Adam Ozimek on Labor Market Trends and a Call for Employee Experience
Adam Ozimek, Ph.D., is Chief Economist at Economic Innovation Group (EIG). With a passion for empowering growth and success, Ozimek's expertise lies in identifying the evolving dynamics of the modern workforce. Having held prior positions as Chief Economist at UpWork and Senior Economist at Moody's Analytics and conducted research in a broad array of economics fields, including labor markets, demographics, and remote work, there are few with his perspective and knowledge.
Adam Ozimek, Chief Economist at Economic Innovation Group
I recently sat down to chat with Adam Ozimek about future of work trends as part of my research to produce Season 1 of The Lever with Drew Fortin. This show highlights how the rise of artificial intelligence (AI), robotics, and Web3 will shift the paradigm of humans at work for the better. I wrote this article based on my notes and transcripts from the interview. You can also watch a video of my interview with Adam Ozimek, Ph.D., Chief Economist at Economic Innovation Group, below.
Major Labor Trends Over the Next Few Years
Ozimek kicked of our time together by shedding light on how the labor market is set to experience some fascinating trends in the next two to three years. One of the most prominent shifts is the growth of remote work. While remote work gradually gained traction before the pandemic, it skyrocketed during the global health crisis as businesses sought ways to adapt and continue operations. Surprisingly, many companies found that remote work worked effectively and provided numerous benefits. As a result, a significant portion of the labor market is expected to remain remote even after the pandemic subsides. Startups, in particular, are embracing a remote-first approach, further driving this trend.
However, remote work is not the only noteworthy labor trend on the horizon. Another aspect that will shape the future of work is the increasing focus on employee experience. Companies are recognizing the importance of providing a positive work environment and fostering employee engagement. This includes prioritizing talent mobility, encouraging continuous learning, and offering opportunities for growth and development. Organizations that prioritize employee experience to attract and retain top talent while driving productivity and innovation will rise above the rest.
"It's not going anywhere. And if anything, we're going to see more of it as startups are disproportionately remote, embracing remote-first." - Adam Ozimek, Ph.D., Chief Economist at Economic Innovation Group
Ozimek also explained how new technologies and automation will continue to impact the labor market. With artificial intelligence and robotics advancements, certain job roles may become obsolete, while new ones emerge. He emphasized how crucial it is for individuals to develop a versatile skillset that includes adaptability, creativity, and critical thinking. Learning to learn, unlearn, and relearn will be essential for staying relevant in the evolving job landscape.
These labor trends indicate a significant shift in how we perceive and engage with work. Remote work, prioritizing employee experience, and embracing technological advancements will play a crucial role in shaping the future of labor over the next two to three years. Ozimek advised that staying adaptable and proactive will be vital to success in an ever-evolving professional landscape as individuals and organizations navigate these changes.
Navigating Return to Office: Balancing Worker Preferences and Market Forces
Ozimek also stated that businesses mandating a return to the office are facing a complex decision. While some firms may find it necessary to have their employees work in-person, others may thrive with a remote work setup. He believes the key lies in understanding workers' unique needs and preferences and the competitive landscape in which they operate.
Worker preferences play a significant role in shaping the future of work. Some individuals prefer structure and collaboration in an office environment, while others value remote work's flexibility and work-life balance. Employers must consider these diverse preferences and find ways to accommodate them to attract and retain top talent.
Ozimek went on to share that market forces come into play when determining the optimal work arrangement. Employers face competition in hiring and retaining skilled workers and in product markets. As some companies successfully navigate remote work, they may pose a threat to others who insist on an in-person work model. To remain competitive, Ozimek believes businesses must assess their chosen work arrangements' long-term profitability and productivity implications.
"There are going to be firms and occupations that need to be in person, and there are going to be firms and occupations that are best done remotely. And a lot of employers just don't know" - Adam Ozimek, Ph.D., Chief Economist at Economic Innovation Group
Returning to the office or continuing remote work is not a simple choice based solely on managerial preference. It requires weighing the demands of the workforce, considering the potential labor market competition for talented employees, and aligning work arrangements with long-term profitability goals. By striking the right balance, businesses can create an empowered and engaged workforce while staying ahead in a rapidly evolving professional landscape.
Understanding the Tensions in the Employer-Employee Relationship
In today's labor market, tensions between employers and employees are palpable. Many wonder if the employer-employee relationship is broken or if it has been strained all along. To shed light on this issue, Ozimek offers valuable insights into the factors contributing to these tensions and the potential resolutions.
One major source of tension arises from the shift towards remote work. Employees may desire the flexibility and work-life balance it offers, while managers may prefer a return to the office for a variety of reasons. This clash of preferences adds to the strain in the employer-employee relationship. Ultimately, market competition will play a vital role in determining the future of work arrangements, as some companies successfully navigate remote work while others insist on an in-person model.
Another factor is the tight labor market experienced in recent years, leading to a high quit rate and turnover. The pandemic, alongside policies such as stimulus packages and expanded unemployment benefits, caused workers to reevaluate their job choices, seeking better opportunities. This created a temporary labor shortage, particularly among low-skilled workers. While this acute shortage is expected to ease over time, firms should prepare for tighter labor markets in the long run, which may challenge traditional hiring practices.
"People are looking for better job because they've been able to find them, especially on the lowest skilled part of the labor market, which is not where employers are used to having to deal with it being difficult to find workers" - Adam Ozimek, Ph.D., Chief Economist at Economic Innovation Group
Over the past decade, labor markets, especially for low-skilled workers, have been relatively weak. However, policymakers have learned that running the labor market hotter than previously thought can lead to positive outcomes such as wage growth, reduced wage inequality, improved working conditions, and increased employment opportunities. While this may benefit society, some employers may struggle to adjust to a world with increased competition for low-skilled workers. The paradigm of quickly finding and hiring low-wage workers is no longer sustainable, requiring businesses to adapt to the evolving labor market dynamics.
By understanding these underlying factors, employers can navigate the tensions in the employer-employee relationship more effectively. It is crucial to consider employee preferences, market forces, and long-term sustainability when devising strategies that foster growth and success while empowering talent and business strategies.
The Evolution of Skills in the Era of Automation
Ozimek shed light on the impact of automation on compensation and the value of a worker. He emphasized that automation tends to increase worker productivity, potentially increasing earnings and wages in the long run. Drawing parallels with historical examples such as the introduction of tractors in agriculture, Ozimek highlights how automation can bring about significant progress and improvements in human well-being.
Ozimek also acknowledged that as technology advances, specific tasks may become less skill-intensive, potentially leading to a shift in the composition of jobs. However, he emphasized that focusing solely on the impact on specific occupations or skills overlooks the broader societal benefits of automation, such as increased affordability and accessibility of goods and services.
To illustrate this point further, Ozimek highlighted the example of shoe production. While the advent of automation may have decreased the average skill level required for shoemaking, it also resulted in greater availability, lower costs, and improved consumer welfare. By considering the overall societal impact, the benefits of automation become more apparent beyond the narrow focus on individual job displacement.
"I think it's better to think of it as its impact on tasks, specific tasks. So, AI might replace some tasks that you do and that frees up your time to specialize in other tasks." - Adam Ozimek, Ph.D., Chief Economist at Economic Innovation Group
Moreover, Ozimek encourages a broader perspective when examining the impact of automation on compensation and the value of workers. While certain tasks may become less skill-intensive, the overall benefits of automation in terms of productivity, affordability, and societal welfare cannot be overlooked. By understanding these dynamics, individuals and societies can better adapt and leverage technology to empower growth and success.
By expanding income pooling to different sectors of the economy, Pando aims to empower individuals, mitigate risks, and provide financial stability in an uncertain world. The concept offers an innovative approach to navigating the ever-changing landscape of careers and allows individuals to focus on their growth and success.
The Future of Work and the Growing Need for Human Judgment
When discussing the evolving landscape of work in light of increasing AI integration. He emphasizes that as machines handle objective, transactional tasks, the importance of human judgment actually intensifies. The next generation of workers will need to develop new and enhanced skills to thrive in this changing environment.
According to Ozimek, the demand for robotics programming is likely to remain strong. However, the impact of AI on programming as a whole is uncertain. While tools like ChatGPT have accelerated coding processes, it remains unclear whether this will significantly decrease the demand for programmers or reshape their roles into more holistic product management positions focused on user experience and design.
Ozimek suggests that the future job market will place a growing emphasis on soft skills. Machines may struggle to replicate the emotional intelligence and interpersonal aspects required for certain roles, such as sales. Human judgment and the ability to connect with others on a personal level are expected to remain essential qualities in various professions.
"In the long run? Increases in productivity should translate to increases in earnings and wages and the bigger impact it has on automating waste stuff that we do, the bigger impact it's going to have on productivity and wages. So, I expect that to be a positive thing in the long run." - Adam Ozimek, Ph.D., Chief Economist at Economic Innovation Group
As the future of work unfolds, Ozimek maintains that the balance between hard and soft skills will likely lean towards the latter. While AI can enhance efficiency and processing power, it is unlikely to replace the nuanced human qualities that contribute to effective sales and interpersonal interactions. Soft skills, encompassing emotional intelligence and personal connections, are poised to retain their value in the job market.
By understanding the shifting demands of the future labor market, individuals can proactively cultivate the skills necessary to excel. The combination of technical expertise and strong soft skills will empower workers to navigate the evolving landscape and thrive in an AI-driven world.
The Evolution of Work: Exploring Freelance and Fractional Employment
On discussion on how automation and technology are not necessarily displacing workers but rather augmenting and empowering them, Ozimek cites examples like ATMs in the banking industry, where the introduction of technology did not reduce the demand for tellers but rather reshaped their roles to focus more on personalized customer service.
Shifting the conversation towards the rise of freelance and fractional work, Ozimek acknowledges that this trend was already growing before the pandemic, and it has been further accelerated by recent events. While some may question the possibility of building a company solely composed of freelance or fractional workers, Ozimek believes it is indeed possible. He highlights that companies can outsource entire tasks or departments to freelancers, akin to how many businesses outsource legal services to law firms. The line between freelancing and outsourced services can often blur, with freelancers sometimes operating as small agencies with supporting teams.
Ozimek emphasizes that while the surge in freelance and fractional work may seem radical, it is merely an evolution of how work is structured. It involves rethinking traditional employment arrangements and embracing the flexibility and expertise that freelancers bring. By leveraging the skills and capabilities of freelance and fractional workers, companies can access specialized talent, reduce costs, and adapt to changing market demands.
"I think the balance of demand for hard versus soft skills is going to tend to lean more towards soft skills in the future. I think that the things that machines are going be least good at is being a actual person and the sort of emotional intelligence and sales." - Adam Ozimek, Ph.D., Chief Economist at Economic Innovation Group
As the world of work continues to evolve, the rise of freelance and fractional work offers new opportunities for both businesses and workers. It challenges traditional notions of employment while providing greater flexibility and access to specialized talent. By embracing this shifting landscape, companies can tap into a diverse pool of skills and adapt to the dynamic demands of the modern economy.
Exploring the Dynamics of Freelancing and At-Will Employment
When the topic of at-will employment and freelancing is discussed, Ozimek emphasizes maintaining at-will employment as a key ingredient in a dynamic labor market that fosters productivity. He highlights the potential risks of eroding at-will employment, noting that increasing the cost of firing someone can inadvertently reduce the demand for labor.
Ozimek believes it is crucial to differentiate between different types of freelancers. He notes that most contract workers prefer this type of work arrangement, as it provides them with flexibility and autonomy. According to surveys, many freelancers value the ability to scale up or down their workload, choose when and where they work, and enjoy the benefits of being their own boss. It is essential not to conflate freelancers who choose this work status with those who may be misclassified by employers to avoid labor obligations.
Ozimek acknowledges that some freelancers may opt for this work arrangement due to unfavorable conditions within traditional employment settings. However, he points out that a traditional employment option is often available for each occupation. Surveys indicate that freelancers actively choose their work status, valuing the flexibility and opportunities it provides, especially regarding remote work.
"It's not very common, but freelancers can play a substantial role and if you sort of rephrase how you describe it, it becomes a lot easier to imagine. So, you can outsource entire tasks or entire departments to freelancing. And that sounds like a radical step." - Adam Ozimek, Ph.D., Chief Economist at Economic Innovation Group
While freelancing may have surged during the pandemic, He highlights that the preference for freelancing existed before the global crisis. Many individuals sought freelancing as a means to access remote work opportunities, as it offered a greater level of comfort for both employers and workers.
By understanding the motivations and preferences of freelancers, businesses can adapt their approaches to talent acquisition and management. Recognizing the value that freelancers place on flexibility and autonomy can enable companies to create more attractive work arrangements that align with the evolving demands and aspirations of the workforce.
The Value of Humans in the Workplace: Perspectives from Ozimek
Ozimek suggested that the value of a human worker is highly contextual and depends on various factors, such as the opportunity cost of not having the work done or the alternatives available. It involves considering the return on investment (ROI) for specific activities and assessing the potential loss if the work is not conducted.
Moving further, the conversation delves into performance measurement and the increasing importance of soft skills. He notes that while soft skills are highly valued, measuring and validating them remains relatively unsophisticated. However, advancements in artificial intelligence (AI) hold the potential to improve performance measurement by tracking contributions in real time and summarizing individual achievements within collaborative platforms like Microsoft Teams. AI-assisted assessment could provide insights into a worker's output and contribution, particularly in areas where output-based metrics are more readily available.
Ozimek further explains that while it may be challenging to directly measure soft skills, focusing on results can often provide a useful proxy. For instance, when evaluating a salesperson's performance, it may be difficult to gauge the extent to which they make customers feel valued. However, measuring the number of sales closed can serve as an indicator of their effectiveness. As AI evolves, there may be future opportunities to assess softer aspects of work, such as human interactions and emotions, but significant advancements are still required.
"I think at will employment, it's one of the ingredients in our dynamic labor market, but helps make our economy productive. And I think erosion of at will employment, treating the employment relationship is something that's very difficult to sever." - Adam Ozimek, Ph.D., Chief Economist at Economic Innovation Group
By understanding the contextual nature of the value of human workers and exploring innovative approaches to performance measurement, organizations can better align talent strategies with business goals, fostering growth and success.
The Rise of Independent Workers and the Shift in Career Development
Ozimek spoke of an independence revolution amongst workers and its connection to the fractional freelance movement. Ozimek raises the question of whether individuals will rely less on businesses to subsidize their career development and instead drive it themselves.
He highlights the growing need for workers to have more control over their performance metrics and validate their skills with tangible performance data. He suggests that advancements in technology are likely to meet this need, allowing individuals to build their resumes with validated performance metrics rather than solely relying on traditional resume content.
The conversation further explores the potential of global remote work and its impact on career development. Ozimek emphasizes that digital labor markets offer outcome measures that can serve as proof points of a worker's value and success rate. This becomes particularly valuable when hiring workers from different countries, where traditional signifiers of quality may not be applicable. Remote digital labor markets allow workers to accumulate diverse experiences and build a trail of success, which becomes an asset in finding remote work opportunities globally.
By embracing the trend of independent work and leveraging digital labor platforms, individuals can take ownership of their performance metrics and drive their own career development. The ability to showcase validated performance data becomes crucial in a global context, where traditional indicators may not hold the same weight.
"That's less about soft skills than it is about output and contribution on the soft scale side. More often than not, I think you just have to focus on results." - Adam Ozimek, Ph.D., Chief Economist at Economic Innovation Group
As technology continues to evolve and provide new avenues for career development, individuals have the opportunity to shape their professional journeys, pursue remote work options, and demonstrate their value through tangible performance metrics.
Rethinking Hiring Criteria: Beyond College Degrees and Job History
Ozimek spoke of crucial factors to consider when assessing a candidate's potential success within a company and how it raises questions about our conventional reliance on college degrees and job history as indicators of on-the-job performance. He also emphasized the importance of role-specific evaluation when hiring. While creativity may be critical for certain positions, it may not hold the same significance in others where focus, diligence, and attention to detail are paramount. By tailoring the interview process to align with the required skills of each role, employers can gain deeper insights into a candidate's suitability.
Drawing from insights by Tyler Cowen and Daniel Gross, He highlights the value of considering diverse candidates who may excel in roles that require high diligence, attention to detail, and focus. For instance, individuals with autism often possess these attributes and can make significant contributions despite not standing out in traditional interviews. It is essential to recognize the unique skills and perspectives that divergent candidates may bring to an organization.
"One of the advantages of having digital labor markets across various platforms is you have outcomes measures that help indicate your success rate and value as a worker. These are extremely valuable proof points when you're trying to hire someone outside of your labor market and sometimes in a different country." - Adam Ozimek, Ph.D., Chief Economist at Economic Innovation Group
Ozimek encourages hiring managers to prioritize the actual skills relevant to a role rather than being swayed by superficial factors during interviews. Focusing on identifying candidates with the necessary abilities instead of being charmed by their charisma in the moment can lead to more effective talent acquisition.
By expanding the criteria beyond college degrees and job history, employers can uncover hidden talent and create diverse, high-performing teams. Emphasizing role-specific evaluation and considering candidates who may not stand out in traditional interviews can result in more accurate assessments of a candidate's potential for success within the organization.
Want to hear more from Adam Ozimek?
- Catch Adam Ozimek in episodes 2 & 5 of Season 1 of The Lever with Drew Fortin
- Watch my full-length interview with Adam Ozimek, Chief Economist at Economic Innovation Group on YouTube
- Follow Adam Ozimek on LinkedIn
Drew is a people-first, values-driven leader with nearly 20 years of growth strategy and team-building experience across retail, marketing technology, local media, and HR tech. He spent 7 years at The Predictive Index, where he was Chief Growth Officer responsible for the company's strategy to build the world's first...
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