Jobless Recovery Explained

Steve Pruneau

There’s a lot of news these days about increased lay-offs.  Politicians and economists debate anxiously, “How can we get companies to hire more people?”

Not gonna happen, and I don’t mean that in a sinister way.  I mean it in an evolutionary way: we are not going backward.

Getting companies to take-on more traditional employees (permanent, full-time with benefits) is like asking Ford to make all components in house; a fast track to oblivion.  Do we really expect Apple, Dell and HP to manufacture all components in-house?  No.

So why is it we are pushing the same stone up hill by asking companies to take on more traditional employees?  Doing so will essentially make any business less responsive to market fluctuation because there is a higher level of fixed costs.  Of course, company executives know this and that’s why we are in a jobless recovery.  The current jobless recovery is the correct response to economic conditions and it is the correct direction for our economic evolution.

We are an economy in serious transition.  It is changing in far more fundamental ways than most people realize.  Imagine re-building an entire factory, piece by piece, machine by machine, roof, walls, systems… while we operate that same factory.

What we need is just-in-time talent.  We need a supply chain of people to work just-in-time at every step in production of goods and services.  Now that’s an exciting future.  Our economy will be more responsive and more of us will be more productive more often.

Let’s return to the current way of producing goods and services.  When we have a high level of fixed capacity (most of the company roster is composed of permanent, full-time employees) we have periods of boredom and waste.  In manufacturing terms, it’s called slack capacity.  In the service sector, we make fun of it with movies like “Office Space” or TV shows like “The Office”.

I want to be clear, I have sleepless nights too.  Knowing we are headed in the right direction does not lessen the changes and uncertainty that each of us must endure on a peraonal level.  What keeps me going and what I suggest could keep many of us going is, solutions that make it possible for us to take care of our personal needs (health insurance, retirement savings plan, administrative support for business activities, steady stream of new work assignments) and yet not be full-time, permanent employees.

Free Agent Source is part of the answer, but not the only answer.  We need a market full of solutions that deliver the things everyone currently gets from a single, traditional employer.  When we have a diverse array of solutions that are legitimate alternatives to traditional employment, we will all be free to work in our chosen endeavors on assignments just-in-time and yet still enjoy a level of consistency and economic security in our personal lives.

Government is not going to provide the solution and we shouldn’t want it to.  Although, as the new model emerges, it will be necessary to update regulations later to support a new highly interactive market for just-in-time talent.

Right now, there are a few things that corporate HR professionals can do, to start bringing higher levels of capability into their companies immediately.  That’s in the next post.

Steve Pruneau leads executives and business owners to solve the gap between variable revenue and a fixed workforce. He is the first consultant at Free Agent Source. As a founder, Steve engages the broader community of corporate clients, entrepreneurs, startups and consultants. He manages company operations and lives in Los Angeles, CA.

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