High-quality service jobs and the advent of a new golden age?

As MIT’s Zeynep Ton has pointed out, the U.S. suffers from a deluge of bad jobs, many in the service sector. While some suggest trying to revive manufacturing as the basis for a solid middle class, automation and other advances make it highly unlikely to be the solution. Instead, let’s think about what it would take to create high-quality frontline jobs and potentially lay the groundwork for a new Golden Age.

Of bubbles and golden ages

When looked at through one lens, things look pretty grim out there. Tariffs are once again on the policy menu, the assumptions of economic order that have been in place since the end of the Second World War have been shaken up and organizations are facing multiple existential threats. But, economist Carlota Perez reminds us, we have been here before. In roughly 60-year cycles, capitalist economies reinvent themselves with a new technological regime that goes through a fairly regular pattern – first an eruption of new possibilities, followed by a bubble, then a crash and then eventually a deployment phase where the new discoveries are in widespread use, investment capital lines up with production capital and we have the potential of achieving a new “golden age.”

We are in the messy middle, where the old regime (think mass production, petroleum, appliances, suburbs and highways) is still clinging on, and the new regime (information and communication technologies, the Internet, now AI) hasn’t yet been completely installed. It’s a period of political upheaval, competition among nations for primacy, experimentation with new business models and the discovery of entirely new ways of working and living. And our current “installation” period has lingered for longer than one might expect, as inexpensive global labor markets and the capture of financial markets by the ‘casino’ economy prop up the productivity of the previous technological regime.

So there is much talk of “bringing back” good manufacturing jobs to the United States as a way of once again bolstering the lifestyles of the middle class. Here is where Perez’s work intersects interestingly with that of MIT’s Zeynep Ton. In her recent article in the Harvard Business Review, Ton points out that while manufacturing jobs are indeed critical to national security, innovation and resilience, there are unlikely to be enough of them to rebuild the middle class in the United States. Instead, she suggests, why not focus on the jobs that are already plentiful here – front line service jobs. Indeed, as she points out, there are more Americans working at Walmart than in all U.S. automotive factories combined.

The new world of work, ‘permissionless’ organizations and future good jobs

We are already seeing the emergence of new kinds of jobs made possible by digital technologies. We can already observe that network-centric organizations operating as networks of competence or ecosystems are taking the place of traditional firms. These organizations behave quite differently from firms designed to deliver value in the mass production paradigm with its linear hierarchies. The digital paradigm favors flexible, interconnected networks of specialized entities. This can dramatically reshape how work is organized and how value is created (there will be a whole conference on this in Lisbon in September). As I have argued, the new technologies can substitute for what management traditionally did, opening the door to “permissionless” forms of organizing.

A second big shift that digital technologies usher in lies in how value is created and consumed. Value shifts from tangible to intangible assets. Back in 1975, as a report published by UCLA finds, intangible assets were just 17% of the assets on publicly traded firm’s balance sheets. Some 50 years later, intangible assets such as software exceed 90% of all assets on a company’s balance sheet. The people creating value from these intangibles, moreover, are in high demand – in many cases in higher demand than the people working with physical assets (as would be the case for workers in a factory). What we can observe in many of these firms is that knowledge, creativity, design, software, relationships, and services become primary sources of value, rather than physical production.

This then brings us to the central challenge articulated by Ton’s work: how to make the non-automatable, non-repetitive work of the front-line worker more rewarding for the workers themselves and better for those receiving their contributions and care? Building on the work of people like Paul LeBlanc and David Autor, I suggested that we could put more people in scaled systems of care that might not save a ton of money (at least in the short run) but which would allow us to achieve far better outcomes.

Might the end of mass standardization be the opening we need?

In the mass production paradigm, the sweet spot was to produce a whole lot of items that were of high quality, affordable, and exactly the same. One toaster would be like the next, one car like the one just coming off the production line, your clock radio exactly like the one your neighbor bought. As the mass market paradigm gives way to a service paradigm, services can come to replace what products used to do. Take listening to music – today, we don’t even buy albums anymore, in fact, we don’t buy music much, rather we rent it. The algorithm, not the music studio, decides what to play and in what order.

With the advent of digital services that are easy to personalize and customize, the competitive advantage of the mass market paradigm fades. This is true even for physical products. Hyundai, for instance, is experimenting with entirely different form factors for what a “car” might be – piloting a so-called “walking car” that could climb steps and create access for people who couldn’t otherwise have access to mobility. Tesla famously is able to guarantee road-worthiness assessment at the level of the individual vehicle, meaning every car off the line can be slightly different. Companies like South Korea’s Toss can create bundles of financial products that are specifically customized for individual user needs.

This all opens up a new growth vector in the experience economy and relationship-based work on the front lines. We can anticipate growth in work centered on human relationships and experiences. Healthcare, education, entertainment, and personal services are becoming dominant employment sectors. A premium on emotional intelligence, creativity, and interpersonal skills is emerging. And the rising importance of meaning and purpose in work is now part of employee’s expectations. We’re already seeing, for instance, that Gen Z’s interest in taking a traditional promotion is waning as few members of that generation see climbing a corporate ladder as the path to a rewarding career or life.

Ton’s outline for what constitutes good jobs, based on her many years of research and experience with the Good Jobs institute makes an excellent blueprint for considering what a re-imagined service economy that creates broad prosperity might look like.

Good jobs today, good jobs tomorrow

What Ton describes is a systemic approach to job design that regards workers not as a cost to be minimized but as drivers of profitability and growth. Good pay, investment in the form of continuous education and development, the ability to create a career track from a front-line job to one with greater authority and redesign of systems to reduce unnecessary complexity and give people all the tools they need to do their jobs well are all elements of her proposal. We see evidence that this can work at the level of a corporation. Companies like Costco, Enterprise Car rental and Quick Trip would all be examples.

These companies operate mainly with employees. But we’re seeing a whole lot of other kinds of service jobs emerging that are not based on a permanent relationship to an employer, but rather on value-exchanging transactions, potentially between individuals and teams and customers. Interestingly, these firms – Airbnb and Uber come to mind – create the equivalent of mini-markets through their platforms.

Historically, a hierarchy, or complex organization was thought to be required when the costs of transactions were high, the risk of misbehavior high and the complexity of the work itself leading to some kind of outcome was hard to describe, or depended on firm-specific knowledge or intangible assets. As I have argued elsewhere, more and more activities can now be conducted through market-like transactions. We now see the widespread growth of platform-based business models, demonstrating that activities we used to think needed to be organized by companies can be handled by forms of marketplace contracting. Indeed, a recent study found that more than 150 million workers in North America and Western Europe are some kind of “gig” arrangement. In the US, 36% of workers have some kind of gig arrangement.

In what may be a terrific path forward, one could conceive of new economic designs in which gig workers can create their own good jobs. Pay can reflect the value created (with regulation as needed to make sure large platforms don’t become abusive). Value can grow as people’s skill and mastery grows. People would take the time and slack they need to develop their skills. In partnership with platform operators, tasks could be simplified and streamlined, and teams could have API-like interactions with other teams, eliminating a lot of the needless noise and complexity introduced by organizational dependencies and cross-functional collaboration. And of course one of the main attractions of gig work is that when properly designed it can provide people with agency, the chance to develop mastery, and the opportunity to pursue a purpose they believe in, factors that Dan Pink argues are the fundamental building blocks of motivation to begin with.

Golden Ages are not guaranteed

While the AI revolution, which will almost certainly destroy any number of existing jobs, will also come new ones, many that we probably haven’t even thought of yet. There could be sustainability-focused occupations, such as energy efficiency specialists, urban farmers, repair technicians for products not designed to go obsolete and building retrofitters who take existing stock and make it “green.”

We can begin to see what good jobs might look like in a future in which networks and ecosystems of value-creating teams and individuals are alternatives to or even replacements for the mass market production machines of yore. But, as Perez warns us, golden ages require smart design and a commitment to making life better for the majority of people – they don’t appear automatically just because a new technology is around. We are going to need better designs for employment models beyond the traditional employer-employee relationship. We will need some kind of safety net that accommodates intermittent or portfolio employment. We’ll need to recognize and appropriately compensate for previously undervalued forms of work, such as work in the care professions. As Ton says, the term “unskilled labor” should be summarily retired.

Rather than clinging to manufacturing nostalgia or assuming service jobs must be low-quality, this integrated perspective offers a vision where the deployment phase of the digital revolution delivers on its promise of broadly shared prosperity—through transformed service work that values human capabilities and provides dignity alongside economic security.