over 50,000 drivers for food deliveries through services like Ubereats, Doordash, and Postmates. The trend is clear that the “9-to-5” or W-2 salaried job is on the decline as much of the new job growth is stemming from the alternative job space as a result of freelancing. What is also fascinating about these “1099” independent contractors or “not employees” working in the booming gig economy is that over a third of freelancers according to some estimates elect not to be covered by the Affordable Care Act (ACA). This has sparked new ventures and ideas for preventative care and a better self-insurance marketplace as Warren Buffet, Jeff Bezos, and Jamie Dimon announced plans to roll out a new initiative to provide cheaper coverage.
In a one-two punch, the combination of the massive retirement wave of Baby Boomers along with the rise of gig workers will create one of the widest gaps of unfilled job openings throughout history. The economy has been accelerating for years, but the start of this 2018 indicated sluggish growth prospects and an uncertain future of sustained growth. Aside from those facts, automation and advanced artificial intelligence will soon make millions of more jobs and employees obsolete whether they are executives, managers, accountants, lawyers, or drivers as it poses a massive threat to the current state of employment in the United States. It is possible that it could lead to Great Depression-level unemployment and a total societal meltdown, which would imaginably includes the handing out of trillions of dollars in cash. Self-driving cars alone could destabilize our society with truck drivers and these gig drivers out of work with educations that on average are about high school level or freshman year in college. All it takes is one innovation before any of it is a reality.
Retail workers, routing specialists, call center workers, fast-food workers, insurance underwriters, analysts, accountants, and bankers are all included in this gloomy narrative. A 2017 report by the consulting firm, McKinsey & Company, concluded that by 2030 as many as one-third of American jobs will may disappear because of automation. Some have argued and are studying to see if cheerier forecasts exist, predicting that new jobs will be created to replace the ones that are lost somehow. The aforementioned report also forecasts out to a horizon that is three presidential terms away, and perhaps includes skeptical candidates to the new economy who would try to capitalize on the opportunity. Scrutiny over tech companies like Facebook and Google has increased in the past year as worries of monopolistic behavior, malicious exploitation of social media and the addictive and parasitic effects of smartphones have made a once bulletproof industry vulnerable. Even with industry backlash along with insiders joining in, fending off the bots and robots will arguably require public payments, regardless of income or employment status, on a regular basis to help bring Americans all to the poverty line whether or not they were hit by automation or advanced artificial intelligence.
Although there has been a considerable amount of popularity around Universal Basic Income, it is a leaderless movement that has not yet broken into mainstream politics. As a policy, it is not entirely a new idea and has been in previous accords including the likes of think-tank circles, Rev. Dr. Martin Luther King Jr., the economist Milton Freeman or more recently Elon Musk, Mark Zuckerburg, Marc Andreessen and other technologists in Silicon Valley. Y-Combinator, the legendary startup incubator, is testing out a basic income experiment with 3,000 participants in two states. Knowing that it is an old idea that has become relevant again because of our societal expectations, Universal Basic Income is seemingly more and more necessary. There is a major need to find a reasonable price tag for this sort of project before it’s too late, unrealistic, or the opportunity is gone and before anything can be done about it.
There is an ample amount of optimism for small business and entrepreneurs in this growing gig economy with 42% of small businesses using contract labor. It’s cheaper and more flexible to add workers. As traditional W-2 employees stagnate and 1099 workers grow, there are Millions that have fallen through the cracks of measurement, working multiple part-time jobs that earn less than the required $20,700 reporting threshold. (59% of cryptoasset investors do not report to the IRS). Would a Lyft driver who earns $15k driving and owning an Airbnb making $15k or contracting freelance programming work even report her income without an accountable employer? The new tax regulation offers discounted rates for pass-through business making it highly likely that the trend of contingent labor will continue, if not accelerate.
A record amount of VC money in 2017 was deployed into startups, cryptoasset funds, and blockchain and AI-themed ventures – including machine learning, advanced robotics, and self-driving vehicles – and they are projected to cultivate a $15 – 20 trillion market opportunity by 2025. These shared economies and distributed workers will eventually have unmet needs in job finding, health insurance and tax advisories that will continue to grow and innovate. The dynamic digital landscape has also been budding symbiotically with freelancers and now accounts for a significant portion of the USD GDP and employment within the United States. Self-driving vehicles, automation, and advanced AI will be disruptive and potentially dangerous trends to manage in the years ahead, but at the same time an exciting, innovative moment full of opportunities to prosper as a worker, entrepreneur, and investor. Now, at least, you know that the gig is up!