LAJ ARTICLES

Creating Value and the Ownership of Work in the Gig Economy

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The Gig Worker creates value by completing processes. The higher the value of the processes completed, the higher the premium created by labor. Processes that are programmable can be done by machines and software at much lower costs than human labor. As robotics and software get cheaper, human labor gets more expensive.
Virtually any skill that can be reduced to a procedure defined by a set of rules can be automated or offshored. Any skill with defined inputs and outputs can be commoditized: reduced to software or a set of procedures that can be performed anywhere in the world. Virtually any skill that can be reduced to a procedure defined by a set of rules can be automated or offshored. Any skill with defined inputs and outputs can be commoditized: reduced to software or a set of procedures that can be performed anywhere in the world. Employees are interchangeable, employers are interchangeable. The interchangeability of work, employees, employers, products and services is the key characteristic of commoditization.
Nobody will invest in a robot unless that robot will produce a profit above and beyond the cost of production and credit/interest. So all these wonderful robots will only perform work that is profitable. The problem with that is most of human life and activity is unprofitable.
Enterprises don’t have profits, they only have expenses. Creating value is what generates profits, and without profits enterprises can’t pay employees, and government can’t skim taxes from profits and wages. Enterprises don’t have profits, they only have expenses. Creating value is what generates profits, and without profits enterprises can’t pay contractors, and government can’t skim taxes from profits and wages.
Though it is politically popular to blame outsourcing/offshoring for the demise of “good paying manufacturing jobs,” if trade barriers were erected tomorrow that banned all imported goods, domestic manufacturers would employ robots and software to produce most goods, for the simple reason that hiring costly humans to complete processes that machines can perform faster, better and cheaper makes no financial sense.
Henry Ford’s $5-a-Day Revolution
After the success of the moving assembly line, Henry Ford had another transformative idea: in January 1914, he startled the world by announcing that Ford Motor Company would pay $5 a day to its workers. The pay increase would also be accompanied by a shorter workday (from nine to eight hours). While this rate didn’t automatically apply to every worker, it more than doubled the average autoworker’s wage.
Jobs that can be learned in a few hours are prone to being replaced by machines. If a process and its end-state can be specified, a machine or software can be programmed to do the work. Human labor that generates low market value cannot command a high wage. We can choose to subsidize higher wages, but these higher costs must be paid by someone else via higher taxes or costs.
Fragmented Labor and the Ownership of Work. The only value creation model left for labor is ownership of the entire process of production. Depending on the industry or sector, this might include a variety of machining, 3D fabrication and injection-mold technologies, marketing, design and content creation, software development and sales, the ownership of work depends on what processes are creating value.
The End?

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