An Adaptive and Resilient Workforce
The “Great Reset” and Rethinking our Model of Work
The ‘Future of Work’ has been a growing theme for years as advancements in technology and automation of jobs, an aging workforce (and rising gen Z), and increasing income inequality set the stage for our country’s next significant wave of labor force shifts. Since COVID-19 arrived blazing into our lives just a few months ago, it’s been a catalytic accelerant, and we’ve seen that future arrive much sooner than anyone anticipated. In doing so, it has exposed the fatal cracks in a labor and economic system built for profitability and efficiency, rather than sustainability. It’s become increasingly clear that there is no going back to ‘normal’, normal wasn’t working.
While there are many aspects of ‘Work’ to explore — from how our physical office environments will evolve to remote working tools to communication and productivity enhancements — we focus primarily on areas and solutions that are directly improving the wellbeing, mobility, and economic prospects of workers themselves. One of the most significant challenges of our time will be in reinventing a new workforce model that is better equipped to adapt to a rapidly changing environment, and helps reduce rather than amplify inequality.
Below are some of the areas we are tracking at Better Ventures, and interested in seeing solutions in.
* Upskilling and Re-skilling Become Continuous Learning
* The Gig and Alternative Workforce Gets a Reboot
* The Era of The Empowered Worker
* Emergence of Alternative Pathways to Jobs
1) Upskilling and Re-skilling Become Continuous Learning
Even prior to the job losses of the last few months, we were facing one of the most substantial workforce shifts of our lifetime due to the combined forces of technology advancements increasing job automation, a workforce that’s aging and yet can’t afford to retire, and a growing skills gap. It’s been estimated that automation may displace as many up to 25% of current U.S. jobs (the equivalent of 40 million workers). The Covid-19 pandemic has highlighted the need for workers in all industries to have strong digital skills. However, approximately 1 in 3 American workers have limited or no digital skills, and according to The World Economic Forum, at least 54% of all employees will require significant re- and upskilling by 2022. In manufacturing, where nearly one-quarter of the workforce is age 55 or older, the shortfall in jobs is projected to reach record highs of 2.4 million unfilled jobs over the next decade. Workers of color and lower-wage workers are most impacted by the skills gap and face significant barriers in retraining, threatening to further worsen income disparity and opportunities for mobility.
Upskilling usually refers to building skills within a line of work to stay relevant and re-skilling refers to retraining for a new role or sector.
In the last few years, companies have taken note. PwC launched a $3 billion program aimed at upskilling all 275,000 of its global employees, AT&T committed $1 billion to retrain half of its workforce. Amazon announced they were investing $700 million into upskilling initiatives for 100,000 employees by 2025. Many others, such as Disney, Chipotle, Walmart, are spending up to $100 million on their respective upskilling programs. The manufacturing industry has committed to spending $26.2 billion in 2020 on upskilling initiatives.
Of the nearly 40 million jobs lost in the last few months, the majority will likely return as the economy starts to re-open, but some economists estimate that 40% may not.
In the future, workers will need to continually enhance and improve their skills to stay relevant and keep up with changes. Education and work will be more tightly integrated, and we’ll need new types of partnerships, programs, and innovative new companies to support continuous learning. This is no longer a nice to have as a talent development and retention mechanism, but an economic imperative.
Areas we’re interested in:
- Sector-specific onramps and training — In sectors such as healthcare, manufacturing, and construction, there is still a gaping need for more tech-enabled and scalable upskilling solutions and a nascent field of offerings. Facing critical shortages in labor and skills, these industries will need to find a way to blend the required in-person elements of training and certification with remote, immersive content that can be delivered anywhere. We are primarily focused on solutions within skilled trades, or what is often referred to as middle skills.
- New learning platforms that are modular, micro, and mobile — For upskilling to be effective with millions of hourly and deskless workers, it has to be designed and delivered in a way that’s easily accessible and achievable within the constraints of their workday. Gen Z will also further drive the trend towards shorter, more engaging content and ways of learning.
- Enablers such as data-driven tools for skills profiling and mapping and digital skills-based credentials — To achieve a workforce based on continuous learning and mobility, industries and companies need much better data on their workforce, current skills, and anticipated gaps and a way to plan and track upskilling and re-skilling. Workers similarly need better transparency and tools to manage their mobility and career options. Along the way, we need verified stackable digital credentials that are accepted as a proxy for trust and enable workers to continually add to their marketability and build their skill profiles.
2) The Alternative Workforce Gets a Reboot
The last recession gave rise to marketplaces like Uber, Lyft, and UpWork that drove the boom in gig work. 57 million (~36%) of U.S. workers are estimated to be part of the alternative workforce, including gig workers, freelancers, and independent workers. Whether as a way to supplement income or as a primary income source for those for whom traditional employment wasn’t an option, these platforms have become part of our daily lives and economy. As was the case after the 2008 recession, many traditional workers who lost their jobs are likely to turn to alternative work either out of necessity or desire for flexibility, and companies in many sectors will be reluctant to rehire amidst uncertainty. More than 80% of large U.S. based companies plan to significantly increase their use of nontraditional workers in the coming years.
The current crisis has also, though, highlighted many of the long-term struggles faced by gig workers. While the gig economy offers flexibility, workers have limited access to unemployment benefits, health insurance, or sick leave. According to a recent survey, gig workers have been among the hardest hit economically by the pandemic. An estimated 15 million workers rely on gig work as their primary income, and over 50% said they had lost their jobs; more than a quarter had seen their hours cut. Almost 70% said they now have no income, and only 23% have some money saved. At the whim of increasing pressure from labor marketplaces, workers have become increasingly squeezed and are effectively beholden to each marketplace.
This recession will likely lead to an evolution of the gig economy that is very different, and hopefully vastly improved, with more benefits, mobility, and more options for workers who increasingly work across a myriad of platforms.
Areas we’re interested in:
- Gig workers as home-based micro-entrepreneurs — Business in a box type platforms that enable workers to operate their own micro-business. Our portfolio company, MyVillage, is doing so within childcare, and we believe similar models will evolve in other areas of home-based entrepreneurship.
- Portability solutions enabling platform independence — We need better benefits options that aren’t employer-driven and are worker-centric. Companies like Catch are an example of where this is heading. From financial management and planning to insurance, mental health, and caregiving. Gig workers also need a way to utilize their work record and reputation as credentials. An Uber or Lyft driver’s work history and reputation are owned by the platform, and if the driver leaves, they cannot carry any of that value with them, or use it as collateral to demonstrate skills in another type of job.
3) The Era of the Empowered Worker
Today the United States has the largest wealth gap since before the Great Depression, and 40% of Americans cannot cover an unexpected expense of $400 or more. Union membership has fallen from 23% of American workers in 1970 to 10.3% in 2019, and only 6.2% in the private sector. As a result, unions’ diminished powers of collective bargaining are no longer able to bolster wages, assure benefits like health insurance, and improve training and working conditions to the extent they once did. The cumulative effect of all these forces for American workers has been diminished voice, reduced power, and eroded job quality.
Nearly three-quarters of Americans live paycheck to paycheck. About 30% of the workforce lacks employer-paid health insurance. One-third of workers lack paid sick leave. In a survey of 30,000 hourly workers at over 120 of the largest retail and food-service firms, jobs that now make up part of the essential workforce during the pandemic, 55% said that they lacked access to paid sick leave. The caregiving load is also increasing. 1 in 6 Americans works full-time or part-time assisting the care of an elderly family member. 70% of working caregivers suffer work-related difficulties due to their dual roles.
In an MIT survey, workers reported a sizable “voice gap” at work, a gap between how much say or influence they feel they ought to have and how much they actually have, on topics such as wages, working conditions, fair treatment, and input into how they do their work. The study also found that nearly half (48%) of non-unionized workers would join a union if given the opportunity, up from about one-third in previous decades.
The current pandemic has highlighted this gap and need for a voice. Workers from Amazon, Instacart, Whole Foods, Walmart, Target, and FedEx, amongst many others, have staged strikes and protests to demand better protection and pay. With their own lives and wellbeing threatened, they’re tired of not being listened to.
We need a more worker-centric system that doesn’t further marginalize and immobilize workers in sectors that are critical to our infrastructure and economy or further widen the growing income divide.
Areas we’re interested in:
- More holistic benefits — Companies will need to start offering benefits that go beyond the bare minimum and take into account a more comprehensive view of the worker and their personal lives and challenges. Areas such as mental health, caregiving support, early childhood care, are needed and will continue to be demanded by workers.
- Worker voice platforms — Despite declining union membership, a recent Pew Survey found that 55% of millennials support labor unions. New platforms will arise that supplement the role of worker unions and enable workers to collectively have a voice with their employer and work constructively to address and resolve them.
4) The Emergence of Alternative Pathways to Jobs
College isn’t cutting it, especially on Zoom
Current students are emerging from their virtual classrooms with diminished job prospects and rescinded internship offers. Many of those still in college, or who had planned to go in fall, are reconsidering the value of continuing a degree and taking on student debt, to learn via Zoom at home. Many are instead taking a year off or looking at alternative options altogether. Even before COVID-19, the value proposition of a 4-year degree was coming into question when doing so has plunged this generation into debilitating student debt. But we haven’t had many other options.
I spent six years of my life and career in Switzerland a few things really struck me about the system compared to the U.S.: 1) The concept of a gap year before or during college, and 2) The apprenticeship and trade school dual-system in many countries enabled a viable alternative path to go straight into a trade and in the workforce while simultaneously supporting a more robust pipeline of skilled labor and talent flowing into these sectors.
Different models have emerged in the U.S. over the last few years, which have started to pave a new path, but few have sufficiently tech-enabled or scalable. COVID will further increase and accelerate the need for a range of solutions that help people enter (and re-enter) the workforce.
Areas we’re interested in:
- Tech-enabled vocational training — Bootcamps like Lambda School have exploded in numbers, helping people learn digital skills and start careers in coding. While thus far many of these programs have focused on coding and engineering, we are interested in seeing more companies helping to facilitate similar pathways to skilled trades, nursing,
- Skills-based hiring. It’s clear that companies will need to diversify how and where they are sourcing talent and develop more sophisticated screening methods that are skills-based rather than degree-based. Companies like Riipen are using project-based remote internships as a way to work directly with a company while learning skills and more closely integrate learning with building work experience.
A more sustainable future?
The World Economic Forum has referred to this period as “The Great Reset.” Perhaps this moment offers a unique opportunity to reinvent and rebuild a more adaptive and resilient workforce that supports sustainable growth. If you are a mission-driven founder working on solutions in any of the above areas, we’d love to hear from you.
