Looking ahead, not back: knowledge intensive services and the gig economy

Two reports point up the deep challenge cities and regions face in responding to global economic change.

The first, A century of cities, recounts various UK policies over the last hundred years intended to reduce regional disparity and adjust to changing economic conditions in different eras. The authors note that cities that managed to reinvent their economies to focus on knowledge-intensive business services are thriving much more than their counterparts that chose policies designed to replicate past economic success in lower skill industrial or routinized activities.

Responding to massive economic change and job displacement is never easy, but policies that strive to redistribute economic activity have had little impact, according to the report. These policies include industrial policy designed to preserve manufacturing; incentives and subsidies to communities, businesses or business parks; cluster and sector policies (with some successful exceptions); and policies designed to restrict growth in certain communities, thereby attempting to redirect opportunities elsewhere.

Instead, the authors recommend policies designed to make communities more attractive to knowledge-based busineses. These include improving the skills of the workforce, supporting innovation or knowledge networks, and encouraging density/land remediation rather than business parks in rural and suburban areas.

The second, Freelancing in America: 2015, points up a new challenge and opportunity for regional economic development leaders. The study estimates that one-third of all US workers have done freelance work in the last year. Freelancers include independent contractors (19.3 million US workers), moonlighters (13.2 million), diversified workers/multiple activities (14.1 million), temporary workers (4.6 million), and freelance business owners (2.5 million).

Further, 60% of freelancers said they are doing this by choice, seeking greater freedom and flexibility in work and ways to generate income, with the majority earning more than they did at their previous jobs.

“This is a tidal change in the relationship between an individual and the workplace,” Sen. Warner said. “It’s stunning that nobody in Washington is talking about this.”

Senator Mark Warner of Virginia has been thinking about these issues at the national and state levels, suggesting we consider new worker classifications to “help provide the kind of safety net more traditional employees receive,” benefit exchanges for small businesses, and better information sharing and funding networks to support this new way of working.

As the nature of work continues to evolve, economic development efforts that focus exclusively on companies that offer standard full-time jobs in traditional industries will increasingly be playing catch-up in the new economy. 

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