Flooding the Labor Market

I have discovered TED talks and my life will never be the same.

For those that aren’t aware, TED stands for Technology, Education, and Design. It’s a bi-annual conference that invites speakers on a variety of topics to give eighteen minute speeches on the above three topics. The talent and celebrity it draws is impressive, and luminaries lik Jane Goodall, Bill Gates, Phillip Zimbardo, Billy Graham, and Nicholas Negroponte have graced the TED stage.

Over the past 3 days I’ve watched nearly a dozen of the talks, exploring topics from the brain chemstry of love, to the pyschology of human motivation the nature of evil, and the economics of celluar technology in bangledesh. What I want to talk about here though is a speech by Clay Shirky.

Clay Shirky is an adjunct professor at NYU’s Interactive Telecommunications Program (ITP) and author of the book “ Here Comes Everybody: The Power of Organizing Without Organizations,” which I haven’t read yet but will be picking up at the library tomorrow. Here’s the talk below. It’s only 18 minutes so I’d suggest you watch.

If you don’t here’s the quick summary. Using flickr as an example, Shirky argues that the traditional way of organizing individuals, the institution, by it’s nature leaves alot of value on the table. Because there is a cost with employing people (salary, benefits, infrastructure, etc.) institutions will only take individuals who’s value outweighs the cost. In other words, whose labor is worth buying.

In contrast, systems like flickr build collaboration into the system so that there is almost no cost in “employing” even the most unproductive employee. A professional photo agency can’t afford to pay someone who takes four photos a month, even if they are really good photos. They must leave his four photos, “on the table” with their value uncapitalized. Flickr however, because they have no costs associated with collecting and distributing his photos, have no problem reaping the benefits. Our photographer may be “unproductive” in the traditional sense, but he still produces value we can capture.

Now in many ways this isn’t that new an idea, it’s just another spin on the idea of crowdsourcing. But for whatever reason Shirky’s explanation got me thinking of this problem in terms of the cost of labor. Essentially what these collaborative tools have done is tap into a massive well of unused labor potential by lowering (nearly to the point of elimination) the associated costs of harnessing labor. It’s almost as if somebody figured out how to drill oil at close to zero cost. We’re essentially living in the age of a resource boom, except it’s a resource even more fundamental than even oil.

If we start thinking about the rise of crowd sourcing, collaboration, etc as a resource boom, we can make some very interesting predictions.  A good physical world paralell is that of aluminum. Up until about 100 years ago, aluminum was considered even more precious than gold. While the element itself is abundant in the earth’s crust, it’s rare in it’s free form, and is usually bound with oxygen to make aluminum oxide (Al2O3). It was only in the late 1800’s that a series of scientific discoveries made it possible to simply and easily extract pure Aluminum. By 1914, this once precious metal cost only 18 cents a pound. Soon aluminum foil was being used  to wrap teas and chocolates. Aluminum’s cheap cost made it an ideal component for airplane construction, helping fuel the aviation revolution. By the 1950’s aluminum was being used for beer cans.

In this story we see a few key points. Here we have a resource that was prohebitively expensive until within about twenty years it become shockingly cheap. As a result, new applications sprung up like lightning, and the world wide market for aluminum skyrocketed.

We’re likely to see a similar thing happen in the market for cognitive labor. As our methods for extracting labor improve, and the price of cognitive labor drops, new applications will come out of the woodwork. The market for labor will increase. And new technologies taking advantadge of the glut will revolutionize our lives.

But if the price of labor is dropping, then does that mean all us white color types are going to be too poor to enjoy it? No, not likely, since it’s not the price of all labor that’s dropping, just certain kinds. Photography is a good example, with the market for stock photography exhibiting a serious drop in value with the gult of work coming from people on flickr or iStockphoto. Plus the opportunity for payment for labor is increasing. Hobbies, like photography, or writing, or filmmaking, are becoming a viable way for anyone to make an extra buck, as collaborative systems become increasingly effective at extracting value. That trend is only likely to increase as the demand for our spare cycle grows, and companies have to start competing over what is still a scarce resource.

Ultimately, we can’t really predict how it’s going to play out though. Shirky’s projection of fifty years of chaos is a good as guess as any as far as I see. However, I’m certain through the choas will arise something fundamentally better than what we have today.


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