19 May Is Trump Helping or Hurting the Gig Economy?
President Donald Trump has made it clear. When it comes to jobs and foreign trade, his administration will put American jobs “first.”
But what does that mean for the gig economy, where people outsource jobs to freelancers via the web? And what will it mean for online talent platforms that match employers with subcontractors for freelance work?
In an environment where short term work gets outsourced via the web on a project basis, Trump’s economic isolationism may send more jobs off shore, by forcing US companies to abandon the increasingly difficult task of H1B visa sponsorship.
Upwork, an online freelance juggernaut, gives employers access to more than 10 million independent contractors. But this globally dispersed, workforce has brought downward pricing pressure on US freelancers, much like container shipping helped kill domestic manufacturing. Waning tides lower all boats.
“As transport costs fall to extremely low levels, producers move from high-wage to low-wage countries, eventually causing wage levels in all countries to converge,” wrote Marc Levinson in The Box, a book about the impact of containerization on the world economy. Insofar as the gig economy promotes the offshoring of information work, online freelancer marketplaces are having a similar effect.
Now US workers have to compete for freelance work with international rivals, oftentimes from countries where the cost of living and wages are much lower. For knowledge workers, the blow back can be particularly harsh.
So a former newspaper journalist who currently works as a freelance writer has to significantly lower his hourly rate to compete for online gigs. For him, it means offshore competitors using half-baked AI algorithms enter in a few keywords and sell largely unintelligible blog posts on Fiverr. They aren’t English literate and have no experience serving in US markets, but they’re succeeded in lowering with a writer gets paid for quality content.
Now when it comes to a task like data entry, it may makes sense to hire someone who can do the work just as well as a US worker for less money. But when it comes to US jobs like inside sales, content marketing, demand generation or training and development related jobs, you’d think that understanding US culture would be a prerequisite for success.
It’s hard enough to communicate to Americans even if you don’t get the subtle cultural cues that are ingrained in western culture. That subtext isn’t easy to glean from a freelancer’s online profile on Guru.com.
Trump’s anti-immigration stance is unenforceable online. So how do you protect US jobs that aren’t being taken away by immigrants from being outsourced online? You can entice some companies to keep jobs in the US with tax breaks, but how does that protectionist tone play put online?
By catering to the global community of online freelancers, on-demand workforce providers make it increasingly difficult to identify and hire top performing knowledge workers. So it’s not just the freelancers that are getting hurt. Online global freelancer marketplaces frustrate businesses in search of good writers, lead qualifiers and digital marketers who understand the US market as well.
Let’s face it. Handing out tax breaks to keep jobs in the US is unsustainable. We need to make it easier for businesses to create US jobs by restricting the boundaries of our talent pool to US workers, and give businesses a way to try out tomorrow’s workforce today.
With all the attention given to globalization and its economic impacts, an often-overlooked truth is that the US economy, despite much rhetoric to the contrary, is less globalized than virtually all other advanced countries. We produce most of what we consume. It’s one thing to off shore data entry. But what fluent English speaker would choose to be qualified by an offshore phone rep, given the choice?
Yet, as with most issues, the optics often carry more weight than the facts. We don’t have to stand by and watch Internet outsourcing hurt US businesses and workers if we can find a way make it easier for businesses to identify and hire US based talent.
The danger of economic nationalism is that it lays our problems at the feet of big business and international rivals, suggesting we can fix our problems with tougher trade policies. But more frequently, market losses are the result of financial speculation and easy credit – not foreign economic influences.
For online talent marketplaces, protectionism is a double-edged sword. While open markets and equal access to opportunities, are currently the hallmark of the online marketplace, they don’t have to be.
Why wait for a Trump administration to solve the problem, when we can solve it ourselves by making American workers easier to find and hire online?
(Official White House Photo by Shealah Craighead)