Will Robots Steal Your Job?
Growing up, your teachers and parents likely told you to go to college and then get a job, because that’s how you could ensure a secure future.
And who were you to argue? They all followed that path and so did the generation before them. It seemed like the smart thing to do.
But what actually is job security? The answer is – it’s an illusion.
There is no such thing as job security, and it’s never been more apparent than in 2020. In August, the Labor Department released its employment report and cited 18 million Americans were out of work. They joined nearly 30 million Americans who were already out of work.
I am willing to bet that most of those 18 million people who were newly out of work thought they had job security.
We see now how companies operate regarding spending and employees. One friend of mine, lucky enough to still have a high-paying job, told me how his company cut multiple millions out of their existing budget and did a hiring freeze. Their whole company is working remotely.
“You know what?” he said. “We’re more productive than ever right now.” Don’t think his CEO isn’t noticing how much bloat they had unknowingly been carrying over the years. This crisis is exposing it. And a lot of those jobs and contracts won’t be back.
Good Jobs Are Outsourced To Contractors, Robots, And Automation
“Never before have American companies tried so hard to employ so few people.”
So goes the opening shot for a 2017 article published in the “Wall Street Journal” called “The End of Employees.”
The article details how many of the major companies in America are doing their best to outsource their jobs to contractors, or automate them, rather than hire employees.
The percentage of the American workforce that is not directly tied to a company has risen by almost 100% by some estimates, and it shows no sign of stopping.
Steven Berkenfeld, an investment banker who has spent his career evaluating corporate strategies, says companies of all shapes and sizes are increasingly thinking like this: ‘Can I automate it? If not, can I outsource it? If not, can I give it to an independent contractor or freelancer?’
“Few companies, workplace consultants, or economists expect the outsourcing trend to reverse. Moving non-core jobs out of a company allows it to devote more time and energy to the things it does best. When an outside firm is in charge of labor, it assumes the day-to-day grind of scheduling, hiring, and firing. Workers are quickly replaced if needed, and the company worries only about the final product.”
The article continues that, “Eventually, some large companies could be pruned of all but the most essential employees. Consulting firm Accenture PLC predicted last year that one of the 2,000 largest companies in the world will have ‘no full-time employees outside of the C-suite’ within 10 years.”
And, “Eventually, some large companies could be pruned of all but the most essential employees. Consulting firm Accenture PLC predicted last year that one of the 2,000 largest companies in the world will have ‘no full-time employees outside of the C-suite’ within 10 years.”
If these were trends already happening in 2017, when the economy was doing well, imagine what the other side of this pandemic crisis will look like for employees as companies make sure they put themselves in a place to weather the unexpected. It will not be pretty.
Does Job Security = Financial Security?
When I was a kid, my poor dad wanted nothing more for me than to go to a good school, get my degree, and get a good, safe, secure, high-paying job.
This is not unlike how most people were raised—and how most people have lived their life. For the majority of people, job security through a high-paying job is priority number one.
My rich dad, my best friend’s father, taught me how to think like an entrepreneur. He didn’t want me to grow up to be an employee. He wanted me to grow up and be a business owner and investor.
For my poor dad, a job was the ultimate sign of financial security. For my rich dad, being an employee was risky.
My rich dad was well-ahead of his time. To be an employee is an illusion of security. You have a steady paycheck, but you are not in control. You are at the mercy of the business owner and the economy. If either decides you are not needed, you lose your job—and if you’re really unlucky, lots of other things like your house, your car, and more. And today, unfortunately, it is riskier than ever to be an employee.
This shouldn’t come as a surprise, and many people who have been laid off, fired, or furloughed that I’ve talked to have simply said, “I’m not surprised. I’m just sad.”
And to be honest, so am I.
I’ve spent years teaching people that being an employee is the riskiest position to be in. I wish more had heard the message and more had changed their lives prior to this crisis. I feel for them and I feel for their families, but it’s still not too late to make a change.
Because the other side of this crisis could be a gold mine for those with the right mindset.
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Contractors, Automation, And Robots, Oh My!
In the Wizard of Oz, Dorothy and her motley crew of fellow travelers are in the dark and foreboding woods. They sing, “Lions and tigers and bears, oh my!”
Today, many people are in the dark and foreboding woods, financially. They are not afraid of natural predators like lions and tigers and bears, but they are afraid of a new kind of predator – contractors, automation, and robots.
Whether it is from robots and automation, many jobs are being outsourced to technology. And if jobs are not taken by technology, they are now taken by contractors. Just look at how companies like Lyft and Uber are disrupting the taxi industry, how Airbnb is disrupting the hotel industry, and how driverless cars will disrupt industries like shipping.
The Dangers Of The Gig-Economy And Owning A Job
Many view the rise of contractors and the so-called gig economy as a good thing, but it is not. The argument goes that we are finally creating entrepreneurial opportunities for the masses. Entrepreneurship has been democratized, so they say.
The reality is that most people participating in the gig economy are not entrepreneurs.
Rather, they simply own a job. They still operate on the left side of the CASHFLOW® Quadrant, just as a self-employed person rather than an employee.
This owning of a job is a great advantage for companies who no longer have to pay payroll taxes, provide health insurance, or fund retirement plans. They get all the labor and none of the trappings. And it’s all packaged in the allure of freedom.
Unfortunately, gig workers are not financially free. They work long and hard hours to make less, and have fewer benefits than employees did historically. If they cannot put in the hours, they do not make the money. That is not how an entrepreneur operates.
An entrepreneur makes money even when he or she is not working.
Of course, anyone looking for a good job or doing all they can to hustle in the gig economy is really looking for one thing, to be financially free. Unfortunately, they will not find financial freedom in either sector.
The Secure Side
I still have some friends who seek security as employees or self-employed, the left side of the CASHFLOW Quadrant. I believe that the left side of the quadrant is actually the riskiest side. If people could see what I see when I travel the world, they would not be looking for more security.
It’s also risky for the self-employed. If they get sick or injured, their income is directly impacted. As I get older, I meet more self-employed people my age who are physically, mentally, and emotionally burned out from hard work. The more fatigue a person endures, the less secure they become, and the risk of having an accident also goes up.
The irony is that life on the right side of the quadrant, the one viewed by most people as riskier, is actually more secure.
For example, if you have a secure system that produces more and more money with less and less work, then you really don’t need a job or need to worry about losing your job. To make more money, you simply expand the system and hire more people. That gives you the opportunity to expand your means so that you can enjoy all that life has to offer.
People who are high-level investors aren’t concerned about the market going up or down because their knowledge allows them to make money in either situation.
If there are market crashes for the foreseeable future, which I believe there will be, many baby boomers will panic and lose much of the money they had for retirement. If that happens in their old age, instead of retiring, they’ll have to work for as long as they can. How is that security?
Professional investors are people who risk little of their own money and yet still make the highest returns. The people who know little about investing take the risks and earn the least return.
From my point of view, all the risk is on the left side of the CASHFLOW Quadrant.
Editor, Rich Dad Poor Dad Daily