Overall, employment patterns have shifted — in the direction of increased employment by big firms and a declining role for small businesses and the self-employed. Since 1993, the earliest year for which there is comparable data, the percentage of workers employed by small firms (one to four employees) has fallen slowly, but fairly consistently, from 5.6% to a bit under 5%. Meanwhile, the percentage of the workforce employed by firms with 1,000 or more workers has risen from 35.6% to 39.2%. Average tenure with the same employer has also risen in recent years, going from 4.9 years in 2004 to 5.5 years in 2014. The percentage of workers over 25 who have been with their current employer for more than a decade has also risen consistently, from 30.6% in 2004 to 33.3% in 2014. The percentage of people who are self-employed has steadily and consistently declined over the past several decades, falling from a high of about 7.3% in 1991 to 5.3% in 2015.
I wonder how this breaks down by industry. I would bet that the market share of small businesses has been declining in medical care, restaurants, and general retail. I assume that small farms have continued a downward trend.
Personal coaches are growing in number.
The best ones are probably worth what they charge. How to evaluate them, IDK.
Does this take into account rise in free lancing?
Presumably Uber driver isn’t considered self-employed with these numbers.
The author claims that many things technically freelance and used to buttress the “unstable employment” argument ought to be considered more traditional employment, e.g. full-time contract employees who sign W-2s. These certainly FEEL more like good old fashioned jobs than part-time gig work.
This may have implications that would lower the strength of the local knowledge and calculation problem arguments given current economic trends.
It might be possible to resuscitate Galbraith’s argument for the Internet era, that large standardized orgs with excellent and very granular economic sensors (e.g. online activity tracking ) intelligence and cheap and powerful computational capabilities, big legal compliance departments, and massive scalability really do now have an edge over the little, local entrepreneur or arbitrageur.
So once the local, little guy had the advantage in detecting and exploring local knowledge that escaped the attention of the big guys. But now the big guys have information surveillance systems and techniques that are like quasi-panopticons and economic all-seeing eyes of Sauron, that are as least as good as what the little guy can have.
More speculative and not thought through: maybe it’s even worse, they may generate, provide and control the market reconnaissance info used by the little guys in similar ways these days, and like big investment houses, keep the best opportunities for themselves.
If we assume the dramatic shortening of tenure over the past 50 years was a response to an antiquated form of corporation, I am not sure an increase in that trend in this decade is necessarily a negative. I work for one of those big companies, and easily the biggest ever in my career (which included owning my own consulting company with 12 sub-contractors at one point). Things that come to mind:
– Corporations have found ways to give employees the entrepreneurial experience
– Equity / pay / retention systems have evolved to compete with new offers from outside
– (As another commenter mentioned) big data lets big companies act like small companies in some ways, and some employees of big companies are focused as “owners” on small parts of the whole (I’m in this situation)
– A holistic view of an employee as an asset anywhere in the org, and orgs big enough to offer multiple opportunities for conscientious workers improves retention
– A high focus on feedback and performance reviews keeps everyone engaged, and provides early warning on attrition risk
– Multinationals with cloud operations and tons of video conferencing can bring the office to a small city instead of forcing you to relocate to their big city (I’m in this situation too)
I understand the importance of mobility overall, but from where I’m sitting it feels that big companies are offering a different deal than they did 20 years ago, and that must be considered in any conversation about the situation.
Average Is Over or New Commanding Heights? That is the question.
Here is an HBR article that strongly suggests college tuition is holding back entrepreneurship. Not for students but for parents who have to pay for it. Can’t leave the corporate job because of that future liability.
Not sure if the effect they measure is that high, but thought it interesting.
Thoughts?
https://hbr.org/2016/07/research-want-more-entrepreneurs-make-college-cheaper?utm_campaign=HBR&utm_source=facebook&utm_medium=social
Looking at the office I work at, I have really seen the number of experienced employees increase and our office is having trouble finding young talent. We have not have a major layoff in years and I
1) Why is more gig economy a good thing? The US economy has always had variations of this over the years and it does not seem to be increasing long term. Why is job instability so good for the US economy?
2) In terms of TBTF and other the increasing size of multi-nationals (esp. with the complaining about crony capitalism), I think we are forgetting the value of economies of scale. It is exceptionally powerful in the long run.
3) I find it exceptionally contradictory that most successful internet businesses become so monopoly/oliogopoly really quick. (The barriers to the internet are really small and rely on relatively little capital.)
The barrier to entry for many internet based companies is the network effect. You go to ebay for online auctions because that’s where most of the people are so more people go there making them larger… Same with Facebook. Uber and Lyft are fighting for market share now.
I’m not sure I agree that restaurants are moving towards larger corporations. Chains have been losing market share to local places as far as I know.