Global economy strategy

Global economy strategy

Location Matters

The urban economist Enrico Moretti discusses the aspect of location in relation to globalization. The world has changed a lot over the years. Thanks to the advancement in technology, location is determined as the main aspect holding the economic lifeline of major corporations in the globe (Hill, 2015). Location determines how a company performs both at its local base and internationally. Moretti argues that the low-skilled jobs that are moved out of the United States allow the large tech corporations to hire the highly skilled workforce while lowering prices of goods (Moretti, 2012).

Innovation hubs have pulled large corporations to their locations owing to the benefits that come with situating a firm in an innovation hub. (Moretti, 2012)Argues that smart, innovative workers and companies, like to be surrounded by other smart and innovative firms because ideas that help the company/worker perform well are hatched within that ecosystem. For instance, a company located in an innovation hub like Silicon Valley and has the entire tech ecosystem surrounding it will perform exceptionally well compared to that outside. Additionally, expertise in various fields in the sector is easily accessible. Consultation and guidance about a company’s progress are sought after from the Silicon Valley techies. Therefore, the closer the firm is to an innovative hub, the more prosperous the firm will be.

Educational opportunities vary depending on the location a person chooses. For instance, young people who move to cities looking for educational or work opportunities move to those that have the best colleges, have a high chance of securing a job after college, and have plenty of recreational amenities. Cities like Boston that are renowned for good colleges and universities tend to attract more young people to move and live in the city, compared to those lacking excellent educational opportunities. Young people move out of their parents’ homes looking for cities that they perceive to be education-oriented and family-friendly and rank high in life quality factors. Florida suggests that the use of the “Trick-or-Treater Index” is essential to gauge if parents can confidently allow their children to participate in door-to-door activities that define the value of the metropolis (Florida, 2010). Therefore, a person’s choice of a city determines the education opportunities and other incentives that the city offers.

The growth and conspicuous presence of a large corporation in any particular location stimulate the area’s technological and economic development, and its spillover effect felt everywhere. For instance, Microsoft’s settlement in Seattle attracted other small businesses in the field of supplies, management, etc. and, in turn, attracted other giant corporations like Amazon, which established its base in Seattle. Similarly, Microsoft’s presence in the area led to the sprouting of many start-up firms related to software and programming, for example, those focusing on software development and management. Moretti’s analysis corroborates this argument that for every new job created in a metropolitan area’s innovative industries, five are created in that particular area, and three jobs go to workers, not specifically in that area (Moretti, 2012).

Under the current phase of globalization, manufacturing and extraction industries have taken a second-tier seat in revenue generation. For instance, most American manufacturing industries have left that role to most Chinese companies and took the high-value work in the service and technology sectors. This unnatural phenomenon has allowed a robust technological innovation in the United States while allowing for rapid factory expansions in China. Therefore, geographically, it implies that Chinese imports docking at American ports is of a lower price than when manufactured in the US, an advantage to the US consumer (Hill, 2015).

Florida notes that globalization has created new class divisions; there are those rooted in a place and those moving to cities offering new opportunities every time. The class mobility ranks urban areas in terms of their economic specialization and values (Florida, 2010). Therefore, most businesses tend to follow talented and innovative persons to cities, even if labor and land costs are high. Florida further notes that cities that manage to attract innovative and talented class of individuals reap disproportionate amounts of wealth, thanks to the exceptional human resource asset at their disposal.

The Gig Economy                                                   

Pros of the Gig economy

            The gig economy is a complex system in the free market economy whereby organizations create temporary positions for workers to work on contractual terms. Workers can also work for the traditional corporations that have embraced the gig economy by changing how their staffing system operates. One advantage for the workers is flexibility (Brown, 2009). Gig economy workers have many options in the sense that they can work anywhere they want, the hours they desire, and make as much money as they want. Often, workers work remotely away from their offices and hours that suit them best, hence, helps those working around family schedules (Prassl, 2018).

For businesses, the gig economy is a cost-saving strategy. Companies do not have to pay for the costs of full time or new employees. Firms do not necessarily provide equipment for gig economy workers because it is a temporary engagement, they only pay for the labor from the freelancer, thus, allows the firms to cut costs (Gandini, 2016). For the workers, the gig economy gives them greater independence because they need not necessarily work from office buildings. This autonomy boosts their confidence, thus, delivers quality work.

Gig economy workers have a variety of jobs at their disposal. Instead of doing the same job the same way every day, the gig economy offers a variety of jobs filled with different elements that make the work enjoyable and interesting. Hence, the monotony of dwelling on one kind of job is avoided. Workers find that each new work given daily is a different challenge on its own. Therefore, they become more excited and creative in the work because it varies daily. The creativity and the urge to complete the task enable the gig economy workers to deliver a quality job that is crucial for a company (Gregory, 2017).

Freelance workers often are paid higher depending on the firm and the economic sector they work in. Some companies pay gig economy workers more money because they do not have to pay benefits on top of their salary. Freelance workers are paid on an hourly basis; therefore, they can control their work hours by maximizing the time they get for work (Gandini, 2016). Additionally, an activity like a part-time higher education study is highly achievable because the work schedule is flexible. Hence, one can work and study at the same time.

Cons of the Gig economy

            For the gig economy workers, there are no benefits because they are not part of the package. Gig economy workers do not get the benefits allocated to full-time employees because theirs is a temporary engagement (Prassl, 2018). Therefore, many of them plan to purchase private insurance and plan on retirement. Therefore, they have the problem of having to allocate a certain portion of the paycheck to those expenses each month. For the gig economy workers who are paid a slightly lower sum, planning for such expenses strains their financial abilities, and most of them forego such expenses.

For businesses, hiring a remote freelancer who is not willing to work as hard as the full-time company employees can be a headache for human resource managers. It can be hard for businesses to get reliable workers able to deliver services up to the firm’s expectations. Selecting the suitable freelancer that understands the company’s mission and values is sometimes costly and time-consuming (Sinicki, 2019). Additionally, the selected remote freelancers can deliver poor quality work, thus damage the firm’s reputation.

Gig economy workers often feel isolated and miss cultural solidarity. Some workers working remotely may deem the isolated and removed life of the gig economy a problem. Often, gig economy workers do not work in office buildings and, in many cases, miss the social elements present in the office. From parties to coffee time chats, gig economy workers work from a remote site and spend their day alone missing such experiences. While this system is flexible for the worker, it can make him/her feel isolated and removed from the other workers (Sinicki, 2019). Additionally, the remote worker misses updates and emerging office trends that are common in various multinational corporations as part of their work culture.

Gig economy jobs tend to be stressful for many workers. They are always ready to find their next gig or anticipate changes in the current one. This leads to stress because many people like a secure and steady job. Gig economy workers often face unexpected changes in their work and their wages (Friedman, 2014). There is also the stress of being removed from the job if issues arise in the line of duty. These factors take a toll on the mind of the freelancer and make him/her feel stressed.

References

Brown, T. (2009). The gig economy. The Daily Beast.

Florida, R. (2010). Who’s your city?: How the creative economy is making where to live the most important decision of your life. Vintage Canada.

Friedman, G. (2014). Workers without employers: shadow corporations and the rise of the gig economy. Review of Keynesian Economics, 2(2), 171-188.

Gandini, A. (2016). The rise of a freelance economy. The Reputation Economy (pp. 13-25). Palgrave Macmillan, London.

Gregory, L. (2017). Workers on tap but income drying up? The potential implications for incomes and social protection of the ‘gig economy’. Social Policy Review 29: Analysis and Debate in Social Policy, 2017, 29, 23.

Hill, S. (2015). Raw Deal: How the” Uber Economy” and Runaway Capitalism Are Screwing American Workers. St. Martin’s Press.

Moretti, E. (2012). The new geography of jobs. Houghton Mifflin Harcourt.

Prassl, J. (2018). Humans as a Service (Introduction). Humans as a Service, The Promise and Perils of Work in the Gig Economy, Oxford University Press (2018).

Sinicki, A., Sinicki, & Ramachandran. (2019). Thriving in the Gig Economy. Apress.