America has always loved its entrepreneurs, but recently it seems their cultural cache has reached a new high. Everyone on LinkedIn is a CEO, shows like Shark Tank are spawning copycats, and over half of Millennials say they plan to or have already started a company. Uber, the on-demand alternative to hailing a taxi, has proudly touted its plans to create “100,000 transportation entrepreneurs,” which is a generous way to describe the drivers on its platform.
All this CEO-play doesn't appear to reflect reality. The official ranks of the self-employed have been stuck at around 10 million for the last few years, unemployment refuses to budge, and real earnings have been flat or even declining for many middle- and low-income workers. If everyone is suddenly an entrepreneur, why aren’t we seeing the economic impact?
The problem is that by turning “entrepreneur” into an aspirational catchall for everyone from Bill Gates to your next Uber driver, we’ve lost our ability to measure and understand the macro shifts taking place--and their policy implications.
With Tax Day at hand, it’s time to look at how work is changing--and why we need a better vocabulary for describing it.
“Everyone wants to claim ‘entrepreneur’ in their own way, to attach themselves to that centripetal force,” says Dave Blanchard, cofounder and president of Praxis, a nonprofit that runs accelerator programs for faith-motivated business and nonprofit founders. “It's turned from a profession into a zeitgeist, and on the net that's a positive thing. If you see yourself as entrepreneurial, that means you’re creating new things, you’re not waiting for someone to tell you what to do.”
Like other accelerators and incubators, Praxis is focused on founders who aspire to scale their ventures; this is known as “high-growth” entrepreneurship, to borrow from the parlance the White House used to launch its Startup America initiative. (An extremely high rate of growth is what separates a "startup" from a regular business, like a new coffee shop.)
Hybrid businesses like the Maki Fund do both contract work and their own sweat-equity projects. Maki, a web development shop based in New York, has been using contract work to fund its pursuit of side projects with the potential to scale.
“In some ways it's very liberating, and in some ways it's a trade-off,” says Casey Gibbons, cofounder and head of product. He identifies as both an entrepreneur and a small business owner, and says his team is constantly switching between priorities: “One is paying the bills, and one is hopes and dreams.”
Professionals who might once have labeled themselves “consultants” or “freelancers” are also adopting the entrepreneur label.
“The term ‘freelance’ limits how people think about you, and it limits how you think about yourself,” says Sarah Doody, who specializes in user experience design and previously identified as a freelance designer. “I teach, I develop curriculum, I speak places. This year I've made a shift: I'm an entrepreneur who happens to design.” Whereas consultant can sound “slimy” and freelancer can sound “transactional,” Doody says that entrepreneur “feels more professional and more collaborative.”
Hobbyists and other skilled workers who have discovered platforms that amplify and commercialize their abilities are another step down the entrepreneurial food chain. Etsy sellers are typical of this category; last year the company released a report on the economic impact of its community and reported that while nearly all sellers hope to grow their businesses, “very few aspire to be ‘as big as possible’; the strong majority of sellers--61%--want their future shops to be ‘a size I can manage myself.’”
Paige Nobles, who works in market research, started selling handmade cards on Etsy as a creative outlet. “Finding out that people liked it gave me confidence to enjoy my craft more,” she says. “It was just really fun.” She recently invested in a letterpress machine and can envision focusing on card-making at some point in the future.
Platforms that enable low-skill “entrepreneurship” are at the very bottom of this spectrum. Fiverr, Lyft, TaskRabbit: These marketplace-based startups position themselves as part of the sharing economy, offering prospective “entrepreneurs” a taste of freedom and income with minimal risk. Uber, one of the most prominent marketplaces, has coined what is perhaps the best (or the worst, depending on your perspective) way of describing this form of economic activity: “turnkey entrepreneurship.”
But extending the use of the word “entrepreneur” in this way begins to erode its usefulness. Moreover, it masks the more fundamental economic shifts taking place.
If the wide range of roles described above share one characteristic, it’s that they are not traditional jobs. In practice, “un-job” is what entrepreneur has come to mean, and why it’s so ubiquitous in our still-struggling economy. Absent a more compelling title, it’s no wonder that freelancers, consultants, contractors, independent workers, and their many free-agent peers have adopted “entrepreneur” as their own. Unfortunately for them, everything from our tax systems to our economic indices still revolve around the industrial model of full-time work for a single employer.
“Our conventional arrangements are structured around jobs,” says David Autor, an MIT economist. "Uber is providing some infrastructure, but I wouldn't call it entrepreneurship." Autor points to the recent decoupling of pensions and health care from long-term employment as a portend of the future, but says that our instruments for measuring productivity and well-being in the new, un-job model are primitive at best. (Not to mention the fact that our existing data sources operate in silos, limiting their usefulness--tax data, for example, doesn't link to unemployment surveys.)
Looking at “tasks” rather than “jobs," a past focus of research for Autor, represents one possible way forward. He challenges the orthodox understanding of labor and output in a way that sounds strikingly similar to the labor model underpinning the new wave of on-demand marketplaces:
A task is a unit of work activity that produces output. A skill is a worker's stock of capabilities for performing various tasks. Workers apply their skills to tasks in exchange for wages. Canonical production functions draw an implicit equivalence between workers' skills and their job tasks... Here, we emphasize instead that skills are applied to tasks to produce output--skills do not directly produce output.
Tasks are in some ways a promising alternative to jobs. For all of the roles described above, save high-growth entrepreneurs, “tasks” closely map to the way in which un-job workers spend their time and measure their productivity. However, the nitty-gritty challenges of measurement have so far been prohibitive to adopting a task-based framework--try to break your own workday into a set of standardized, replicable tasks, and you start to understand why.
The way we define work could change thanks to big data. Economist Erik Brynjolfsson, also of MIT, is interested in using the data already being generated by platforms and technologies to “reinvent our statistics for this new economy.”
“Tons of steel, bushels of wheat--those are easy to count,” Brynjolfsson says, mentioning Google search data and online transactions as data sources that could inform future economic indices. “We do need to move toward more task-based measures, but there’s no silver bullet. We have to step back and think what we really care about.”
Arun Sundararajan, an expert on the sharing economy at New York University, is exploring measures that would capture the quality of life factors that appear to be increasingly important to workers. “How much would I have to pay you to do this work instead of something you love?” he says. “In dollar terms, that is the value that someone is applying to working only 30 hours a week so that they can spend more time with their kids. It’s crude, but I see that as a way of measuring the impact more completely.”
At the Kauffman Foundation, a nonprofit dedicated to advancing entrepreneurship, researchers say they would simply welcome data that’s cleaner and more current than the existing hodgepodge of definitions and sources. “We’d like to see data that’s better reflective of on-the-ground realities,” says Dane Stangler, vice president for research and policy. He defines an entrepreneur as “a person who sees an opportunity or solves a problem with scarce resources,” and prefers to talk about firms “on the basis of their age and their size” in order to understand their economic impact.
If one thing characterizes the new crop of self-described entrepreneurs, it’s that they tend to flock together. WeWork, the office space startup that calls itself “a home for amazing businesses of all shapes and sizes,” has been growing in leaps and bounds; by the end of the year it will have added another dozen sites to its existing portfolio of 17 locations in six cities. WeWork’s 20,000 members pay a monthly fee for desk space, and the company takes care of the rest, coffee included.
On a typical day at WeWork Fulton Center, also home to WeWork corporate headquarters, product managers in jeans are doing Skype calls in telephone booths and cofounders are rehearsing investor presentations in glass-walled conference rooms decorated with circus-themed stickers. Not everyone is an entrepreneur, exactly, but nor is everyone doing a job in the way that Silicon Valley investor Paul Graham cautioned against: “A job means doing something people want, averaged together with everyone else in that company,” he wrote dismissively in Hackers and Painters.
“There are startups, there are small businesses, there are freelancers,” says Noah Kerner, chief strategy and marketing officer for WeWork. "The focus is on building a community that can come together to solve business challenges." The company does look at the mix of tenants in each location, but deliberately levels the playing field by referring to all customers as “members” who are “doing what they love.”
That message may resonate with WeWork's customer base, but it’s little help for policymakers. A visit to Fulton Center is a reminder that the un-job is here to stay, whether or not it shows up in our official databases.
[Image: Flickr user Alex Brown]