Demonstrating once again that certainty and knowledge are inversely correlated:
One camp is absolutely certain federal workers are paid twice what private-sector employees receive. Another camp is absolutely certain they’re paid 24% less. The first is outraged at how overpaid federal workers are. The second is outraged at the propaganda leading to the outrage of the first.
As FactCheck.org reports, the studies cited by each camp in support of its position are so flawed as to be useless. The last credible comparison was conducted in 1990.
And so, as is so often the case, ignorance is the only honest position a rational person can profess.
It’s as Mark Twain said: “It ain’t what you don’t know that gets you into trouble. It’s what you do know that ain’t so.”
Speaking of which, my vote for the Stupidest Linguistic Construction Award goes to this popular jewel, “The fact is, next year thus-and-such is going to happen.” I don’t know much, but I’m certain of this: By definition, a prediction isn’t a fact because … ach, crivens! Anyone who needs this explained is beyond hope.
Keeping that firmly in mind …
Last week’s column started a discussion about the future of work in the United States. It made a case for the higher value W-2 employees bring to well-led, competently managed companies compared to their 1099 contracting counterparts.
Not all contractors loved the comparison, and I don’t blame them — the view was, while as accurate as I could manage, incomplete. Another, and perhaps better way of thinking about this might be that employees are part of the enterprise infrastructure. Like most other investments in infrastructure, investing in employees trades increased scalability for reduced flexibility.
The incremental cost of servicing steady business growth is lower when the work is performed by employees than when performed by contractors.
The trade-off: When business volume fluctuates, either cyclically or unpredictably, it’s easier to add and shed capacity through the use of contractors (and their close cousins, temporary employees).
That’s the short version. For a more complete view, read “Building a sourcing strategy,” KJR, 3/29/2004).
Which brings us to you, not as someone who makes business policy but as someone who needs an income. You need to plot a course. To do so rationally you need a reasonable view regarding the future of work in the United States. (If you participate in a different employment marketplace, you’ll have to judge its similarities and differences for yourself — I’m trying to avoid the inverse correlation between knowledge and certainty noted above.)
To start, we can’t avoid taking a look at some long-term trends in the U.S. economy, the first of which is our three-decades-and-counting industrial policy, which, being as factual and objective as I can manage, has encouraged “financial innovation” and investment over technological innovation and investment.
By which I mean tax incentives and relaxation of the regulatory environment have encouraged a steady shift of capital investment and a lot of our country’s talent from inventing products with tangible value and building factories to manufacture them, to inventing and selling financial derivatives that are portfolios of debt obligations or portfolios of insurance policies hedging against debt defaults … investments that are based on debt and as decoupled as possible from any underlying assets with tangible value.
At the same time our economy has restructured itself so as to increasingly replace equity with debt on corporate balance sheets.
(These insights come from Michael Lewitt’s The Death of Capital (2010). It’s more than a bit ideological, excruciatingly dull, and overly focused on persuading the reader that Michael Lewitt is immensely erudite. Reading it is worth the investment nonetheless, because it peels the onion a lot more than any other analysis I’ve encountered that deals with our ongoing financial crisis.)
This matters to you, when planning your career strategy, because with an economy built on multiple layers of debt, volatility will be the norm, not an aberration.
And employers who expect volatility will prefer contractors to employees.
As noted above.
These are my premises and conclusions. They aren’t facts. You don’t need to agree with me on either. You should reach some conclusion about this subject, though. Anyone who doesn’t will end up with a career strategy built on mental habits instead of a clear view of the situation they’re planning for.
So there it is. The view from here is that you should build your career strategy on the expectation that employers will increasingly shift their emphasis from employees to contractors.
The devil is, as always, in the details, though, and that little Luciferian foray will have to wait until next week.