TCS Daily

Cottage Industry and Societal Change

By Glenn Harlan Reynolds - September 10, 2003 12:00 AM

Last week, I wrote about the way changes in technology are sparking a return to "cottage industry," with all sorts of work that used to be done in offices returning to people's homes -- the traditional place for most kinds of work, back before the Industrial Revolution.


Now, as it appears that many jobs cut during the recession won't be coming back, it also appears that many workers are starting their own businesses, often at home. In fact, quite a few formerly unemployed people are now reporting that they're self-employed. Though an economist quoted by the New York Times discounts this phenomenon as "involuntary entrepreneurship", it seems likely that -- voluntary or otherwise -- we'll see a lot more of this sort of

thing. As Slate's Mickey Kaus notes:

If we're entering a new economic era -- one in which traditional cyclical employers won't start rehiring, . . . isn't it likely, even, that workers will adjust by pursuing entrepreneurial opportunities? And if entrepreneurship is real, what does calling it "involuntary" mean? I might prefer to have a full- fledged "job" at Microsoft, complete with stock options, health insurance, etc. Instead, I'm a freelance contractor. Calling my entrepreneurship "involuntary" might be accurate, but it doesn't mean I'm not working and feeding myself. In the "newer" economy, you'd expect such self-employment to increase, no?

Yes. So what will this phenomenon mean? On the political front, I suspect that this phenomenon promises more support for my earlier argument that outsourcing of jobs to foreign concerns will become an issue in the 2004 elections, and one that can hurt the Bush administration. I also suspect that it will change the mix of political issues somewhat: self-employed people tend to hate red tape and taxes (people have been predicting a "1099 revolt" for a while as the percentage of self-employed people grows), but on the other hand the difficulty of getting things like health insurance when you're not affiliated with a large company might make them more amenable to some proposals from the Democrats.


We'll save that speculation for another column, though, because I want to look at some social changes that may come with increasing self-employment and home-based work. The Industrial Revolution, after all, remade our society -- and the boom in white-collar jobs after World War II did it again. Now the pendulum may be swinging back. What will that mean, for good or ill? Here are some thoughts:


Crime: Crime in the suburbs increased once the population of stay-at-home moms was diminished. Neighborhoods had fewer sets of adult eyes around, teenagers got less supervision, and two-career couples were more distracted. Will that change? Likely. "Latchkey" kids are increasingly coming home to a parent who works at home, or whose schedule is irregular enough that his/her absence can't be taken for granted. And irregular schedules mean that thieves can't assume that neighborhoods will be deserted during the day. That's certainly true in my neighborhood, where quite a few of the people are professionals who set their own calendars, and who can often be found mowing the lawn, or lounging by the pool, in the middle of a weekday because they'll be working at night or on the weekend or whenever their schedule best fits.


Family: One of the standard negative depictions from the Gray Flannel Suit era featured a disconnect between the world of work -- to which fathers trudged off en masse to downtown office buildings where they performed inscrutable tasks, from which they returned exhausted and in need of martinis -- and the world of family. Kids had little idea what their fathers did; fathers knew little about what their kids did. Husbands and wives moved in different worlds.


The entry of women into the workforce in large numbers has helped this a little, I suppose, but not a lot, especially where the kids are concerned. But kids who get to watch their parents work up close -- the way that kids did in the pre-Industrial Revolution "cottage industry" days -- are likely to have a much greater appreciation of how the world of work operates. Perhaps -- also like kids in the pre-Industrial Revolution days -- they'll mature more quickly as a result, though here I am perhaps being overoptimistic. At the very least, however, they'll see work behavior "modeled" in their presence. Instead of "take your daughter (or son) to work" day, it'll be "take work to your kids" every day. (And spouses tend to know a lot more about the work of self-employed spouses, for better or worse.) I'm not enough of a sociologist -- or a psychic -- to analyze all the changes that may result from this phenomenon, but I feel pretty confident that there will be changes.


Economy: If more people are free agents, working at home or out-and-about rather than in traditional offices, then businesses that provide them with useful services and amenities will flourish. We're already seeing some of that, with businesses featuring comfy chairs, and increasingly other amenities like free wireless Internet connections in order to attract "gypsy workers" who aren't chained to offices and who like to combine work with pleasure. (I often write this column at one or another local establishments offering free wi-fi along with other lures, and I'm almost never the only one working with a laptop when I'm there. I've never written a column from this place, though.)


Obviously, other businesses catering to the self-employed crowd -- from Kinko's to Office Depot -- are likely to do well, too. On a "macro" level, to the extent that more people are self-employed, it will make economic statistics more difficult to decode: instead of the binary distinction between "employed" and "unemployed," we'll have the fuzzier distinction between "good year" and "not-so-good year" that small businesses tend to experience. As the reports quoted above already indicate, this will make it harder to figure out what's going on.


Traffic: Proponents of light rail and other sorts of mass transit tend to portray these systems as the wave of the future. But the "commuter rail" model assumes the presence of, well, commuters: traditional gray-flannel-suit types who head downtown in flocks, spend a day at the office, and then return home. The driving pattern for work-at-home types is different: lots of short errands to different destinations (like Office Depot or Kinko's), typically carrying parcels. It's much harder to design a commuter-rail system that works for people like that. As Ralph Kinney Bennett notes, the automobile's flexibility and independence are unmatched by other forms of transportation.


Politics: I suppose I should save this for another column, too. But here's one note: people who are self-employed are far more aware that there's no such thing as a free lunch, and far more likely to look at the bottom line. As more of the electorate becomes self- employed, this is likely to produce an overall attitudinal shift in politics, over and above any changes in specific policies.


Will people miss things about the old-fashioned employment market? Absolutely. Though "job security" under the old system was always a lot less than it appeared, the constant need to hustle for business that marks self-employment is a whole different way of life. And though big companies are subject to Dilbert style inefficiencies and stupidities, they take advantage of division of labor in a way that the self-employed can't. On the other hand, most people who are self-employed, in my experience, tend to like it. Most people who work for big organizations don't. So it may be that, overall, job satisfaction will be higher. I hope so. Because, for good or for ill, I think that this is the trend. And I think that it will be for some time.


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