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The Billable Hour Is Not Fungible

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The Times They Are A-Changin’

Come gather 'round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You'll be drenched to the bone
If your time to you is worth savin'
Then you better start swimmin'
Or you'll sink like a stone
For the times they are a-changin'

💬 Bob Dylan


With the financial problems ricocheting around the world - I see occasional headlines from 50 years ago.

Three day work week - bad.

Fifty Years Later : Four day work week - good.

I get the subtle shift in the back story, just an observation.

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Where Am I Working?

I am sitting in New Zealand writing this. It started as an idea in my head and was typed into a local file on my computer. I copied it to WordPress (my blog hosting software of choice) and saved a draft to my People First server.

The words were then sitting on a server in Iowa, USA.

From this point on, as I edit the draft, I am in New Zealand, the words I am editing are in Iowa - where am I working?

By the time you read this post, I will have published and anybody in the world can read it.

Example, a visitor in Kenya pulls up this web site in their browser and these words are 'automagically' read in Kenya.

Question

Where is ‘the work’ done?

  • New Zealand, because that is where I tapped the original words into the computer?
  • New Zealand, because that is where I cut and paste those words into WordPress?
  • Iowa, because that is where the People First servers are?
  • Where you are reading this because until those words delivered value (you reading them), no work was done.

I ask because once you know where the work was done, you should have an idea on where you should be taxed and arguably where you should be licensed to work.

This conversation doesn’t seem to be a major part of public discourse, because the scenario is an edge case. But for how much longer?

New York has a law that says anybody working IN NEW YORK pays New York Taxes and from that emerges things like the NY, NJ and CT tri-state tax agreement.

“Like all states with broad-based income taxes, New York has asserted the right to tax nonresident income earned within its borders. But unlike most other jurisdictions with significant cross-border commuter flows—such as Illinois and Indiana or Virginia and Maryland—New York has never given nonresidents a tax pass in the form of ‘reciprocity’ with their home states.”

Read More

But if my servers are in Iowa, my customers are in Europe, my bank account is in California and I only live in New York, should I pay New York taxes?

I write more about where we work in this week's newsletter.

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Class Action Against Uber and Lyft

For example ...

  • set my prices
  • make informed decisions about which trips to accept
  • switch freely between platforms
    etc etc

This lawsuit starts instead by accepting that drivers are independent, then argues that Uber and Lyft are illegally depriving their independent-contractor workers of certain forms of “economic independence” such as the ability to set prices, make informed decisions about which trips to accept, and switch freely between platforms, at a cost to both drivers and consumers.

and

“Uber and Lyft are either employers responsible to their employees under labor standards laws, or they are bound by the laws that prohibit powerful corporations from using their market power to fix prices and engage in other conduct that restrains fair competition to the detriment of both drivers and riders,” the suit argues.

Full complaint : Class Action Against Uber (pdf)

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The Four Day Work Week – Is New Zealand Being Left Behind?

You can read the article here.

It’s not really a question as to whether New Zealand is being left behind. I think there are many countries facing this challenge … but the question is what is the challenge?

I ask because I believe that there is a massive conflation of this as people make their arguments..

Does a 4 day week mean

  • Working 40 hours in 4 days

OR are we really talking about reducing the number of hours of a standard week to 32 hours?

If the latter we are essentially awarding people a 20% increase in their wage/salary… really? From businesses who argue that they can’t afford a 2 Percent increase in salaries?

If it is the former … what’s the big deal? It isn't that hard to reschedule the teams .. and the benefits to the staff ... priceless!

Imagine cutting out 20% of these rides every week!

This is an easy commute - try it during rush 'hour'!

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physical presence - generated by craiyon

Netflix to pay $59M to settle a tax dispute in Italy, where prosecutors claimed cables and servers used by Netflix amounted to a physical presence in the country.

If you are wondering why I put this under the ‘Work’ category - it is because I think there is a court fight waiting to happen as to where work happens.

The thinking behind this case will be funneled into the new case.

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What Is The Future Of Work?

Let me point out - again - that the answer to the question is useless - because the question is badly framed. I have written about this before here, here and here and a whole host of other places aswell.

The Conclusion

There is no future of work. There is only a future of income.

Fast forward to a LinkedIn graphic that was presented to me last week.

It appeared in Brett King's LinkedIn stream. Brett and I are connected on LinkedIn, and have a couple of very good mutual friends in common. Brett, like another 'futurist' Gerd Leonhard is doing a great job in 'getting the word out', but I worry that the word being got out is not just oversimplified but actually harmful because people are being lulled into a false sense of security.

This Is One Such Example

First, I assume that 'Aritificial' is a typo and not some new technological development ...

... but the lack of proofreading of a single sentence might be a clue to how substantial the thinking is that underpins the idea.

Important: Please do not take this post as my taking an anti position on Brett. I don’t know him, but do follow and pay attention. He is not wrong on a number of issues. Like these two ..

The Original Post on LinkedIn (sorry - I wanted to embed it here - but LinkedIn is the only site that seems to fail with a WordPress embeds) ... go figure.

The crux of my issue is the flip approach to what is happening in the world of business today.

I limited my response to a few lines ... hoping that a reader would be able to 'read between them', Brett read the lines, but not between them.

Brett duly responded ...

Readers of this blog will know that this is something I understand.

BUT

The point I was trying to make is not about the future of work - we know is being redefined through outsourcing, offshoring, automation, AI, the gig economy, zero hour contracts ... and it is clear those jobs aren't going to come back.

My point is (and always has been) more 'People Firsty' ... that is as all of this comes to be - how will people make income to live their lives in the future?

Example 1

In the comments in Brett's thread people referenced the four day week - and everyone is talking about how it is already happening. The assumption seems to be that a staff member will no longer work 5 days and instead work 4 days.

This is quite brilliant and lovely and utopian and - all those things we want to have in and around our lives and existence. Who doesn’t want to work less ...

If their salary is not affected.

But let's just take a couple of seconds to do a pretty shallow dive ... if people are working 4 days, not 5, then they are working 20% less. To let them work less and not pay them less is the equivalent of companies giving each of those people a 20% salary increase.

Are companies going to do that?

The answer is in plain sight because we have a stalking horse in the race. Thanks to COVID we have proof points all over the world that people don’t want to 'go back to the office' and in turn, some companies have responded with

That's ok - work wherever you want!

Spectacular - until you read the small print ...

This isn't the only article out there, do a search and you will find hundreds, if not thousands of articles debating the merits of paying your staff based on what locals earn.

Case in point - move 200 miles up the I80 from San Francisco to Reno, salaries are nothing like that of the Bay Area. On top of that since Reno is in Nevada - there is no state tax. In California - well like most places, it varies, but here is one slice ...

$115,648 – $590,7469.30%
Source : HR Block

- so moving your life 200 miles reduces your cost of living substantially just based on tax savings. But there's more ...

Beyond the tax break, the Reno cost of living index is just 116.2, compared to San Francisco's at a whopping 244 - and that does not include the tax break just described.

So if you can do your job remotely, why wouldn’t you want to move to a cheaper place - and collect the same income. (Putting the comparison of living in Reno versus San Francisco aside.)

It does seem to be a perfect idea - except your employer is not generally going to allow that - because they do - and will - pay you based on where you live - not where you work!

I get the argument, I really do - but that's my point. If companies aren't going to pay people for value delivered, but based on where they live, then why are they suddenly going to pay you a higher daily rate because you want to work less?

To me, the 4 day week is an experiment to cut salaries - legally. It won't happen suddenly - just over time. They might well leave your salary in place, but everyone's? ... and when you leave will they continue to pay your premium rate to the next person?

Example 2

As more and more people leave their cubes to follow their dreams and passions - which is what everyone is telling you to do - right? Follow your dreams - it will all work out.

What dream and passion are you going to follow?

Look around today and you will find little societal support for artists, musicians, writers, poets et al. Imagine if the number of such people suddenly doubled, grew fivefold or even tenfold as we all follow our dreams ... are all those people suddenly going to be earning a lot more? (it's a rhetorical question.)

We are also told that there is so much opportunity in the professions of care-giving, social services, teachers, hospital workers, elderly care. They are right. Lots of opportunities. They are all on the ‘hot professions’ list, but before you get too excited, go talk to the people who work in those areas now. Ask them why Teachers are resigning en masse? Why do nurses get trained and don’t go into health services?

There are countless examples of how society (that's you and me), value these professions. We don't.

Back to musicians - we pay Spotify 10 bucks a month to stream an 'all you can eat' flow of music to your ears. The artists are generally not well rewarded. But it's not as if Spotify aren't making good money. How else do they afford to $100 million to sign up a single podcast - or buy company after company as they seek to lock up the world of podcasting. (BTW - they are doing it because the more you listen to that - the less they have to pay out.)

To conclude, as wonderful as it is for all of us to follow our dreams and passions - so we can all live fulfilled lives - we also need to earn an income. And we are barely doing that today, so how is that going to get better?

I said something better change
I said something better change
I said something better change
I said something better change

The Stranglers

Or maybe we will all move into social services, hospitals, caring for the elderly - since they are all on the ‘hot professions’ list. That said, the last two years have clearly demonstrated that while ‘society’ might value the people in those roles, it is clear that the paymasters do not.

In short, as we replace jobs with automation - and people don’t have a way to replace that income, something is not adding up.

Bottom line - as organizations remove people from their vendor supply chain and automate sales to improve business efficiency, more and more people will be left out of the workforce - and no matter how many Norman Tebbits (Sorry old English reference), how about Kim Kardashian's words of 'motivation'.

I have a way of looking at the issue. I call it ...

The Business Equation

At the simplest level, the business equation recognizes that every commercial entity has an input - where it creates something using people, money and/or assets to create a product or service that is sold - the output. The 'black box' in the middle is the business. Your business. Any business.

To maximize shareholder value, the business seeks to reduce the cost of what it produces or increase the price of what it sells. Yes there all kinds of techniques that are used - but reduce it all down and you are left with

It is a simplification, but the logic holds.

This is an early simplification of the model. The whole enchilada will become a post unto itself.

It is also true that on the left-hand side of the equation the fixed costs of 'people' is really high - which is why over the years, companies have sought to cut those costs by 'getting people off the books'. That's where outsourcing and offshoring got their start. Automation through Robotics is now turning into AI and then at contractual levels, the gig economy / zero-hour contracts all play into the needs of corporations who keep on pushing the boundaries of 'just in time' 'people'.

And you thought the days of people being cogs in the corporate engine was a thing of the past!

Now imagine every company big and small working to remove people from the equation in this way. Where does it leave people? Every mini Business Equation on the left of that diagram is doing its bit to outsource, offshore, automate .... and where do people fit in that equation?

To quote my friend Geoffrey Moore ...

That's What I Think - What Do You Think?

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Work

'Outsourcing' and its sibling ‘Offshoring' often suffer from 'abdication syndrome' as the company focuses on cutting its costs to virtualize their supply chain.

BUT

If you don’t have people inside the company who understand what the outsourcing company is up to .... how do you manage the relationship, contracts and work done?

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Why Do You Work?

Photo by AR on Unsplash

I promise, Manton, Daniel and I did not coordinate this - I think sometimes synchronicity just happens.

In last weeks newsletter I asked the question

"Why Do You Work?"

A reply post will be available this Saturday.

There have been some great answers, but that is not the reason for this post.

Manton Reece - the brain behind Micro Blog 1 and Daniel Jalkut - the brain behind Red Sweater 2 have a weekly podcast called Core Intuition. This week I learned that they have been running their podcast for twelve years. A remarkable feat even of itself. Both of them are independent developers and this week the conversation turned to employment. A really nice discussion between two professionals that wrestle with following their dreams and passions, while balancing the need to put bread on the table.

Have a listen - you won't regret it and very pertinent to the discussion 'Why Do You Work'.

Footnotes

1] If you want to see MicroBlog working in the real world, my web site - John.Philpin.Com is powered by MicroBlog.

2] If you want to see Red Sweater working in the real world, that’s a little harder - but Daniel has a superb product called Mars Edit that I am using to write and post this article. Seriously. If you are a Mac user that writes a blog - you should be using Mars Edit.

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Slack Solves The Wrong Problem Really Well

Or as Cal puts it …

"Slack is the Right Tool for the Wrong Way to Work."

”The future of office work won’t be found in continuing to reduce the friction involved in messaging but, instead, in figuring out how to avoid the need to send so many messages in the first place.”

Cal Newport

Cal nails the problem I have with Slack that I have never managed to nail down.

Read the article in The New Yorker