Employment Trends in the Great Recession

In the last post, we described the massive restructuring occurring in our employment base, driven by automation and technology.  In this post, we’ll explore this in more detail, with a focus on the trends driving these changes, leading us to the opportunities of tomorrow.

Trends Driving Employment Changes

The profound changes occurring in the 1930’s were driven not only by farm automation, but by a perfect storm comprised of many other trends that culminated in that decade.

Same is true about this Great Recession. Here’s a short list of the changes we are currently experiencing:

  • Direct Replacement by Technology and Automation
    Automation has directly replaced many jobs like the factory worker (who manually moves widgets around the factory, and creates more widgets), the clerical worker (who manually moves paper around the office, and creates more paper), as well as all of those who used to manage these workers.
  • Saturation Driven by Technology and Automation
    Just like farm automation drastically drove down food prices in the 30’s, improved efficiencies in the production of today’s products has driven down these prices, leading to a saturation of markets and an excess of manufacturing capacity.  (how many computers, cell phones, tv’s, and dvd, cd and mp3 players do you own?)
  • Diminished Importance of Geographic Location
    Improved supply chain automation, reduced costs of long-distance communication, coupled with reduced barriers to international trade, has allowed work to move to the lowest cost producer (the so-called race to the bottom).
  • Increasing Costs of Benefits and Regulation
    With US-based health care and benefits primary provided through large employers, as well as the expensive reporting required to meet Federal, State and local laws (including Sarbanes Oxley), employers have an incentive to reduce traditional US-based employment.
  • Elimination of the Middle Man
    Historic roles such as stock brokers and travel agents have been greatly reduced by self-service websites, with many more intermediary roles under pressure.
  • New Business Models Driven by Technology and Automation
    Digital delivery of audio and video content is one example, as is the low cost and high convenience of online suppliers who compete with traditional brick and mortar retailers (i.e. Amazon.com).

So where is all of this leading?  While no-one knows for sure, we can make some educated guesses.  (be sure to check out the comments to the previous posting — many good ideas are included there)

Spectrum of Employment Options

While there are many ways to slice and dice what’s going on in employment, I believe the most insightful way is to consider the employee/employer relationship, and how it is changing as a result of the Great Recession.

Coincidentally, Business Week recently published an article titled The Disposable Worker that describes in detail what I believe is happening.  In 2005, about 75% of all jobs were consider a traditional, full-time, employer/employee relationship with benefits.  In this decade, I believe we will see this number decline greatly, especially if health insurance is made available to all without regard to pre-existing conditions.  (There are way too many people underemployed at Walmart and Home Depot just so they can get health insurance for their families).

To get an idea of where the new jobs will be coming from, consider this spectrum of employment options:

Employment Type Type of Employers
(working exclusively
for the employer)
Large Corporations, Small Corporations, Non-Profits, Owner/Operator Firms
(working for a firm that offers
your services to another firm)
Professional Service Firms,
Consulting Firms, Staffing Firms,
Temporary Firms
Self Employed
(working for yourself)
Owner/Operator Firms, Venture Funded Startups, Independent Contracting, Freelancing,
Self Funded Startups

As a general rule, I believe that the jobs of tomorrow will be moving from the Traditional employee/employer relationship, to more of the Hybrid/Self Employed models of employment.  In the next post, we’ll explore this in more detail.  As always, your comments are requested and encouraged.  Until next time …

Tranzitioning.com is a blog by Jay Fenello, principal and founder of BizPlacements.com, an Atlanta-based
Business Brokerage and Placement firm that helps people buy and sell small businesses and franchises.

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