Session Description: Will workers bear the brunt of a more efficient society?

Below is an excerpt of The Automated On-Demand, Gig, Sharing, Itinerant, and Uncertain Future of Work panel at Techonomy NYC. The complete transcript can be viewed here.

Peter Petre: In a way, we’ve already started the conversation on our topic, which you see here. And that’s simply a multi-adjective way of explaining how this subject of the nature of work and the future of work has blown up like a giant dust storm and is taking over much of the conversation. We’ve already spent time on it this morning. Arun Sundararajan is of the NYU Business School. He’s one of the world’s leading experts on how digital technology transforms business, government, and society, and he actually wrote the book—he wrote the book on the sharing economy, on Platform, Lyft, Airbnb, TaskRabbit. It’s a book called “The Sharing Economy” and I commend it to you.

Diana Farrell was the head of the McKinsey Global Institute in the early 2000s, and then when the great recession hit and Barack Obama was elected, she was recruited to the White House as a top advisor on economic policy during the crisis years, from 2009 to 2011. And now she’s the founding head and CEO of the JPMorgan Chase Institute. So welcome, Diana.

And Andrea Glorioso is the European Union’s liaison to Washington on Internet and data and communications policy. He’s expert in intellectual property and IT law and data security. And what this means is that Andrea has a unique dual perspective on not only this weird workaholic madhouse we call the United States, but also technology and labor in the EU, and we’re going to go to Andrea for some perspective.

But the way I want to start out is—we’ve talked about labor a little bit in both the conversations you’ve heard so far this morning. But I want to step back and set the big context, which is that since the great recession here in the U.S., the U.S. economy has seen more than 80 months of job growth. More than 80 months. And the economy is actually now near what the Fed likes to call full employment, which is like 4.2 percent. So taken that way, the picture looks really positive. And the two questions I want to start our discussion with today are 1) during this time of recovery from the recession, what have we learned about technology and jobs and the future of work, and 2) what are the numbers that we’re hearing not telling us?

So I’m going to start with Diana because one thing I forgot to mention is, in the backs of your magazines, you will find an article by Diana about some of the statistical work that the JPMorgan Chase Institute is doing and this will dovetail with that.  So Diana, please.

Diana Farrell: Great. Let me start with that. I think we all were very surprised as economists about kind of the narrative that was out there in general that the economy was the driver of a lot of the anxiety that voted for change and otherwise. Because according to most of the traditional measures—you mentioned unemployment, but also in the last couple of years, finally we’ve actually seen pretty healthy income growth, which has been a new phenomenon. We’ve seen the concern around labor force participation abate a little bit, the concern around long-term unemployment abate a little bit. And so as an economist, you could sit and wonder, what is the disconnect? And I think some of the work that we’ve done really informs that question in an important way.

So what we have is—anonymized, obviously—a window into people’s financial inflows and outflows. So think about their income coming in, their expenses coming out, and we get to track this on a high frequency basis, which is what the aggregate data don’t tell you.

Petre: High frequency means like every time I pull out my Chase credit card, that’s the frequency?

Farrell: That’s the frequency. We’re usually doing things on a monthly basis, but yes, that would be in effect the raw data coming in. But if you survey people and you ask them, “Do you prefer income growth or stability?” you know, whether you’re talking about Pew [Research Center] or CFSI or any number of people who track this, they’ll all say people much favor stability over income growth. So what did we find when we put a lens on people’s income and expenses? We find extraordinary levels of volatility. And so month to month, 55 percent of Americans are seeing a potential swing of up to 30 percent in their income or 30 percent in their expenses. Now, that is really hard to grapple when you just look at aggregate year on year data. And that’s what you begin to understand about the anxiety that people feel because their income is often moving in ways different than expenses. Sort of in a traditional way, they don’t co-vary. If your income dropped and your expenses dropped with it, maybe not such a big problem. But in fact, we see income drops at the same time that we see very large increases in expenses, and the result is, if you think of it as a stress test on households, households are often left without a liquid buffer to withstand that volatility and that’s a source of huge anxiety.

The paper that you mentioned, Peter, in the Techonomy piece today, which is really a very nice collection of articles, focuses on expense volatility. So four out of ten—well, let me say one more thing about the volatility issue. People who track low income communities have been talking about this for a long time, that low income people get in a lot of trouble because they have a liquidity trap—

Petre: It’s paycheck to paycheck too.

Farrell: Exactly, paycheck to paycheck. I think our findings were surprising in that this is true for all Americans. Quintiles one, two, three, four, five, all are facing this kind of volatility—

Petre: Well, let me interrupt you. What does that mean, that people don’t have jobs anymore—and this kind of leads into something I wanted to ask Arun to talk about.

Farrell: Well, no, I think people do have jobs but they’re any combination of different work schedules that lead to different hours worked, the way the calendar works; that some months have five Fridays, some months have four Fridays but people get paid on a biweekly level creates volatility. Tax refunds can create positive volatility. But again, volatility that doesn’t always get matched with expenses kind of discipline.

So people still have jobs. You mentioned the unemployment rate. For those people who are seeking jobs, they have jobs. People are supplementing traditional jobs with gig economy-type of jobs, and our work focuses primarily on the online platform economy. I would note that for most people, that isn’t their primary source of income. Most people are really just supplementing their income through that.

But the nature of work is changing. So I think too much of the discussion even earlier this morning was focused on the binary question of will we have jobs or not. I share the optimism that we will have jobs. But there’s no question that the nature of jobs is changing and that this volatility point I talked about is here to stay. It’s not going to go away. If anything, it’s probably going to be exacerbated as we move towards independent work and other vectors.