Labor Efficiency: The Next Great Internet Disruption

We need to begin looking deeply into this trend and how it is affecting people

For more than a decade now, the Internet has done a great job of making things in our day-to-day lives more efficient by easily connecting parties who can have a mutually beneficial personal or business relationship. This same idea is now on the verge of disrupting labor and changing the definition of employment as we know it.

The Rise of the Independent Worker.

Over the past couple of years, there has been a huge increase in the number of workers who operate as some sort of independent, free-agent contractor or consultant. Though the numbers vary greatly, the consensus seems to be around 20 percent of the U.S. workforce, and growing (with some estimates up to 50 percent by 2020). Think about that, one in every five workers are currently unattached to any one company!

Expert explanations for this rise vary as much as the number itself, but I believe the two most important factors, by far, are:

  1. Technology. Never before has a physical space represented less. An office building, in and of itself, often holds no more tools necessary to perform a job than someone can carry with them. Computers, phones, the cloud, and an overall connectedness has produced an environment where location is becoming less and less relevant. Not having to rely on someone else for the tools of productivity has given substantially more people than ever before the ability to be an independent worker. (No doubt there remain exceptions).
  2. The economy. The recent recession has resulted in layoffs and very high unemployment numbers. Further, there is a whole new generation coming of age believing that long-term employment at one company is a remnant of the past. Whether this is because they have read about layoffs, experienced it with their family or friends, or any other reason — many people, regardless of age, no longer feel comfortable or stable at a traditional job. So the economic conditions have forced some into an independent role by necessity, and it has motivated a countless number of others to explore work options outside of the traditional job.

Armed with the technology and connectedness, people are setting out on their own in record numbers. But where are they finding work?

Changes in How Companies ‘Hire’ Labor.

Labor efficiency is about having the right workers for the tasks which need to be accomplished. This includes tasks of all types and in all areas. More than ever, this is being accomplished by having lean, flexible workforces which come and go as projects demand. Increasingly, employers are parsing up tasks and having temporary, project-basis workers complete the tasks.

Take one gigantic U.S. company, Caterpillar Inc., who recently reported that they hired almost 30,000 flexible, contingent workers in the last quarter of 2011. By almost every study, companies of all sizes are emphasizing a lean workforce, and hiring on project-basis engagements more and more (though not all are as drastic as Caterpillar). This trend is not limited to factory workers or computer programmers or any one group — workers in every industry and profession are seeing this increase.

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