There is a new division of labor on the horizon when we look at the future of work. Soon, complex organizational hierarchies that mark the relationship between employer and employee may be a thing of the past. I believe in their place will rise a two-tier system comprising 1) a powerful professional class and 2) unskilled and semi-skilled laborers and their unions. We can already see the shift toward this system in the growing popularity of contract work and the payment of fees over wages across many industries. The consequences of this shift could be drastic and merit careful consideration.
First, let’s look at the distinction between wages and fees. Individuals who sell their time for money are paid wages. How this time gets used is decided and managed by their employers. Fees, on the other hand, refer to money that is paid for services rendered. Fees are charged by skilled professionals — like lawyers or web developers — and by tradespeople — like plumbers, carpenters and landscapers. Professionals are free to manage their own time and labor because clients only care about their service quality. Fees imply a greater level of independence than do wages. They allow workers to have more control over their craft or business.
However, fees can also indicate outsourcing and subcontracting, in which a company pays workers who they don’t regularly employ for their services and presents their work as their own. This can lead to professionals being exploited by organizations when they don’t get a seat at the business decision-making table.
These days, fewer and fewer professionals are working as employees of an organization and earning wages. A growing number of companies realize the economic benefits of short-term fees over the commitment to long-term wages. A fee system allows organizations to pay professionals for particular tasks rather than offer full-time salaries.
Today, the phrase “What do you do for a living?” is far more relevant than “Where do you work?”
If you need a ride, you don’t hire your own chauffeur; you call an Uber. If you need to spruce up your lawn, you hire a landscaper, not a full-time gardener. Organizations can contract out many services, from childcare to software development to civil engineering.
Fees are not only more viable than wages, but they can also inspire workers to seek self-employment and create new businesses. The sooner large organizations like schools, hospitals and government institutions understand this, the sooner we can move toward a more responsible fee system with a fair market for contractors.
Some organizations may take time to recognize self-employment as an effective use of labor. Still, more and more companies are heading in that direction by choosing contractors over employees. By 2030, I believe it likely that large companies will be made up of professionals who sell something beyond their time and labor. Like doctors, teachers and lawyers, everyone will have a service offering, not a position title.
However, running an organization of fee-based professionals can present several important challenges, including:
- Professionals require a certain level of freedom and autonomy to complete their work effectively.
- Organizations are structured in strict hierarchies with little room for growth or movement; professionals generally are mobile and are always seeking career advancement. If they can’t find it in one organization, they can take their skills to another.
- Professionals can be hard to replace due to their specific knowledge and skills, giving them tenure. This can make it difficult for organizations to let them go.
- Professionals may prefer to work with a network of other professionals collaboratively. Organizations run on more formal bureaucracies that make this difficult.
- Professionals may have little regard for classic management and administrative systems. If they have to be managed, they prefer it to be done by a professional in their network.
- Each new generation of professionals must be trained by the ones who came before them. Thus, organizations have to serve as both schools and places of work.
Overall, in any professional organization, the individual holds a great deal of power. As more companies hire fee-based professionals, we can expect to see resistance to this power dynamic in the following ways:
- Fixed-term contracts may become the norm, with companies preferring to hire temporary workers rather than give raises and benefits to permanent employees.
- Part-time work may be made more attractive to professionals in the form of flexible time contracts, reducing the number of full-time jobs.
- Retirement plans may be personalized and mobilized to move with contractors from job to job.
- Training and education may be increasingly prioritized within organizations to synchronize their interests and those of their professionals.
- Organizations of the future may have two categories of workers: the professionals and the laborers. Gone will be all those positions in between — the skilled workers, the foreman and middle management.
- If we are not cautious, organizations will be divided into two classes — the haves and the have-nots — with knowledge as the ultimate source for power and wealth.
If the gap between these two working classes becomes too wide, we may see increased union activity among the labor staff, who still have significant power. When united, these workers can hold their labor hostage for increased wages.
The only way to prevent such an outcome is for organizations to offer their essential workers a stake in the company. This could be a financial stake, like co-ownership or profit-sharing, or something on a more emotional level. Building integrated teams of laborers and professionals would help workers feel like their contributions are essential. Good old-fashioned respect and communication could go a long way to preventing a new class hierarchy and ensuring that all workers are treated well.