My latest piece for the Globe and Mail on why Prince Harry is one of many young men ‘marrying up’
My latest piece for the Globe and Mail on why Prince Harry is one of many young men ‘marrying up’
Here is my latest piece for the Globe and Mail, It talks about the way that inequality is going to follow this generation of workers into their senior years.
I am thrilled to now be writing a bi-weekly column for the Globe and Mail, Canada’s national newspaper. See my first here – it is a look at how the gig economy is in force but our social policies are woefully out of step with it.
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.
Demographics drives a lot of things including Mergers and Acquisitions (M & A) activity. That is a lesson we are now learning from Japan, where there are apparently too few heirs to take over large companies as their boomer-aged Chief Executives head for retirement.
This piece from the Financial Times looks at what is going on, but the story is a simple one. Plenty of Japanese CEOs are baby boomers, meaning they are at retirement age or heading there soon. Whether they are company owners who do not have children at the ready to take over or simply in companies without a strong layer of younger managers, many do not have obvious successors. As a result, they are turning to advisory firms that can help them arrange mergers. The stocks of such advisory firms are on the rise and no wonder: Nomura Securities estimates that between now and 2040, there will be 40,000 companies per year in Japan facing succession and many of them will need help in arranging it.
Japan is an example of population aging gone crazy. In 2016, births fell below 1 million for the first time since births began to be recorded in 1899. It has become a vicious circle. Births have been low for years, which means there are few young women to have babies. Those that could are discouraged from doing so by a society where childcare for working mothers is very expensive. As a result, the fertility rate in Japan (the number of children the average woman has over her lifetime) was 1.45 in 2015, as compared to 1.86 in Canada and about 1.89 in the United States, and the number of births keep declining.
As in Japan, the fertility rates for Canada and the U.S. are below the ‘replacement level’ of two 2.0, but unlike Japan those countries rely on immigration to fill some of the gaps as do many industrialized countries. Japan frowns on immigration, however, meaning that the foreign born population in the country is less than 2 percent, compared to about 13 percent in the U.S. and over 20 percent in Canada. The end result is that the entire population is aging quickly, and the age of executives is as well.
Whether Japan is a unique case or there are lessons for North America here remain to be seen. Certainly there are huge differences in culture that suggest an-aging-CEO led M & A boom is not as likely in the U.S. or Canada. For one thing, Japan values having family-run companies more than most companies do, with many in that country boasting that they have been ‘family run’ for generations. The importance of being able to make that boast, however, makes that in many cases Japanese CEOs have gone as far as adopting an adult male. In fact, an astounding 90 percent of adoptees in Japan are apparently actually males between the ages of 25 and 30. Since being family-run does not matter as much in North America, there is no need for mergers to make it happen. As well, there are few large companies within North America that do not have a clutch of in-house candidates vying for any stray CEO openings.
Although North American companies may not merge between themselves immediately because of population aging, they may find themselves merging with Japanese ones. Given that the market within Japan for any products is also shrinking due to population aging, mergers with non-Japanese companies are also increasingly on the table. We saw a huge hint of things to come with the purchase of premium-spirits company Jim Beam by Japanese company Suntory holdings in 2014, but there may be much more to follow.
The way that aging affects North American companies may be different than the way that it does Japanese ones, but there are lessons to be learned from Japan just the same. Fewer people joining the workforce means the options for how to conduct business have to change. Mergers may be one unexpected thing to come out of population aging, but there will certainly be more – and more business opportunities – as boomers age in every country.
There are a lot of things robots can do, but they cannot make societies any younger.
Canada and the U.S. are aging – there is little debate about that. What exactly that will mean for the labor force and the economy is a bit more up for grabs, but to get an idea of how it may all play out we have the examples of those areas that have already gotten old ahead of us. One such area is East Germany, a town from which is profiled in this article from The Economist.
East Germany, if it was an actual separate country from West Germany, would apparently be the oldest country in the world. That is, at present Germany and Japan each have a median age of close to 47, but East Germany is indisputably older still. Following the installation of the Berlin Wall in 1989, young people headed for the west, leaving a smaller population to have families. The Economist quotes an official from a German think tank who puts what is going on rather succinctly: ‘kids not born in the ‘90s, also didn’t have kids in the 2010s. It’s the echo of the echo’. With deaths far out-pacing births, Germany as a whole is headed to having 40 percent of its population aged over 60 by 2050, with East Germany getting there first.
In the town profiled in the article, one apartment building in five is empty, and where two-thirds of kindergartens and over half of all schools have closed since 1990. There is a dearth of workers, particularly young workers, in the area. Not surprisingly, the biggest shortage is of those who are available to work in health care. particularly as it relates to the old. Immigration has filled some gaps, although refugees are not necessarily taking the available jobs, and tend to leave anyway. As one inventive solution, a local training school is arranging to have young people study German in Vietnam and then head into apprenticeship positions in the area. Were it not for measures such as that, small towns would potentially shrink even further and possibly be abandoned all together.
Are there lessons for North America here? Certainly there is a potential warning of how things might play out if more workers are not found. In Canada’s Atlantic provinces, for example, aging is happening more quickly than it is elsewhere, especially in non-metropolitan areas. That is already straining government budgets which are facing the reality of fewer tax-paying workers and stronger draws on health care services. In Canada and in many countries things may well get worse. After all, it is an old equation: you grow an economy through population growth, and through productivity. If population growth is not there, all things being equal that means you grow less quickly. If East Germany does end up short of 5 to 7 million workers by 2030, as some experts predict, then economic growth is certainly going to suffer.
Or is it? To me, the wildcard in all of this is the impact of technology, something that is not really mentioned in the article. After all, apprentice humans will not be needed if ready-out-of-the-box robots actually replace the need for many job functions. That is a concept that is not as far in the future that many of us may like to consider. According to one study from the University of Oxford, about half of all jobs are vulnerable to being replaced by automation. Analyses from the Bank of England and the World Economic Federation (WEF) have reached similar conclusions. No one knows exactly the final figure or the pace of how it will happen in different countries, but it is certain that some job functions will not be needed in future, although in previous industrial revolutions (this one, according to the WEF is the fourth) other jobs have sprung up to replace them. Regardless, the absolute shortages of workers in East Germany or in North America may turn out to be less severe than sometimes predicted. That may not help individual workers keep up their standard of living, but it will keep industries running and promote overall growth.
Then again, even if technology replaces the need for some workers, it will not make up for the fact that societies will be populated by old, and getting older, people. Whatever happens in terms of technology, the reality is that many schools will indeed need to be turned into care homes sooner rather than later. Even if robots are able to staff some of those homes, they will not change the fact our societies will have a different overall vibe.
Robots will not judge whether the vibe from an older society is better or worse than the one we have today, and perhaps no one else should either.
I’m happy to have been able to contribute to Macleans’ list of ’75 Charts Every Canadian Should Watch in 2017′. My post was on the ‘Gig Economy’ and you can find it here (you have to scroll down to find it, but that gives you a chance to see some fascinating graphs first) but as I mention, wish the information we had on it was better. Are you listening Statistics Canada?
If I had to think of an industry prone to poisonous industrial relations battles I would probably think first or the auto sector, or maybe even something like education or health. The battles in those industries, however, are apparently being matched by orchestras (can I say ‘in the orchestra industry’?) across North America. Like many people, I tend to think of the music industry as full of a few superstars and many starving artists, but as it turns out that is not quite the full picture. Orchestras, as it turns out, have long been a unionized sector, and like other unionized sectors they are facing changing times a tumultuous period of restructuring.
Orchestras are actually a fascinating sector, albeit fascinating like watching a train wreck. Over the past few years, a host of North American symphonies have faced bankruptcies and closures (those in Louisville, Honolulu and London, Ontario are examples), long strikes and lockouts (notably affecting orchestras in Philadelphia and Pittsburgh this year) and deficits (the New York Philharmonic and the Toronto Symphony Orchestra come to mind but there are actually too many to list). They play pretty music, but they are actually going through ugly times.
Not surprisingly, much of the source of strife in the orchestra sector is happening because of money issues. Like firefighters and autoworkers, orchestras are finding that the non-profits that have long employed them no longer have the means or the desire to pay for what had been long-held contracts. In Pittsburgh, for example, players have been making a base rate of $107,000, which is something over $51 an hour not including benefits, which is in contrast to an what the Bureau of Labor Statistics says was an average wage in Pittsburgh of little over $22 an hour as of 2015. The current dispute centers around a plan to cut musicians’ salaries by 15 percent, and as well to freeze their pensions and to reduce the size of the ensemble.
Some argue that the market for musicians is intrinsically different than say the market for retail workers. If you ‘let the market decide’ on the level of salaries, goes the argument, you would not get you the best musicians. That is, the salaries for retail workers might be low since there are so many people willing to do the work, and since the job is simple enough that there is no shortage of qualified people. There may be lots of unemployed musicians, but if you let them outbid each other to work cheap, you might not get the ‘best’ ones. And $100,000 there is a different pool available than there might be at $30,000, or at a ‘pay by the gig’ agreement.
There is some merit to this view. For one thing, I would argue that at the higher salary, you are not only choosing different workers, but as well guarding against the turnover that would inevitably happen if you hired at a lower or a gig rate. It would only make economic sense for musicians to migrate towards better paying short term gigs if they did not have security and a decent salary. Whether that decent salary should be above what a nurse gets paid (which in Pittsburgh is $25.84 an hour according to payscale.com) is up for debate, however. And, the overriding trend in the labor market is to ‘gigify’ even the most traditional of jobs, which means the musicians are fighting a bit of a losing battle.
The bigger question really is what the correct industry model should be for orchestras. Should they be considered a public good, and therefore pretty much paid for by the state as they are in Europe? Or should they be left to sell tickets to pay their costs? That one is a bit of a non-starter if you want orchestras to survive, since virtually none are able to do so without outside support. According to a report by the League of American Orchestras, detailed in this story from The New York Times, as of 2013 (the last year for which data is available) orchestras had reached a ‘tipping point’ where they now rely more on philanthropy than ticket sales to generate revenue. Of course, private sector philanthropy rather than government grants could theoretically work, although there are far more demands for revenue from arts organizations than there is money to go around.
In my reading of it, orchestras actually should be a growth industry and the well managed ones could face a bright period ahead. Think about the major changes we are seeing as an economy and as a society. One of the biggest ones, to me, is the retirement of the baby boomers which will give a lot of people nothing but time – and those with time have time for music.
Boomers, retired or not, are now searching for ways to give their lives more meaning. Getting involved in hobbies, and in particular in music is a natural way for them to do that. Baby boomers also want to be on boards or to do meaningful volunteer work, and to have some input into organizations that interest them. If orchestras can help them to do that, then the the next step for them is to get them to write checks. Rich boomers can write big checks and poorer ones can write small ones or buy tickets. The trick is to tell them what is available and make it accessible to them. Savvy orchestras have already increased the size of their marketing departments and community outreach programs in order to reach this market.
The existence of cultural institutions is also an important consideration as baby boomers think about where they want to live once they retire. When listing what they want close to them, many cite proximity to cultural and entertainment venues as a consideration. Florida, the haven for many pre-boomer retirees and in a way of model of how many communities will evolve, is actually a hub of small orchestras. Communities that want to attract or retain boomers would do well to retain their orchestras as well.
Even with higher demand ahead, the path for orchestra musicians is unlikely to be a smooth one. The economic future we are facing is one where many will go from gig to gig, and where job security is not a given for anyone. Musicians outside of the orchestra sector know what that career path looks like better than anyone. Perhaps they could give some coping lessons both to their colleagues and to the labor force at large.
Collaboration, sharing ideas, boosting creativity, creating bonds – all of these are reasons that are typically given for having open plan workspaces. Sit next to your colleagues in an open plan office or cubicle, goes the reasoning, and productivity will rise. Not so, says new analysis by researchers at the University of Auckland in New Zealand. In fact, as chronicled in this piece for the World Economic Forum things may be so bad in an open plan office that you are really better ‘working remotely with your cat for company’. Ouch.
For many of us, the open plan model has existed for pretty much as long as we have been in the workplace. Once upon a time (if you believe the scenario presented in shows like Mad Men which take place forty or fifty years ago), even fairly junior employees got actual offices with walls and doors and secretaries that sat outside them. Quaint. These days, the reality for the majority of office workers, even up to high middle management, is that you get some form of cubicle, or maybe a desk in an open plan office. ‘Hot desking’ – not having your ‘own’ desk with a space to put your kids’ pictures on or a drawer in which to stash your shoes in the winter – is also quite the trend these days. The reasoning is that we-are-all-friends-here and that it is more efficient to just grab whatever desk is available than to have designated spots for everyone.
The Auckland University researchers found a long laundry list of ‘employee social liabilities’ faced by those working in collaborative spaces. Distractions obviously topped the list, but as well working in close physical proximity to others apparently also results in distrust and negative relationships. If you work close to someone you are apparently less likely to be friends with them, and you are more likely to think you are being well supervised by the manager who also works in proximity. As for the idea of free and creative flow of ideas, that was not borne out by the data either.
The findings, which were based on a survey of 1,000 working Australians, are interesting and well worth pondering. These days, companies are struggling with how much to let employees work off-site as compared to in the office. For some workplaces everyone has to be present every day, but that is not always the case. Still, even when technology allows people to work elsewhere, there is often a deep distrust that they are going to get enough done. Out of sight of their supervisors, goes the theory, and they are probably cruising the internet or hanging out at Starbucks. The reality, however, is that they may be getting more done than if they were at work in their cozy little cubicle web. Having their own offices, working with just one or two others, or working from home apparently produce more and better work than being in open plan offices.
No one is arguing that workers should never see each other or that they get more done if they spend most of their time isolated from one another. Many studies have shown that a bit of contact, whether in meeting rooms or around the photocopy machines, can yield great benefits. That is the real argument against allowing people to work from home although clearly there is room for something middle ground between the all-or-nothing model. Given that forcing everyone to hang together when they are at the office is apparently not yielding a lot of economic benefits, the researchers suggest that noise-cancelling headphones or walls of plants may be a good idea for some offices. As well, some simple courtesy towards co-workers might not go amiss.
It is an important thing for companies to get right. In the current economy, there is a huge need for productivity gains, as well as for keeping costs lean. That could mean cutting down on office space and shoving everyone together, or it could mean letting people work from home more frequently. It could even mean putting up some walls, with the acknowledgement that sometimes good fences do indeed make good neighbors.
Maybe I’m late to the party, but it was only recently that I heard the phrase ‘side hustle’. Apparently it has been around a while: way back in 2013, Entrepreneur.com tacked up an online definition, calling ‘a way to make some extra cash that allows you flexibility to pursue what you’re most interested in’. It can also be your true passion – a chance to delve into fashion, travel or whatever it is you care about the most without quitting your day job. More recently, it has been attached to the Millennial Generation who apparently have the right mix of creativity, tech savvy and financial need to makes the Side Hustle something of a given. In fact, the Side Hustle may work well with another trend, that of people being unhappy with their work lives. As it turns out, having a second, compelling career may make you more tolerant of your day job.
This article from Quartz spells out the way that it works. Quoting the author of a book called The Happiness of Pursuit, Chris Guillebeau, the author makes the point that in this day and age there is no need for ‘occupational purity’. That’s a new phrase to me too, but I like it. For so many people, the skills they now have and the jobs they now occupy will have to be re-thought every few years in the future. That is true for all workers – think about unemployed 50 somethings who need to think up new careers – but especially true for those just entering the labor force. Telling a 20something to pick a profession and assume they will be working at it for the next four decades or so seems like poor advice to me.
And so you have the Side Hustle. It has always existed for some out of economic necessity: for those pursuing a dream (wanting to be a rock star say), their reality also may mean being a barista or whatever. Which one of those jobs is the side hustle is a matter of opinion. The new-style Side Hustle is the one where the full time accountant sings in a rock band on weekends, or the customer service rep makes jewelry and then sells it on Etsy after hours. The singing accountants have always existed of course, as have the jewelry makers. What has changed is the technology that allows the jewelry to reach a wider audience – and perhaps as well the attitudes that now say it is a good idea for the accountant to channel his inner-Steve Tyler.
So why does it make people happier to have that side hustle? Well, clearly it makes them less invested in your regular job, which as we all know is hardly to be a job-for-life these days. More simply though, the side hustle can just make people happier and more excited about life in general, and that no doubt will have positive spillovers for their regular jobs, however mundane they might be.
While I like the tone of the Quartz article and do not disagree that having a richer life makes you happier, I think that we are going to see side hustles rise at an exponential rate, but for reasons more related to economics. These days, more and more companies are getting less and less committed to having huge numbers of people on the payroll. That means we are moving to a world with a mix of full-time work, side hustles, freelancers, part-timers and temporary workers. A lot about that mix makes those who study the economy and the labor market uneasy and worried about what that means for income security and economic growth, and I would not disagree that those are valid concerns. If those ‘new work world’ workers figure out how to make themselves a little happier amidst all of that, that might constitute a benefit that is harder to quantify but is a benefit just the same.