During economic downturns and recessions many people turn to freelancing or starting a business after being laid off from a regular job. It’s part of a natural cycle. Then, when the economy picks up again, some of those people return to the workforce because they weren’t successful as an entrepreneur or because they prefer the security of employment.
There are longer-term forces at play, however, and people who become self employed during this recession may be more likely to continue to work for themselves after the economic recovery. This is due to a progression towards something academics call the “post-employment” economy that we appear to be in the midst of.
Just what is the post-employment economy anyways? Will we all be freelancers or entrepreneurs one day?
The “post-employment” economy refers to a growing shift of the labor force away from working as employees towards a preference for being independent agents. Richard Hooker has an excellent multi-part series defining the post-employment economy over at Shoestring Venture.
Essentially, the nature of production has changed steadily over the past 100 years. During the 20th century, the middle class was built around the concept of getting a “job.” This was because the foundation of the economy was manufacturing and other capital-intensive ventures. Firms had to become large to realize the benefits of economies of scale inherent in their businesses.
The economy now has become much quicker to innovate and more volatile as manufacturing and other labor-intensive businesses have moved offshore. As Mr. Hooker puts it in his essay:
In a highly volatile, hyper-innovative economy in which the means of production, distribution, and marketing are relatively inexpensive and available to anyone, the race goes to the fleetest of foot, not the biggest of bulk.
That’s why the layoffs and downsizing of huge corporations we’re seeing now might not be temporary. It’s harder for big companies to compete in the new economy. Smaller, leaner, quicker companies have the advantage.
Smart people are realizing that big corporations can no longer afford to pay them what they’re worth. Combine that with the inherent flexibility of being self employed and it’s easy to see why we are indeed moving closer to a post-employment economy.
We may not all be freelancers or entrepreneurs one day, but those of us who aren’t will probably be working for smaller companies.
What are your thoughts on the lasting effects of this recession and the broader changes in our economy? Tell us in the comments!
photo by morgantepsic