In the MBA class I teach, there are three specific reasons why I tell my students to stop looking for a job.
The first is that full time jobs are disappearing. The private sector used to create and add full-time jobs to the economy at a rate of 2-3% per year. In 2000, during the dot-com crash, that rate fell below 2%. In 2008, the rate of job creation fell even further—below 1%—and has remained at that historically low level through 2015. Economists Larry Katz and Alan Krueger found that all of the net employment growth in the U.S. over the past decade came from alternative work arrangements, not full-time jobs.
Another cause of the decline in jobs is that our engine of job growth has stalled. Young businesses, not small businesses, as is widely believed, create the most new jobs. The growth of new young businesses is at historically low levels and the businesses that do start are creating fewer jobs. Startup businesses used to create about 3 million jobs a year in the U.S. but that has declined to barely over 2 million per year.
Instead of creating jobs, companies are increasingly disaggregating work from a job. There are fewer full-time journalist jobs available anymore, for instance, but there is plenty of freelance reporting work. Similarly, that former director of marketing job has now morphed into the work produced by a social media contractor, an outsourced PR agency, and a marketing strategy consultant. Where there once were jobs, in the gig economy there is now just work.
The advice I give my students is to look for plentiful work, not increasingly scarce jobs.
The second reason I tell my students to stop looking for a job is that full-time employees are becoming the worker of last resort. Instead of preferring full-time employees, many firms now actively avoid them, and look for ways to build their business models and run their firms with as few full-time employees as possible.
Full-time employees are the most expensive and least flexible source of labor, qualities that make them unattractive to corporate America and Silicon Valley startups alike. Our policymakers have perpetuated an outdated labor market structure in which companies pay the highest taxes for full-time employees, and are required to provide certain benefits and protections only to full-time employees, which means that hiring an employee costs significantly more (30-40%) than an equivalent independent worker. In addition, both the public and private capital markets have a strong track record of rewarding companies with higher valuations when they either limit or reduce the number of employees. Not unexpectedly, the trends of hiring part-time workers and independent contractors, automating, and outsourcing have become persistent, widespread, and are growing.
That doesn’t mean that full-time employees will disappear entirely — they won’t. There will always be the need for a small, core group of essential workers, in-demand talent, and senior management roles that companies will want to fill with full-time employees, for reasons of quality, consistency, and continuity. Beyond that core, however, companies face powerful economic and market incentives to keep full-time employee headcount low.
The best strategy my students can follow is to prepare themselves to be independent workers, not full-time employees.
The third reason is that it’s clear that traditional work isn’t working for most Americans. Job security no longer exists, and the good wages, generous benefits and secure retirement that used to be guaranteed with full-time employment are in decline or have disappeared. Nearly 70% of Americans aren’t engaged at their jobs, according to Gallup. In contrast, a recent McKinsey survey of more than 8,000 workers found that independent workers are more satisfied with nearly every aspect of their working lives than employees.. A Future Workplace/Field Nation survey of 959 freelancersfound that 74% prefer being an independent worker and have no intention of returning to a full-time job. Inherent in the gig economy is the choice, autonomy, flexibility, and control that drive worker satisfaction, but which full-time employees often lack.
Read the full story at Why I Tell My MBA Students to Stop Looking for a Job and Join the Gig Economy