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Is there a better way to see the future of work than to follow the drama that is Uber? The ride-hailing service burst on to the scene in San Francisco just about six years ago and nothing has been the same ever since. From how to manage a gig workforce through to how technology is destroying some jobs and creating others (more on that in a minute) Uber is the maybe-not-that-reluctant poster child for the story of workforce change, the latest instalment of which takes place in London, England.
For those who have managed to miss it, last week London decided to revoke Uber’s license to operate in the city. As always, when it comes to Uber, emotions run high and the London decision apparently brought out the strongest of those. Some (led by traditional London cabbies) are jubilant at the decision, effectively calling Uber a not-fair upstart staffed by criminals. Others called the decision everything from Luddite-like to racist. Customers of the ride-hailing service are not thrilled.
There are lots of pieces to the drama, but for me one of the key parts is this: the jobs of London cabbies used to be protected by the fact that that they had a knowledge base that could not be easily replicated and now they are not. In fact, the test they take to be allowed to drive a cab is called ‘The Knowledge’, and it requires memorizing something like 25,000 London streets. Not surprisingly, preparing to take the test can take years and those who pass it are understandably proud to have done it. As a system it all worked fine until GPS technology and Uber came on the scene.
With the advent of GPS, it is as if robots have replaced the taxi drivers. That is, rather than being required to know every street by heart, every Uber driver checks directions by putting the street address into GPS, and every passenger can do the same on their phone anyway. There may be other ways in which taxi drivers have it over Uber drivers, but the argument that cab drivers can get you where you want to go better has effectively been destroyed. Technology has de-skilled the function of the cabbies, meaning that if the world operated in a true free-market sense, the taxi drivers would see their wages drop and their jobs disappear. As Uber has expanded, London taxi drivers have undoubtedly seen their incomes affected, but the majority have struggled on partly in the hopes that Uber would just go away.
And yes, regulation does exist and markets are not exactly free. That is why someone gets to decide whether Uber can operate at all, which in effect means deciding the relative fortunes of Uber drivers vs. cabbies. With the London decision, the cabbies have managed a win for now but they have to know it is a temporary one. Uber (as well as competitors such as Lyft) is rolling in in more and more cities, and is proving to be a hit with those who prefer to pay less rather than more for a ride and to hail it more conveniently to boot. For sure, there may be regulations needed to ensure that Uber drivers are thoroughly checked, but there is little to suggest that the majority would be better off if Uber did not exist at all, no matter what London has decided for the moment.
And so the impasse continues and right at the moment cab drivers and Uber drivers seem to hate each other, in London and in many other cities as well. Then again, they should maybe think about banding together to map out their joint futures. After all, Uber all has never made a secret of the fact that they want to have driverless cars ferrying passengers sooner rather than later. As they get closer to that reality, neither ‘knowledge’ nor ‘GPS’ may be enough to keep any kind of drivers in cabs.
As driver jobs are eliminated, others will be created although job functions will likely come and go over the years ahead. Rather than thinking just about specific knowledge, perhaps what workers need to develop are skills in things like ‘flexibility’ and ‘adaptability’. They may sound like buzz-words, but if Uber has taught us anything it is that the work world is turning on a dime and it might be best to be ready for the next instalment of the drama.
Walmart buying Modcloth? ‘Say it’s not so’ went the lament from Millennials and other assorted cool people earlier this year. After all, Modcloth is a cutting-edge, online retailer that offers funky clothes for those who consider themselves the opposite of everything the world’s biggest retailer stands for. Modcloth and Walmart could never be a fit – could they?
They may be profitable enough right now but Walmart apparently see the future of retail and they want to change so that they do not get left behind. Walmart wants to be hip. It wants to expand its customer base to include the well-heeled, and wants to convince people that it is a retailer with good values. Heady and varied goals to be sure, but the company has deep pockets and an aggressive business plan, which ironically may be what it takes to make their retail dreams come true.
The company has image problems to be sure. Perhaps with some justification, Walmart has come in for a lot of bashing in recent years. Ask people what they think of it, and inevitably some negative things will come up. ‘Walmart does not pay employees enough’, ‘Walmart is anti-union’, ‘Walmart sells poor quality goods from China’, ‘Walmart is for unattractive people who live in flyover and voted for Trump’ are some popular responses (the last one para-phrased a bit by me, but nevertheless one that reflects a prevailing sentiment). It is a big, low-priced retailer where you can typically get the lowest price on a variety of goods from Nintendo goods through to cucumbers. If you are buying on price, rather than style, Walmart is where you go. It is a philosophy that has served the company well-enough through the recession and post-recession years.
Thing is, although Walmart may be where you go to get things cheap, there is now a cadre of consumers who do not want to go anywhere at all to get the things they need. They like to buy online, and when they do they typically choose Amazon. As well, as a group they are a little different than the core Walmart shopper. A little younger, a little richer, a little more educated maybe. A lot more cool think some, and certainly too cool to be ordering from Walmart online.
Knowing what online customers want and knowing what those customers think of them, Walmart has now embarked on a strategy of buying up small, successful independent online retailers, with plans to allow them to operate under their own brand names, with Modcloth being the latest of these. Earlier this year they picked up outdoor specialty retailer Moosejaw and online shoe seller Shoebuy. Men’s retailer Bonobas is rumoured to be next on the acquisition block.
It is a risky strategy to be sure. The typical Modcloth customer, for example, is more or less the kind of person that hates Walmart and everything that it stands for. No surprise then the announcement of its sale is being met by virulence from many customers who vow to never buy from Modcloth again. Maybe they will not, but then again maybe other customers will. Maybe a little of the hipster sheen will rub off on Walmart, or maybe some customers will stick around to see what Walmart’s input brings to the party, especially since the company is retaining much of Modcloth’s marketing talent. After all, at the end of the day, Modcloth (a company that in the past has ruffle d feathers by offering wedding dresses for around $200), is just like Walmart in that both are retailers selling relatively inexpensive made-in-China clothing to a North American market, so that has to be some kind of a starting point.
Whether the experiment with this set of online retailers works or not, Walmart clearly realizes that its future growth has a lot to do with attracting and retaining a millennial clientele. To be sure that clientele wants good prices, but they also want to be thought of as having style–and they do not want to have a lot to do with bricks and mortar retailers. Buying up Modcloth shows a certain style in itself, which may be the first step in acquiring some stylish new customers.
North America is aging, and a lot of the rest of the world is aging as well. It is something to think about as we consider where we are going to get the labor we need to grow our economies in the years ahead. That is, for decades we in North America have been able to attract the cream of the crop in terms of workers if we so chose. The opportunities were here and a surplus of workers was elsewhere. So what will happen when that surplus dries up, and more and more countries are scrambling for young workers?
This article from the World Economic Forum (WEF) details the aging trends in Asia very clearly. The region has for years benefitted from a ‘demographic dividend’ where a a young, growing work force (aged 15-64) has helped drive growth. Now, as is the case so many places, fertility rates are falling and people are living longer. Already one-third of the population in Singapore and South Korea is over 50, and in Japan the ratio is closer to half. No surprise then that workforce growth is slowing. The most dramatic example of labor force contraction could well be in China, where the WEF figures there could be a decline of 170 million people in its working-age population over the next three decades.
If left unchecked, all other things being equal a declining labor force means strained public finances as well as lower economic growth. That is why the WEF suggests that the countries experiencing the decline in labor force growth look to the ones with younger populations as sources of labor. India, Indonesia and the Philippines fall into this category.
It could mean a shift for North America. Right now, there is no shortage of willing workers, at all skill levels, who want to be in Canada or the United States. The competition of those workers, particularly those in the highest skill categories could heat up in the years ahead if would-be workers have the choice of staying at home or heading to a nearby Asian country rather than going further afield. That could be a big deal, given that North America is also aging rapidly.
Does that mean that North America is headed for labor shortages? Probably not. What the article does not mention is something else the WEF has discussed at great length, which is the fact that we are in the midst of a ‘Fourth Industrial Revolution’ by which automation has the potential to replicate many job tasks. Right now we are still figuring out the costs and practicalities of using robots or other technology to get things done. If workers are in short supply, the incentive to figure it out faster will be ever higher.