Tag Archives: Intuit

What Trump Means for Job Creation

As the election results rolled in, it became increasingly clear that America — and the world — would never be the same. The American people overlooked all of Republican nominee Donald Trump’s faults and elected him to office in the belief that he will fix the nation’s deep-seated problems of inequity and injustice. And they rebelled against the business interests and corruption that they believed Hillary Clinton represented.

Trump’s victory was enabled by technology — everything from his use of social media to Clinton’s email scandals to Russian hacking. But advancements in technology and how they reshape our economy may also keep him from delivering on some of the major promises that made him so popular during the campaign season.

The truth is that, over recent decades, the rich have been getting richer. Power has shifted to Wall Street and business. Globalization has caused the loss of millions of jobs in the U.S. Some white Americans have also been terrified at the changing complexion — and values — of the country. Trump very smartly played to these fears and promised his supporters what he knew they wanted: greater economic opportunity by bringing back jobs shipped overseas.

See also: How Technology Breaks Down Silos  

But those jobs, many in the manufacturing sector, are increasingly done by technology. Machines are learning to do the jobs of manufacturing workers; artificial intelligence-based tools are mastering the jobs of call-center and knowledge workers; and cars are beginning to drive themselves. Over the next decade, technology will decimate more jobs in many professions, inequality will increase and more people will be disadvantaged.

Some robots already cost less to operate than the salaries of the humans they replace, and they are getting cheaper and better. Boston Consulting Group predicts that, by 2025, the operating cost of a robot that does welding will be less than $2 per hour, for example. That’s more affordable than the $25 per hour that a human welder earns today in the U.S., and even cheaper than the pay of skilled workers in the lowest-income countries. Trump may be able to keep immigrants out, but how will he stop the advance of robots?

Uber and many other companies are working on developing cars and trucks that don’t need a driver in the driver’s seat. According to the American Trucking Associations, approximately 3 million truck drivers were employed in the U.S. in 2010, and 6.8 million others were employed in other jobs relating to trucking activity, including manufacturing trucks, servicing trucks and other types of jobs. So roughly one of every 15 workers in the country is employed in the trucking business. According to the U.S. Bureau of Labor Statistics, roughly another 300,000 people work as taxi drivers and chauffeurs. We could be talking about millions of jobs disappearing in the early 2020s.

And then there is the “gig economy” that has some businesses shifting toward part-time, on-demand employment. Uber has already done this to taxi drivers, and other technology companies are doing it to a wide range of jobs. A study by software company Intuit predicted that, by 2020, 40% of American workers will be independent contractors, temps or self-employed, and that full-time jobs will be harder to find. We are talking about 60 million people in this category. The problem is that not only do such part-time workers lack reliable full-time jobs and sick pay, but they are not entitled to health insurance and longer-term benefits. Even if Obamacare continued, they would not be able to afford it.

The remedies that are being proposed are to impose trade barriers. But closing the doors to foreign trade won’t bring jobs back. It will only slow the global economy and hurt American exports, thereby shrinking the U.S. economy and accelerating job loss.

See also: Technology and the Economic Divide

The silver lining to this dark cloud is that these technology advances also provide solutions to the problems of humanity, such as a lack of energy, food, education and healthcare. The production costs of clean energies, such as solar and wind, will keep falling until they are almost free. With artificial intelligence-based applications, we will have digital doctors advising us, and advances in medicine will allow us to live longer and healthier lives. Robots will do our chores; digital tutors will teach us skills. It becomes possible to provide for everyone’s needs. But all of this requires understanding the cause and effects of inequity and applying more carefully the technologies that are going to change the equation.

We now need a nationwide conversation on how we can distribute the prosperity we are creating. We must create equity and fairness in our legal, justice and economic systems. And, recognizing that technology will disrupt entire industries and wipe out millions of jobs, we must ease the transition and pain for the people most affected and least prepared.

economy

3 Questions About On-Demand Economy

Last year, as Airbnb’s $25.5 billion valuation surpassed Hilton Hotels’ and Uber became the world’s most valuable privately owned company, it became clear the on-demand economy is no passing fad but is, in fact, a force to be reckoned with.

The on-demand marketplace is growing at a dizzying pace as new companies emerge daily, helping connect a diverse workforce of tradespeople, licensed professionals and unskilled laborers to a market of willing buyers through the company’s platforms. Intuit projects the population of U.S. on-demand workers will more than double by 2020, which means that, if you can’t already summon a doctor, lawyer, babysitter or dog walker right now via an on-demand app, then sit tight—they’re coming soon to a smartphone near you.

But the scale and speed of the on-demand economy’s growth also means policymakers, regulators, insurers and on-demand companies will have to huddle quickly to resolve the issues that arise with this expanding marketplace and its workforce. Here are the three key questions we need to address immediately:

  1. When the safeguards of the traditional corporation no longer exist, how do we protect the on-demand workforce?

Uber is currently appealing a case it lost against the California Labor Commissioner last summer regarding whether a driver is an independent contractor or an employee. While establishing this distinction is a critical issue, we still need to address some big questions about the vast self-employed workforce in the on-demand economy.

A good primer question: How do we get the information we need to make informed policy decisions? Independent contractors in the on-demand economy are classified as part of a larger pool of temporary, seasonal, part-time and freelance workforce called “contingent” workers. A 2015 U.S. Government Accountability Office report cites this workforce as somewhere between less than 5% and more than one-third of the country’s overall labor pool. The big gap in this measurement is because it depends on how jobs are defined and on the data source; the broad definitions and lack of clear data on this workforce makes on-demand independent contractors and their needs tough to track and evaluate. How much of this workforce depends on this income for supplementary purposes as opposed to relying on this income as a full-time living?

According to Intuit’s study, contingent workers will make up 40% of the U.S. workforce by 2020. That’s a lot of people working without the safeguards provided by the traditional corporation—guaranteed minimum wage, steady income, unemployment insurance, healthcare, workers’ compensation and disability insurance. What kind of safety nets do we need to put in place to protect this workforce? And what does this growing workforce mean in terms of policy development? How does the social contract change?

  1. How should we regulate hybrid commercial/consumer activities?

A sticky issue surrounding the on-demand economy is how to regulate commercial activities that are conducted by individuals rather than by traditional businesses.

While some argue that an Airbnb property should be as heavily regulated as a hotel if a host is accepting payment for lodgings, drawing an apples-to-apples comparison between the two is a challenge. For example, treehouses, yurts, igloos and lighthouses were among the top-10 most desirable vacation destinations on Airbnb shopper’s wish lists last year, some fetching upward of $350 a night. Who exactly should you call about making sure the igloo is up to code before guests arrive?

Some of the services and products offered by the individual through on-demand platforms have never been available through traditional enterprises; they’re unique, intimate experiences and, before on-demand platforms made them accessible, were difficult to find. We’re entering a new frontier where many tourists covet a culinary experience they can book at a local’s house via apps such as Feastly or Kitchensurfing rather than a fine dining restaurant, or they prefer offbeat accommodations booked through Airbnb to a 5-star hotel. We can’t assess how to best regulate these individual commercial activities until we have more data and understand the risks. How do we collect that data? How do we ensure the safety and protection of the individuals operating and participating in these activities until we have the information necessary to adequately regulate them?

  1. How can a square peg workforce function in a round hole system?

Mortgages, loans, credit cards, leases … these are just a few of life’s niceties (or necessities) that are challenging for an on-demand independent contractor to secure. Our current financial services, systems and policies were built to work for employees who collect a regular paycheck as well as freelancers who have reliable cash flow through long-term contracts and monthly retainers. Independent contractors working through on-demand platforms tend to rely on short-term gigs often generated through multiple sources, and they have difficulty predicting their day-to-day income, never mind their annual net or gross.

This isn’t a niche workforce. If independent contractors represent 40% of the U.S. working population in 2020, they’re significant drivers of the economy. They generate income and pay taxes; they need homes, cars, work equipment and all the other stuff that keeps their businesses running and makes their lives worth living. We can’t dismiss their needs, because we are measuring their 21st century income with a 20th century yardstick. How do we retrofit our round-hole systems to include this square peg workforce?

If we want a thriving economy in which people enjoy the benefits of the on-demand economy, and doctors, lawyers, drivers, plumbers and everyone else serving the on-demand marketplace have equal opportunity to succeed, then the time to talk about these questions and issues is now.