Automation Is Driving Us Toward Self-Employment The trend started started before the pandemic, but the circumstances of the last two years have accelerated it.
By Milan Kordestani • Originally published
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Self-employment often seems like a dream for most, but with the onset of automation in traditional jobs and the evolving gig economy, we may be moving toward a new normal where self-employment is a traditional route. I dreamt of becoming an inventor, building "things" that would solve problems in the world, and entrepreneurship ended up serving as the conduit to being that builder. But for many people my age, self-employment is more than just a dream — it's a means of survival. Oddly enough, automation has made self-employment both possible and necessary for millions.
Rather than relying on human labor, we've managed to make different processes faster, cheaper and less prone to errors via automation — be it hamburger flipping and self-checkout, or AI copywriters and digital bots. However, all good things come at a cost. The reduced need for human labor — combined with the rising global population — decreased the pool of "good" jobs. That is to say, jobs that pay a decent wage and offer the kind of benefits that people want.
In the United States, this issue has become divisive, with most people falling into one of two camps. On the one side, you have people who argue that the jobs are still there; they allege that people are just too lazy, picky or entitled to take them. Then, you have the people who argue that the jobs are gone, and the positions that remain do not pay enough for people to live decent lives.
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There's some truth to both sides. The Washington Post recently noted that, as of September 2021, there were roughly 8.4 million unemployed Americans and 10 million unfilled job openings. At a time when supply chains are hanging on by a thread, the country is grappling with a pandemic, and both individuals and businesses are in need of cash, one has to wonder why this is happening. The numbers show that the jobs are still there and people are either choosing not to take them, or they're underqualified. A simple cost-benefit analysis of these jobs, however, elucidates that they are just not worth the effort for most Americans. Why? Because the wages are low, the working conditions are subpar, and at a time when remote work and gig work is extremely popular, why settle for a low-paying job?
Before Covid-19 was ever on our radar, automation was pushing people away from traditional 9-to-5 jobs. Not only has it decreased the need for human labor, but it has also changed the way that labor is performed. When you can accomplish a task by pushing a virtual button, it opens up the door for employees to work remotely. The commercial push for automation, combined with the effects of the pandemic, led businesses of all sizes to allow more and more workers to do their jobs from home.
However, millions of Americans have not been so lucky. Industries like retail, hospitality and construction don't have as many viable paths forward. After all, we just haven't found ways to automate every type of job. Therefore, businesses in these industries can either try to automate as best they can, thereby eliminating jobs entirely, or entice workers to continue coming in to work as they've always done. The former leaves more people unemployed, while the latter leaves workers less satisfied and, at least in the context of a pandemic, more exposed.
Consequently, automation has had the strange effect of pushing people toward self-employment in more ways than one. Automating processes reduce the number of jobs available across the board while simultaneously making it easier for the employed to work remotely. This has made non-remote jobs seem far less appealing to the modern job-seeker.
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What does all this have to do with self-employment? At the end of the day, people have to find a way to pay their bills or risk losing their savings, homes and potentially more. If the jobs are not there or they are undesirable, what's the solution? Create your own job!
That's one factor that many people overlook when it comes to automation. The term itself often conjures up images of giant assembly lines, corporate initiatives and large-scale operations. However, automation is not just for big businesses; it also works for individuals by allowing them to do work on their own. When businesses can't offer what individuals want or need, self-employment becomes the only real alternative.
This isn't just conjecture, either. According to the U.S. Bureau of Labor Statistics, about 15 million Americans were self-employed in 2015. This meant that just over 10% of all workers in the United States worked for themselves. Fast forward to 2019 (pre-pandemic), and self-employment rates increased to roughly 28%. Some have disputed the latter number, but 14% of those workers considered self-employment to be their primary means of income that year, implying that an additional 1% of the national workforce — equivalent to about 1.5 million people — are opting for self-employment with each passing year.
While the reasons are numerous, many people are simply choosing self-employment because automation is a double-edged sword. On the one hand, it makes jobs more scarce and non-remote jobs less attractive; on the other hand, it makes building your own work as a freelancer, entrepreneur or contractor easier than ever. Automation doesn't just mean that it's easier to do work — it's also easier to make your own work.
Talking heads and politicians will continue to debate over stagnant wages and job scarcity, but it is automation that is driving us toward ubiquitous self-employment. This is a change that has been years in the making. As technology continues to advance at an increasingly fast rate, so too do automated tools. This means that self-employment will likely continue to rise even more quickly going forward.
In the age of pervasive digitization, people want to work from anywhere — and rightly so. They also want to work for a living wage, with reasonable hours and have opportunities to grow and advance. Self-employment gives them the power to do so when many traditional jobs fall short of the mark. But the question remains: How long will it take businesses, supply chains and even governments to adjust to a society in which self-employment is the new normal?
