The Great Transfer of Free Wealth

The past few weeks have seen an explosion of writers coming out of the woodwork to complain about either being asked to, or feeling like they had to write for free. And that’s an important discussion that should continue. But it’s also part of a larger phenomenon as well.

A few weeks ago I wrote about what I called the Post-Employment Economy. In it, I explained how the implicit social contract that once governed the U.S. economy had broken down. Now, young people are entering the workforce with more debt than ever before, fewer employment opportunities, and less social mobility than anytime in recent memory.

But it applies to other things as well. Think about working hours. For a hundred years, we’ve known that overworking leads to less productivity — that is, the longer someone works over 40 hours per week, the less productive they become per hour worked… and the longer it takes that person to recover back to full working capacity. Despite this, during the last 20 years or so employers have come to expect employees to work longer and longer hours for the same amount of compensation.

This creates a two-fold effect: not only are employees earning less income per hour worked, but employers are actually hurting themselves by driving down productivity. There are a number of reasons for this — including the business culture spillover effect of Silicon Valley work obsession — but the end result is people are working much harder for the same pay (because our wages have stagnated).

Placed in the context of recent corporate performance, a very dark picture emerges.

• Corporate profits are higher than ever.
• Unemployment is steady, and probably vastly under-counted.
• White collar employers are demanding longer and longer hours from their employees (and because of labor law exemptions that extra time does not need to be compensated).
• Conversely, at the very low end, hourly employees are being employed less and less to avoid paying healthcare and other benefit costs.

Into this context we can place the alarming rise of the unpaid intern. And even going to school is no longer the path for upward mobility in this country — rather, it’s a quick ticket to debt and unemployment (assuming you’re even of the right economic class to be courted by a good school).

So even apart from the rather elite-level concern of whether one gets paid for writing, there is a society-wide push to pay people less for the work they do… even while the leaders of these for-profit organizations make more money than ever before. From top to bottom, value is being extracted from workers in this country and no one is getting paid fairly for it.

For a long time, working for free seemed like it was the future. Chris Anderson made a big splash before the crash by proclaiming “Why $0.00 is the future of business.” In Anderson’s world, giving stuff away for free was how businesses of the future would generate even more money down the road. It amounted to a clever marketing trick, the intellectual equivalent of a two-for-one special.

I was working for Alvin Toffler’s consulting firm when he and his wife Heidi released their last book, 2007’s Revolutionary Wealth. They posited that wealth in the future would not be determined solely by money, but by less tangible things. In discussing “prosumers,” people growing their own food, and even the value created by hobbies, the Tofflers argued that the new economy would have much more wealth than money alone could measure.

In a way, this is true. In lots of little ways, consumers have been trained to do work that used to cost producers money. When you use the self-checkin kiosk at the airport, you are performing labor, for free, than an airline employee used to. When you use the self-checkout kiosk at the grocery store, you’re doing work that an employee once got paid to do. And so on.

But this “revolutionary” wealth has a dark side: companies are not just extracting extra value from consumers, but from their own employees. Profits are up but employment is down and wages are flat. Young workers or people looking to break into a new field are expected to work for free — not for a low wage while they’re trained into competence. But for free. Zero.

And meanwhile, the companies in charge still profit from the work done.

This model is simply not sustainable in the long run. No matter how much the techno-utopians or futurists crow about how awesome free labor is, the economy still runs on money. And without money, that economy will collapse. Expecting people to produce value for that economy while receiving zero compensation for it is not only unfair and possibly destructive — it is fundamentally un-American.

But what does a fully-paid model look like? We don’t necessarily know yet. And for many industries, it will probably look different. Right now, what’s needed is a cultural change — an awareness of the Great Transfer that’s underway, and a desire to end it and re-establish fairness at the heart of our society. Because without that, nothing will ever change.