Baldwin-Wallace College Economics Blog ... thinking out loud ...

Friday, May 4, 2012

...neo-hunter/gathers

By kay.e.strong

[You may wish to read the two previous blogs on the future of work: …the Class of 2012 and book a space before starting this one.]

The very nature of work and workplace arrangements, worker compensation, as well as the size, composition, and skills of the workforce are being challenged by the forces which have already disrupted other aspects of life. Smart machines are automating both basic and highly specialized routine procedures. Atomizing jobs are allowing deep specialization, propelling productivity, cutting cost per unit and improving product quality. A bachelor’s degree replaces a high school diploma as the minimum for entry into the job market. Global interconnectivity puts diversity and adaptability at the heart of organizational operations, foreign workers are equally attractive to domestic businesses, and globally distributed work is becoming routine.

So, what does this mean for future workers? Workers are cut loose from direct supervision, a daily clockwork routine and permanency of income. In effect, workers become a new class of hunter-gathers foraging for daily sustenance. Success will necessitate—to say the least, a new set of foraging skills!

The Institute for the Future (IFTF), a highly respected forecasting organization, published Future Work Skills 2020 identifying not only the forces disrupting work but also the skills to navigate. While I encourage you to access and read the entire report, I highlight the ten skills below.

Sense-Making: ability to determine the deeper meaning or significance of what is being expressed
Social Intelligence: ability to connect to others in a deep and direct way, to sense and stimulate reactions and desired interaction
Novel & Adaptive Thinking: proficiency at thinking and coming up with solutions and responses beyond that which is rote or rule-based
Cross-Cultural Competency: ability to operate in different cultural settings
Computational Thinking: ability to translate vast amounts of data into abstract concepts and to understand data-based reasoning
New-Media Literacy: ability to critically assess and develop content that uses new media forms, and to leverage these media for persuasive communication
Transdisciplinarity: literacy in and ability to understand concepts across multiple disciplines
Design Mindset: ability to represent and develop tasks and work processes for desired outcomes
Cognitive Load Management: ability to discriminate and filter information for importance, and to understand how to maximize cognitive functioning using a variety of tools and techniques
Virtual Collaboration: ability to work productively, drive engagement, and demonstrate presence as a member of a virtual team

To prepare the mind for change is, I believe, the first step on the journey into the unknown. So, last week I lead my microeconomics students into the future of work 2020. On their final exam students had an opportunity for self-reflection on the challenges that lie ahead. They worry that, perhaps, they are not being properly trained for the emerging work world. They lamented that their personal habits, self-discipline, self-starter ability, and time-money management skill, may not be sufficiently strong to assure success as contingent workers. They want the path of connection to communities-of-work in a brokered world to be illuminated. Some expressed concern that post-secondary institutions may not be doing enough to prepare them for their journey into tomorrow. They offer some suggestions: create deeper specialization within the major, diversify across programs and disciplines to assure accumulation of more skills and knowledge, and offer practical opportunities to hone entrepreneurial skills that will help bridge the gap from permanent worker to contingency status. Students recognize that proficiency, as well as, comfort with digital communications technologies is a new workplace necessity.

Our future workers have spoken. What did we hear…better yet, what will we do to enable their success. Truly, another WAIT-T (we’re all in this together) question.

When we try to pick out anything by itself, we find it hitched to everything else in the Universe. –John Muir, 1911.

Kay Strong, Ph.D., Southern Illinois University, M.T., University of Houston, M.A., Ohio University; Associate Professor at Baldwin-Wallace College; Areas of expertise: international economics, contemporary social-economic issues, complexity and futures-based perspectives in economics. E-mail: kstrong@bw.edu

Sunday, April 22, 2012

…it’s the interest, stupid!

By kay.e.strong

That is, the compounding interest rate on student loans—not the debt load per se that’s killing college graduates and the economy!

OWSers got it partially right with their refrain “student debt is too damn high,” but politicians trying to jam the interest rate to 6.8%—double its current rate—are all wrong!

Student loans weigh in at a hefty $1+ trillion dollars, an amount currently in excess of the collective value of American credit card debt! A trillion dollars in student loans with compounding interest at rates at or above 6.8% annually! A banker's dreams, a college graduate's nightmare.

The Minnesota Republican chairing the House Committee on Education and the Workforce has asserted that “[w]e must now choose between allowing interest rates to rise or piling billions of dollars on the backs of taxpayers.” (Source: http://www.nytimes.com/2012/04/20/education/student-loan-interest-rates-loom-as-political-battle.html)

What a simpleton comment…given the billions of taxpayer dollars being doled out to profitable business interests!

Let’s start with the oil industry. In 2011 oil raked in $4 billion in government subsidies. What it bought them: historic profits—$80 billion dollars for the three largest U.S. oil companies. Go Big Oil!
(Source: http://www.whitehouse.gov/blog/2012/03/29/repeal-subsidies-oil-companies)

Moving on to the agricultural industry. Farmers have been milking the taxpayer since 1933. In 2012 farmers pocketed some $5 billion dollars in direct income payments. What it bought us: “high-fructose corn syrup, factory farming, fast food, a two-soda-a-day habit and its accompanying obesity, the near-demise of family farms, monoculture and a host of other ills.” (Source: Don’t End Agricultural Subsidies, Fix Them) And that doesn’t even begin to account for the damage that ensues from our dumping of millions of surplus commodities on world markets….bankruptcy of struggling foreign farmers, decimation of their local markets and intensified poverty and widespread global malnutrition. Let’s add insult to injury: some farmers were actually paid NOT to farm at the tune of another $2.5 billions (2009)!

Student financial aid packages differentiate between subsidized loans awarded on the basis of financial need with interest being charged when repayment begins and unsubsidized loans with capitalized interest accruing from the date of disbursement, i.e., interest compounds during the entire life of the loan. Unsubsidized loans do not require demonstration of need.

Every post-secondary student faces a federal loan limit—both annual and aggregate. For example, a dependent undergraduate student in her first year is limited to $5,500 loan of which no more than $3,500 may be in an interest subsidized Stafford loan. Pit that against the $8,533 average annual pricetag for undergraduate tuition, room and board estimated by the National Center for Education Statistics for 2009-10. (Source: http://nces.ed.gov/fastfacts/display.asp?id=76). How a student meets her remaining educational investment obligation is the student’s problem.Many end up hostage to a commercial loan—an even more untenable situation. An authentic "reverse" Robin Hood ploy—rob from the poorest of the poor, our children, and give to the banking industry—the nation's most recent charity case.

The Congressional Budget Office estimates that freezing the current rate on subsidized Stafford loans at 3.4% will cost $6 billion a year on a program that consistently generates a net profit which is fed into the Pell Grants program to assist low income students.

Contrary to political simpletons, not only should the interest rate not be doubled in July but the government should provide every individual in the country willing to tackle a post-secondary program an interest-free loan! No, better yet, the government can flip the oil and agricultural business subsidies switches off and the human capital investment subsidy switch on. If we’re going to compete in the world of tomorrow, we need to up our investment ante in our future labor force.

Should Congress find that solution too politically distasteful because it “simply kicks the [wrong] can down the road” then let me advocate another.

Each year the Federal Reserve, a for-profit entity, voluntarily gives the US Treasury $80 plus billion dollars of its own earnings. As the real steward of the economy, the Federal Reserve is in a prime position to bankroll the educational investment needed to move this nation’s economy into the 21^st century. Allowing post-secondary students to line up for a direct loan from the Federal Reserve is a suggestion with very clear contemporary precedent.

Our nation’s future success in the global economy will be premised on the knowledge wherewithal of our workers. Tomorrow’s workers must begin investment today. When the cost to the individual is too high, investment will not occur, making our slide to the bottom a given. It is in our collective national interest to step up to the plate on this one and make human capital investment our priority #1!

Saturday, April 14, 2012

…book a space

By kay.e.strong

Having kicked the idea of a life-time career to the curb (in previous blog), and the rise of “brokers of work,” what more should this generation of undergraduate degree holders expect?

A rapid expansion of the “contingent” workforce! Say “good bye” to permanent employment!

According to Dana Shaw, a Senior Vice President for Staffing Industry Analysts, “Currently, the average mix of contingents in the Fortune 100 is 20-30 percent of the workforce, but it will evolve to 40 to 45 percent of the workforce by 2020 and becoming a majority by 2030.” (Source: The Contingent Workforce and Public Decision Making, Thomas Fisher, 2012)

By definition, a contingent workforce is comprised of non-permanent workers—freelancers, independent professions, consultants, contract workers or accidental entrepreneurs—who work for an organization. The Bureau of Labor Statistics reports that nearly four out of five employers use some form of nontraditional staffing. Obviously, the megaforce, TIG, has facilitated the trend toward greater flexible in labor usage by businesses, but so has the growth in knowledge. Companies needing cutting-edge knowledge can purchase discrete units from the most highly-skilled among the contingent workforce. Having fewer workers on the payroll and no benefit obligation to the contingent worker should make companies lean—more competitive in the global marketplace.

Growing alongside the contingent workforce is a complementary global trend, co-working. Co-working is a network of loosely joined workspaces that fills the space between working in isolation at home and trudging to the local wified coffee shop. In essence, co-working implies working alongside, often in collaborating with people you normally would not in “co-working spaces”—think business centers with feng shui!

Co-working began as a social movement to build community, reduce the environmental impact of daily commuting, and lessen worker isolation, according to Steve King, a partner in Emergent Research. By King’s calculations there are some 760 co-working facilities (2011) up from 405 in 2010. deskmag reports 1129 coworking spaces worldwide (531 in the US, 467 in Europe) in its 2^nd Global Coworking Survey (2011/12).

“Their rise [co-working spaces] is fuelled by several things, including technologies such as cloud computing; more women and freelancers in the workforce, which means greater demand for flexible work arrangements; and economic pressure on firms’ property costs. Nor is the trend confined to office workers. An organisation called BioCurious recently opened a community biology lab in California’s Bay Area. Budding chefs share kitchens; communal workshops known as “maker spaces” are springing up too.” (Source: http://www.economist.com/node/21542190)

According to deskmag’s Second Global Coworking Survey, “[t]he average coworker is still 34 years old, and two thirds of them are men – a finding that matches with the First Global Coworking Survey. However, one year later, we find that spaces are attracting more younger and older people. Every twelfth coworker today is over fifty.”

Not surprisingly, the average coworker is compensated well. “Three out of four coworking space members have a university degree as their minimum qualification. This level of education is extremely high compared to the average population in the surveyed countries. Perhaps this explains their high income. A third of all coworkers report earning above-average wages, when compared to their country’s average income level. 38% of respondents suggested that working in a coworking space directly improved their income – only 2.5% believed their income had decreased since joining.” (Source: http://www.deskmag.com/en/the-members-of-coworking-spaces-survey-203)

More good news for the work refugee of tomorrow. The coworking community has begun to coalesce into an organized professional body. The community gathered at Austin’s premiere SXSW event last month to talk shop. Raising public awareness, building regional coworking alliances and expanding all kinds of collaborative behaviors (car sharing and cohousing) were hot topics on the second Global Coworking Unconference Conference (GCUC, pronounced “juicy”) agenda.

The future of work is shaping up to be vastly different than the stability of your grandfather’s…twenty-five years standing in the same space, trading loyalty for a yearly pay bump and ending with a company engraved pocket-watch.

The future of work promises a cornucopia of opportunities for well-disciplined self-starters able to manage ownership of both their time and talent. This is what this generation of undergraduate degree holders should be expecting.

I wonder…have we dutifully prepared them for their world or just ours?