Financial Health for the Future of Work


JAY WAKS: Good
evening, everyone, and thank you all
for being here. I’m Jay Waks, and a
longtime volunteer for the Cornell Annual
Fund, ILR 1968, Law of 1971. I’m very proud of this badge
because it says Law 2000, and of my fellow classmates
is here this evening. And as I said,
longtime volunteer, but I’m proudest of all
being an ILR parent. Welcome to this
vibrant new space. ILR’s new city
home that will help frame ILR’s success
well into the future. You’re here tonight not only
to hear a special guest, Usman Ahmed, but also because
you share the same Cornell addiction as I,
an addiction being fed by your support
for the Annual Fund. To my fellow Annual
Fund volunteers who are here tonight, thank you
for all of your achievements. And to each and
every one of you, thank you for sharing
this addiction. Thank you for being
a Cornell junkie and for remembering
to dig as deep as you can to support the
Annual Fund this year and for the years to come. Professor Louis Hyman, Director
of the Institute for Workplace Studies, created this terrific
Future of Work program that this lecture tonight
is only a small part of. So now please welcome
one of my favorite ILR academics, Louis Hyman. Louis. [APPLAUSE] LOUIS HYMAN: Well, thank you
so much for joining us today, whether you’re in person
with us in our new space or whether you’re online. Thank you, Jay, for that
lovely introduction, and go class of ’00. So often, when we talk
about the future of work, we think about work,
which makes sense. But tonight, we’re going to
hear about the relationship between personal
finance and work, which is just as important
because after all, we have to retire someday, hopefully. We have to pay our bills. And this is what we’re
going to learn about today. Now, I want to
apologize in advance. If you were at Davos, you
already heard this talk. For those of you who didn’t
manage to get to Davos, you’re in for a treat. Tonight, we have
with us Usman Ahmed. He is the head of Global
Public Policy at PayPal. His work covers a
variety of issues, including financial services
regulation, innovation, international trade,
and entrepreneurship. Ahmed is also an
adjunct professor of law at Georgetown University
Law School, where he teaches courses on international
law and policy issues related to the internet
as well as fintech law. It turns out, in fact, that
regulation still matters in the era of the internet. His research has been published
in the MIT Press Innovations Journal, Cambridge
Press World Trade Review, and the and the
World Economic Forum Global Information Technology Report. Ahmed earned his JD from
the University of Michigan, his MA from Georgetown, and
his BA from the University of Maryland. And please give him a
lovely Cornell welcome. [APPLAUSE] USMAN AHMED: Thank you
so much, Louis, and this is incredible space that
you guys have set up. It’s really
wonderful to be here. And I have a couple of good
friends who are Cornell alums, and the passion, I guess,
for lack of a better word, is impressive of Cornell alums. So I’m happy to be here, happy
to christen this new space. I heard I’m the
first kind of talk that you guys have had here. So I really appreciate
the opportunity. And as Louis
mentioned, at Paypal– financial technology company–
we have 20,000 or so employees, so we certainly think about
work and kind of what’s happening with our employees. We also, and kind of the
impetus for this project– maybe some of you
are PayPal users. You probably bought
some stuff online. And we have like 240-ish million
people who buy stuff with us, but we also have
21 million people who earn a living using PayPal. So when you’re buying
stuff from people, sometimes they’re
also using PayPal to manage their business,
manage their financial life. And as work is
changing, actually, and more and more
people are kind of using the internet
in a way to either earn their primary source of income
or supplement their income, we’re starting to see more
and more of this world of work kind of enter our space. So not only the consumer
or financial services and management, but
also the way in which people are earning an
income is increasingly kind of flowing into our world. So that was the background
for why we got interested in this issue. And my job, on top of dealing
with regulations and policy around the world, is
to try to do research to understand some of these
bigger, broader trends, both for our company
and for the ecosystem because we have a lot
of data and a pretty interesting perspective I
think that we can offer out to the ecosystem because these
problems are way beyond– PayPal is not going to solve the
problem of the future of work. It’s a huge problem. We can maybe help solve
bits and pieces of it, but unless everybody in the
ecosystem is working together, it’s not going to get solved. So what we did here in kind
of a more academic fashion is we did a survey
of 8,000 workers in eight different
markets, and we looked at people who were
in their prime working age, so 20 to 50. We got a mix of industrial
markets and emerging markets– the big ones in China
and Brazil and India. And then we did 120 or so
expert interviews, and Louis, you were involved
in that, and we spoke about your perspective
and the excellent book, Temp, that you wrote, which
I finished on Audible earlier this week. It was very, very,
very informative. Thank you. LOUIS HYMAN: And long. USMAN AHMED: Eh, I mean,
I breezed through it. LOUIS HYMAN: Oh, good. USMAN AHMED: So we did
100 expert interviews with, again, people from
about 30 different countries. So we really wanted to get a
global perspective on this. I think we often talk
about the future of work very much as a US phenomenon,
and I’ll circle back to that at the very end. There’s actually some
super-interesting learnings for the US from other
countries, and vice versa. And then, again, as I mentioned,
with 230-ish million people managing their financial
life on our platform and 21 million plus who are
earning an income, we have quite a
bit of data that we could bring to bear on this
particular question as well. And with all of that work
and months and months of like digging into
this issue, and there’s so much kind of discussion
around this issue, and it’s the robots are
going to take all our jobs. Everybody is going to
be driving an Uber car. There’s all these just
high-level statements that get put out there, and
you would think, again, as a company trying
to sell stuff, we would have something
very blustery to say. But our real conclusion was
pretty muted in the sense of our only kind of
cross-cutting conclusion that we could give was that the
traditional nine-to-five that all of us– or many of us, I guess–
have kind of grown up with and the idea of a single
job for life– those are likely to become
less likely, less common. That’s kind of the
only thing that we could say with some level
of certainty across all the many experts that we talk to
and the data that we got back– many, many bits and pieces
you can pull out of that. But that was one kind
of overarching thing that we thought we
could say at the start as a kind of overarching trend. So within all of that data and
looking at all these issues, we thought we would
divide it up in a way that would make some sense. So we divided it into
four different trends that we think are driving
the future of work, and these are issues
that I’m sure have been talked about here and
get talked about a lot. The first one, the
kind of headline thing that often gets talked
about is automation– the robots are going to come
and take everybody’s job. And so, again, you’ve
seen, actually, last week, I believe the
OECD put out new numbers saying that in the next
20 years, 50% of jobs could be eliminated
due to automation. A couple of years ago,
some academics at Oxford, using the OECD data,
said it was 42%. Then the OECD said it was 13%. So who knows? Obviously, it’s something
very difficult to understand, but what we were able to do with
what the OECD’s research has done is break people down
into categories of work. And there are some
that are obviously much more likely to be impacted
by automation than others. And so because we
were surveying people understanding what
they do for a living and characterizing
them in that way, and again, because
we were looking at the personal financial
management of these people, we were able to kind of put
out some pretty unique insights about what’s happening
to people who happen to be in those spaces
that are likely to be impacted by automation. When we talk about some
of the big policy issues in this space, like
universal basic income or portable benefits,
this kind of finding about the financial lives
of these people, I think, is pretty important to consider. So what we found was that
over 75% of the workers who were in these
spaces or these job types that are likely to be
automated– they had no idea. They had no idea that this
is going to be happening. They think that their income
is going to be going up. They’re generally
positive on the future. So they’re kind of hopelessly
unaware that this kind of change is impending
and is happening to them. And that’s reflected again
in their financial behavior in terms of saving, preparing. So the average
retraining program, at least among large companies,
takes about six months. That’s also the amount of time
that unemployment benefits occur, in many states,
if you lose your job, and you would need
to get retraining. And so what we did
was we asked people, OK, how many of
you actually have money saved up for six
months in case that happens? I remember I was on a panel
with a nonprofit that’s doing a lot of incredible
work in this space, and the founder of that
nonprofit told this great story about his father in the
’70s, who was a janitor and who retrained to
become a COBOL engineer. And I asked him in front
of this huge audience– I was like, where did he
get the money to do that? You have to be able to
pay for an education. And he said, oh, yeah, we
were able to get a loan. Post-financial crisis, it’s
kind of difficult as a janitor to go in and get a loan for
education, I would think. So what we found
was that only 38% of the workers, again, in
these spaces that are highly likely to be automated have
that six months of savings, so would be able to take on the
burden of either losing a job or going into a
retraining program where they’re not earning
the same amount of income and taking that on. So again, when you’re thinking
about some of the bigger, broader policy
issues, understanding that these people are often in
the most precarious situation. The ones that are most
likely to be impacted by this change in the
way people are working are actually in the most
precarious financial situation. So treating everybody
as equal and kind of applying these policy
solutions at an equivalent level might not work. It might need to be that
we understand actually who these people are, their
situations, and the impact that technology could
have on the future. The other area that I guess
gets so much buzz in this space is obviously gig work
and the platforms and all of these I’m doing side
hustle, and I’ve got a gig job, and all these terms that are
obviously becoming kind of part of the common nomenclature now. And what we did was looked in
as unbiased of a fashion as we could at these workers because
I think the sentiment is, oh, it’s– and actually the
Department of Labor had a finding earlier this
week that these are not like employees. They’re independent contractors. They’re doing stuff on the side. And so the traditional
understanding of independent workers,
and our research proves this, too, because we
know about independent workers, is they have pretty
precarious financial lives. Bills tend to be very
kind of standard– every two weeks, every month,
your food bills, your family bills, education bills, rent,
obviously– these things are pretty kind of standard. And so when you’re earning
independent income that fluctuates, it becomes
pretty difficult to manage those bills. So the sentiment about these
online platform workers is, oh, they’re going to be in
a really bad financial situation because of that, because
they should map up to independent workers. And what we found in
our research which was independent workers who
responded to our survey– they did kind of
fit that pattern. They really struggled with
what their financial lives. They did not have good savings. They struggled with bills. They didn’t have positive
feelings about their future financially. But platform workers,
actually, were positive. They actually exhibited
more positive behavior than we were expecting. But they do have some
unique challenges because, again, their income
is not the standard income that many of us in this room
probably have– every two weeks you get your paycheck. You might have some
you know 401k savings. You might have stock, whatever. Most of these guys do
not have that situation. And so what we found was,
first of all, this space is growing massively. And a lot of these platforms
actually use PayPal, so we were able
to see the growth pattern of a lot of the
Ubers and the Airbnbs and all these other gig platforms,
and they’re growing almost 50% year over year consistently. So this is a massively
growing space, which I think everybody understands. Secondly, these people
actually exhibited a fairly financially healthy set
of behaviors in terms of they said we have a decent
amount of savings. We’re earning more money. And that was surprising
to us because we thought they would reflect the
independent worker, and we asked people
who are independent who are not online platform,
and they were struggling. And so our hope on this is
that this kind of economy is different and does have
meaningful differences, but our concern is
that because we’re in this early stage of
growth of these platforms, people are earning a lot of
money, and they’re happy. But what happens once it
hits full scale or the demand goes down? Then all of a sudden,
maybe the earnings will really start
to reflect more of what the independent
work economy looks like. And again, these
people will reflect a lot more like the
typical independent worker. That’s a serious concern. And one of the concerns,
even with these people who are earning more money
and doing more savings is, again, the income does
not match the expenses. So 63% of workers who are
in the platform economy– oh, sorry this is another point. What we found was
that it was about 44% of workers in the platform
economy who were saying, we still struggle with
bill payment on time because they’re not earning
the consistent income. This last point is just
demonstrating that part of that is they want to receive
their money instantly. As soon as they do the
job, they want the money so that they can pay the bill. If I work a full
day, and then I don’t work for another
couple of days, and I have to wait for that
income to come to me, that could be the difference
being late on rent or not– so huge, huge kind of demand
for that service, and we see that on our platform. Again, technology gets a lot
of the hype in the discussion around the future
of work, but there are other changes that are
going to impact how we work. And we also decided to look
into sociodemographic changes related to gender,
age, or where people live as we were talking
about urbanization. We also looked into
that set of issues when we were
thinking about what’s going to be happening to
the way in which people work in the future. And so again, on
the age side, I said we kind of classified people as
20 to 50, so we got millennials and we got Gen X. And one of
the most interesting findings about the millennials was– oh, many, many things came up– that they are much more
likely to work two jobs. So they’re much more comfortable
with this whole gig economy idea– that I’m going to
have a little side hustle, I’m earning multiple
streams of income. Again, because these
platforms are growing, this is just a great
way to earn more income. What happens in the
future with that? Secondly, they want
everything instantly. They want it digitally–
that kind of trend came up a lot with millennial
respondents to our survey, that they want these jobs
to be present instantly. They want the money to be
inserted in their account instantly. And then they want to be
able to enjoy that or use that money instantly. Similarly, one of the
big trends going on in the workplaces in many
countries around the world, especially in emerging
markets, huge trend of more and more women
entering the workforce really for the first time. And what we found was that
women respondents to the survey were a little bit more
financially stressed. And I think that makes
sense in many cases, particularly when we
looked at the US– I mean, the numbers of
single-family household that women are holding
up by themselves– very, very challenging situation
from a financial management perspective. And also, all these
trends on age and gender also kind of further
the notion that people want more flexibility in work. And that’s why you’re seeing
these more side hustles, I want another job because if
I’m the only person taking care of this child, I need a
little bit of flexibility if the kid is sick, or if I have
to go to school or whatever. So this notion of there are
unique financial challenges to being a working
woman, in particular if you’re a single
parent, and that reflected in the
responses to the survey that these folks are not feeling
as confident across the board, whether they were
in platform work or in a more traditional job. Lastly, one of the
trends we looked into was kind of urbanization– another big trend
that’s occurring. I think a couple of years ago
was the first time in the world where more people lived in
cities than in un-cities, I guess– suburbs or rural areas. And that trend just continues. It’s really like become
incredible growth rate over the last 30, 40 years. You as a historian will probably
know this far better than me. And so what we found was that
part of that urbanization trend is that jobs are less
available in rural areas. And so financial
precariousness is increased, and that’s what we
found in our survey. Ah, I’m having a lot of
trouble with this thing. 14% of rural respondents
said that they felt like they were going to be
able to retire, to your point, at the age that they want. Now, granted nobody
to this survey said, I feel super comfortable. They’re 20, 25, 30– I don’t feel super comfortable
I’m going to be able to retire. But it’s a step-order difference
from people who are in urban areas– 25% almost are saying, I
have some level of comfort, whereas only 14% of
these respondents were saying we’re
comfortable that we’re going to be able to retire
on our own terms, so pretty stark difference there. So last trend that
we looked at was if this notion that we looked
at at the beginning or this kind of high-level statement
that we put out that the traditional
job for life is going to be less
likely, and there’s going to be more precariousness,
more churn in jobs, then maybe entrepreneurship
becomes a more likely path. And again, with PayPal,
21 million of these guys– we have a little bit
of a sense of what’s going on in this space. But what we didn’t realize was
all the financial challenges that entrepreneurs face. And again, the survey
kind of reflects that. So only 46% of the
small business owners that responded to
our survey said they make consistent income. Again, if you make
a two-weekly check, that’s very unlikely for
a small business owner. And what that means
is that 55% of them– higher than any other
cohort that we studied– said that they had paid a bill
late in the last 12 months. And so obviously,
that’s additional fees, and that’s interest building
up and all sorts of challenges that these guys have. And so, again, not surprisingly,
that similar to the platform economy workers, these guys
want their money instantly. They want to be able to
leverage that for credit if they need it. They would love to get early
earnings on their income. So all of these kinds
of financial solutions that are still not really
yet widely in the field probably need to be created. And this whole study
was in part to direct it at the financial
services industry. I have to give a
presentation on this to a bunch of large employers
in a couple of weeks in Arizona, and the organizer– we were
having a call earlier today, and she was saying, you
directed this whole study at the financial services
industry telling them that they really need to shape up. What do you have to
say to employers, because these are going to be
all the employers in the room. And I said, the
employers need to demand the financial services
industry actually creates these products to meet
the needs of their employees. Obviously, there
are other things that employers need to do
around portable benefits and all these other areas. But in terms of
financial services, it’s going to be the actual
financial institutions, the fintech companies–
they are going to be the ones
that need to create these solutions because
people are starting to move into these
very precarious financial situations. The last cool thing
that we did was we did this little kind
of regression analysis. We looked at a job
type and a person who is kind of like
the ideal person you would want to be in the future. So we got Sam over here, and
she’s a physical therapist. Care is one of the industries
it’s highly unlikely to be automated– challenging to do from
a platform perspective. People want the same purpose
in taking care of them. So we kind of picked
somebody, and we created this profile
of somebody who would be unlikely to
be affected by a lot of these different
trends, and then we ran a bunch of
regressions to see, OK, what happens to
their financial life if we change their
job type a little bit? So if they were in
a profession that was highly likely to be
automated, and they got fired, what happens to them? And what we found
was that again they were highly unlikely to
have the savings to be able to take that on vis-a-vis
a physical therapist might be saving more money
and being able to take on that kind of issue. Similarly, if we looked
at somebody who instead was in the platform economy and
was using these mobile devices and kind of accessing all
their money online instead of in a more traditional way– again, bill payment going
late was a huge problem for these people. It was 20% to 30% more
likely that they were going to be paying bills late. So if you ever have
a chance, and you want to Google Financial
Help for the Future of Work, you’ll find all the
crazy regressions that we did and analysis,
but just a little bit of a sense of I think we think
of this kind of traditional– and again, that’s
one of the things I’m going to say to
all these employers is, it’s great you guys
are doing this work. You’re thinking about how did
you 401ks for other people. You’re thinking about retirement
benefits for your employees. I am still putting
together the numbers, but I think it’s somewhat
fair to say that about 50% of Americans who are
in the private sector are not in those type of jobs. They’re small business owners. They’re employed
by a small business that doesn’t have these kinds
of protections in place. They’re independent workers. And this segment does not
have all these employer benefit creation tools
at their disposal. So they’re in really
challenging situations, and they’re going
to need solutions that can be delivered at scale
because their segment seems to be growing in the economy. And maybe there’s
something employers could do for that, too. I mean, they don’t have to
just help their employees. They can actually help to solve
some of these problems as well. The last thing I’ll
just say, and then I’d love to just have
a conversation, is I mentioned that
this study was global. And I mentioned that there’s
certain interesting things that we in the US could
learn from emerging markets and the rest of the world. And talking to government
officials in India and in China, talking to
academics, it was funny– this notion that there’s going
to be this more precariousness in work, and people
are going to have many, many jobs over the
course of their lives, and many at the same time. They were like, yeah,
we’ve had that forever. That’s been emerging markets. That’s how it always is. And they were actually
saying, oh, what’s interesting is we’re moving more towards
people having middle-class jobs and kind of standard jobs. So it was interesting this
kind of convergence that’s going on in the world where– so again, we were very
much thinking of it from a financial
services perspective. Solutions that exist in
the emerging markets– things like saving circles,
things like communities building credit solutions
for one another, things like being able to call
on family members to get money when you need it– those might be
things that we need to start figuring out how to
do here in industrial markets if these trends are
going to continue. It’s probably not
the ideal solution, and this whole notion
was not to say, we don’t need
government solutions, and we don’t need
employer-led solutions. The notion was to say, we
also need these solutions. We also need to be thinking
about some of these issues because if some of those
big, broad policy solutions aren’t in place, these
trends are just going to be even more challenging. And the people who are,
again, in the most precarious situations are going
to be the ones that are hit hardest by it. So thanks again for kind
of offering the opportunity to come and talk about this. It’s something we’re really
trying to figure out at PayPal. If there’s folks
in the audience who are either working for employers
who are thinking about this or working in a space where
you’re thinking about this, we’d love to figure out
how to partner with you or help to deliver
some of these solutions to the people who need them. LOUIS HYMAN: Well, thank
you so much, Usman. I think that was just
a wonderful talk. And one of the things
I think is so important about this work is that it
highlights the importance of income volatility. We talk so much about
income inequality. We talk much less about
income volatility, which has very real costs,
and I think it’s costs that are hidden from
lots of well-meaning people who live in this salaried world. The actual financial lives
of just average Americans– that there was at
JPMorgan Chase a few years ago right that found
that– what was it? USMAN AHMED: No, it was
that Federal Reserve study– 47% of Americans can’t
cover a $400 expense. Is that what you’re
referring to? LOUIS HYMAN: I think
we’re going to survey off, we’re going to study
off each other. So that’s really important
that 47% don’t have $400. Just think about that. If your car breaks, or– USMAN AHMED: Health issue. LOUIS HYMAN: Health
issues, right? This way medical
debt can so easily– USMAN AHMED: Spin
out of control. LOUIS HYMAN: –get
out of control. But there’s another–
it’s interesting because you guys relied on some
administrative and internal private data. JP Morgan Chase
did the same thing, and they found that
a little over half of average median
household income. Families with median income
had month-to-month fluctuations of 30% of their
income every month. Just try to imagine paying your
mortgage or budgeting or all the things that scolds
like to tell people– oh, why don’t you just
figure it out? USMAN AHMED: Right. How do I do that? LOUIS HYMAN: How do I do
that with a shift job? I get paid different at
the restaurant every week. So I think this is– USMAN AHMED: I’m
working on tips, right? LOUIS HYMAN: I’m
working on tips. USMAN AHMED: So what do I do? LOUIS HYMAN: I don’t get the
shift I needed at Starbucks. So I think this is
something that really needs to be talked more about. I’m really glad that
you are doing that. USMAN AHMED: No,
that is certainly one of the major trends
that we focused in on, and it’s actually–
again, sorry to continue to take a global
perspective, but I just think it’s so interesting. You’ve got a country
like Singapore, and we talked to the head
of workforce development in Singapore. And they have this kind of
very traditional mindset of everybody works these
nine-to-five kind of jobs, and now they’re seeing
this influx of people getting more infrequent work. And they’re saying,
how do we manage this? How do we actually help
people think through this? They’re very much a
government-driven society, and they want to figure out
how to help these people. But they’re seeing this
trend is growing rapidly, and people have
unique issues when they’re in these situations. So it’s a global trend. It’s something that I
think everyone is really trying to get a
grasp on because we– and again, the struggle is
we have this mindset of oh, I earn my bi-weekly check, and
that’s how I get my credit score, and that’s how I
pay for my retirement, and that’s how I
manage everything. And that’s just– you
wrote a book on it. it’s a challenge. LOUIS HYMAN: But
I think it’s also just we think of that as
normal, and maybe we’re like, oh, well we know people
who drive for Uber. We know there’s the
gig economy, but we don’t think of the
downstream consequences of that for our financial
lives that have real costs. USMAN AHMED: Yeah. And look, again, 50% have
fluctuations in their income. Almost 50% can’t
cover a $400 income. So that’s a lot of people! That’s not just you know some
small number of people who are driving for whatever company. That’s a very significant
percentage of our society. LOUIS HYMAN: So let’s take some
questions from the audience, rather than you and
I can chat all day. Yeah. If you don’t mind
using the microphone– SPEAKER 4: Two technical
comments, and then a question. First, on the technical
thing that you talked about the 401ks– I think with SEPs and
IRAs, it’s essentially– we have some great minds
as policy makers from time to time in our country, and they
thought through these things. And I think it’s pretty
across the board for all the different possibilities
that that’s present. The second technical comment
is several thousand years ago, this problem was addressed in
the tourist story about Joseph and the silos, and so
this is not a new problem. This is something that we’ve
had droughts that destroyed civilizations, and the problem
of having irrigation and doing things to try and average
things out over time has been something
that pharaohs were dealing with
thousands years ago, and everybody else
is downstream. The question that
I have, which I think is the interesting part
is it gathers steam and becomes not just a little
niche area but becomes more central to the
macro situation, is the question
of you identified some of the major touchstones of
civilization the last 40 years. But one of the
others is the fact that there’s been this income
decline for vast stretches or lack of rise the way we
had through the ’50s and ’60s. And I think that’s the other
piece of the urbanization of the other major 30,000-foot
changes that affected civilization. And the question that I have
is from the macro and policy point of view– did you, in your research, find
anything as to whether these different non-nine-to-five
setups are more likely to break that problem, if you will,
of lack of wage growth? And you know it’s
been a political issue for at least the last
12 years, and so it’s a major piece of the
entire fabric of GDP and where our civilization is. So the question is,
did you find anything as to whether it’s going
to continue to be the same or be more extreme because the
volatility or what have you? Or whether this may be part of
the solution to that problem of allowing wage growth
to accrue where it has not because of international
pressures over the last 30 or so years? USMAN AHMED: Great. Thank you for the question. And certainly, you did
the multi-thousand year historical view of
this being the reality, and I was saying, even
in our current times, many emerging markets live
in this reality right now. And so it’s exactly
the same notion. And then, of course,
thank you for highlighting the multitude of retirement
products that exist. The challenge is,
again, not only that people don’t use them, but
also that they’re not really– let’s say, you’ve probably
read a lot about retirement, considering what you just said. The change in the
401k make it opt out instead of opt in was huge
in terms of uptake of it. And so you know designing
products in a way that people will
actually use them is part of the problem with
the whole retirement area. Lastly, to your last point
about kind of income inequality, if I could just simplify
it in that way– we didn’t ask people
how much they earn. So we couldn’t really say if
they were earning more or less, again, because we
were mostly focused on the consumer
financial services line. But one of the points that
I did raise that I think speaks a little bit
to that is the notion that independent workers were
in a far more financially precarious situation than
kind of traditional workers, and so that indicates that they
have struggles, I would say, both with income
volatility and probably with not enough income. But then I said, on
the platform side, you actually saw that they
were exhibiting pretty healthy financial behavior. So that could indicate
because they’re still kind of in a volatile
situation that they’re probably earning more income. So that’s probably why
they’re able to handle some of these financial
situations better. Again, my concern is
that at some point, these two worlds will start
to equalize because the market will build out. So as this market is growing
in a very 50% year over year fashion, you’re
seeing these people, and I think many
people are saying, I do it because I want
to earn more income, and I want to supplement
my income, or I earn– I was reading a fascinating
study about China and the sharing
economy where there are millions of people who are– it’s a huge issue
in China right now– leaving traditional jobs
to go drive for DiDi or to deliver food for Alipay or
Alibaba because they earn more. Those articles say we
earn more doing this job than doing the traditional job. So that does exist. Unfortunately, we
didn’t ask about how much income their
earning, so I probably can’t answer that question as
precisely as you might like. LOUIS HYMAN: An opportunity
for more research. USMAN AHMED: Absolutely. LOUIS HYMAN: That’s right. USMAN AHMED: Always good. SPEAKER 5: Hi. You said that your
studies were global. This kind of a
two-part question. The first part is, what in your
research can we learn in the US from some of the other
economies that you’ve done your research in? And then the second
part is, as individuals, what are things that you think
we can do to prepare ourselves for the future of work? USMAN AHMED: Great. Yeah, I gave a presentation
on this thing, this whole idea at PayPal, actually, to
a big group of employees. And then the first question back
was from a pretty senior leader who was like, is my job going
to be gone in the future? I think that was his
initial question, so I appreciate your
second question. So let me speak to
the first question. I mentioned a few things,
some pretty, I think, innovative products that we
don’t really have in industrial markets– things
like saving circles– that probably could be created
through technology in a pretty cool and innovative way. One other high-level
thing that then relates to a bunch of
different product sets would be basically the notion
of creating much smaller, more targeted products. So right now, if you think
about most financial services, they’re like a box. You go in that, and you
get it, and it usually lasts for a long time,
and then at the end of it, you’re done with it. And we’ve heard this incredible
story about Heinz ketchup in Uganda. And Heinz ketchup really
struggled in Uganda and lost to a local startup
because the local startup was offering individual
packets of ketchup versus the giant bottle. And so that same notion of like,
can you create really small, targeted credit
products instead of one that’s like five years long,
and it’s kind of standard issue, and it doesn’t
matter who you are. You’re getting this product. Instead, understand
that people need maybe something a little
smaller, more targeted, and that is much
more manageable, and they can actually use that
and then move on from that. So a little bit
high-level, but I think it goes to a number
of the different product areas of really, again,
leveraging technology to understand the individual,
their needs, and what you can actually do for them. Then, on your
second question, we didn’t really do a
study about training and what we can be
doing as workers. So most of our stuff had to
do with financial services. So I don’t know if you want to
speak about what you’ve seen, and you didn’t really
write about that either. But I mean, look, I think
all of this research is just demonstrating,
and I guess our one high-level statement is
that there’s more uncertainty. Coming back to your point
sir, for the vast majority of human history,
it’s been like that, and we kind of had
this amazing window. And you would be able to speak
much better this as a historian from the post-World War to the
recent financial crisis, where you had a huge middle class
that kind of had these pretty well-paying jobs, and you had
income growing right alongside. And that became an
economic law– oh, income should grow
right alongside– LOUIS HYMAN: We don’t
need to worry about it. This is how capitalism
is for the rest of time. USMAN AHMED: Right. Maybe those notions just
weren’t accurate, right? LOUIS HYMAN: They
were not, in fact. I mean, certainly
at Cornell, I’m on the Curriculum
Committee, and we were talking about what
should we teach our students, and this is one of
the big questions. And the phrase I kept coming
back to again and again was we need to teach them to
learn how to learn– how to be curious,
how to be more human– because if you learn
something today, it won’t really matter
in a couple of years. But this ability to read a hard
book, to learn a new skill– that’s something
you’re going to need to do again and again, as
we all have in our lives. And I think, for me, this is
a great opportunity that yeah, lots of things can be
automated, but it’s not stuff you want to do. And in fact, no human should do. Human should be caring
for other people. Humans should be doing curious
work and creative work. And just in the same
way that so few of us brought in the
harvest this fall– I don’t know, ma’am. Did you bring in the harvest? USMAN AHMED: I did not
bring in the harvest. LOUIS HYMAN: Yeah. None of us did, right? And yet we all eat bread– when we’re not our diets. But this is an important
part of the progress, and alongside of it is
this terrifying possibility that it’s a race to the bottom. And so that’s kind of
a choice that we’re in, and it’s not determined
by technology. It’s determined by
the political choices that we make as a society
about what we value and whether we value people
as humans or just value people as a disposable labor force. And I think that’s the political
question of the 21st century. USMAN AHMED: Yeah. I guess one trend that we
did highlight in our report that we think is potentially
more likely in this world is kind of entrepreneurship. And I don’t mean that as
set up a giant business. I just mean you take control
of your income-earning life. And so that could be a trend
that could potentially grow. LOUIS HYMAN: How do we
set people up to do that, which is a deeply
conservative American value. So this isn’t just
a left wing issue. This is how do we create
that American autonomy and self-reliance that we’ve
talked about for a long time, but we really didn’t
have in the post-war. That was sort of the death
knell of small business. So I think there’s a
real opportunity here for a bipartisan
conversation about how we grow this economy together. USMAN AHMED: I live
and work in DC. It’s very tough to have a
bipartisan conversation. LOUIS HYMAN: That’s true. I live in New York. We just talk to ourselves. Wherever the microphone is. SPEAKER 6: Good evening. My question is a
PayPal-focused question. I learned something about
PayPal and perhaps learn something about your
platform and business model, and it was happenstantial. In January, I had
made a purchase. I moved and changed my telephone
number, forgot all about it. Ultimately, PayPal chased
me down weeks ago– paid it, forgot about it,
and then it occurred to me that I should call back and ask
whether this 120-day lateness is going to be reported
to the three bureaus. And so I suppose now, having
seen your presentation, baked into your
business model is not reporting to the
three bureaus based on the nature of the kinds
of customers that you have. I learned something. USMAN AHMED: Yeah. I mean, a bit of a complex
question because I’m not sure if I fully understand
the transaction that you dealt with. Was it was it a
credit transaction? So right, on the consumer side. I mean, yeah. So if you paid it off late,
then you didn’t get reported. But if you didn’t, and you
went into collection and all of that, the consumer
type credit prerog does actually deal
with the bureaus. So we secure a lot of
data from the bureaus to underwrite people, so we’re
actually decently involved. And pretty much–
we don’t need to get in big conversation
about PayPal– but pretty much everything
we do is kind of linked into the banking ecosystem. LOUIS HYMAN: I’m going
to let Sarah decide. SPEAKER 7: Full disclosure– I work for a bank. I think one of the things that
addresses the two things you mentioned is there is a
terrible lack of education, in terms of finance and
future, across the board and especially on the lower end
of the economic spectrum that leads to a lot of very
expensive mistakes in talking about the credit
bureaus and fines and people getting these debts spirals with
payday lenders and all that. So I think part of the problem
is there’s a lack of education. It’s getting better with
technology, and it’s out there. People can find it, but
people still unfortunately get terribly taken advantage of. And the second
point was that I’m trying to remember it now
was education and lending– oh, the problem is there’s
a differential between Gen X and the Greatest Generation is
a lack of pensions going forward from corporates. And that really has changed
the retirement landscape for generations going
forward because if you put your 18,500 into your
401k every year, that’s great, but that’s not enough. And people don’t
understand that. So I think that’s another
thing people realize is the safety net that was
there from pensions in the past for your parents and
grandparents doesn’t exist unless you’re a fireman,
policeman, or teacher. So I think, again,
the lack of education to help with the
foundation to kind of get people more stable ground is
realizing you can’t do this. You need to budget. And there’s some great
companies out there that are trying to help
people, but the schools aren’t doing enough. From grade school to college,
they say, you know what? You’re going to be adult soon. You need to learn this. USMAN AHMED: You hit a
very important point there because one of the most
interesting things– I mentioned we talked
to about 120 experts, and I would say they divided up
pretty equally between future of work experts like yourself
and financial services experts because we really wanted
to talk to a lot of them. And actually, one of the most
interesting things– whenever we ask the future of
work experts, what do you need to do about financial
services in this space? They would say,
just educate people. The problem is people
aren’t educated, and if we educated them,
they would figure this out. And when we talked to the
financial services people, almost uniformly they
said, that doesn’t work. And you highlighted
the one place where some research
has shown it does, which is at a very early age. But post that, it’s
very challenging to find the right way to educate
people about these issues. What has been shown
to be more effective on the financial
services front is like I mentioned with 401ks– designing a product where
it’s either opt in or opt out, or designing a product where
the default is something that, or designing a
product that actually can use the data
to understand you better to deliver something that
actually makes sense for you. Those are shown to actually
lead to a lot more financially healthy behaviors than
educating, particularly in older age. You’re absolutely right that
in younger age populations, there’s been a lot
of good research to show that if you can
kind of get that in early, you can actually lead to a much
more financially healthy life. But it’s something
I want to dispel for a lot of folks who are
not in financial services that the big solution is if
we just educated everybody above 30 who is poor– oh, they would figure
out how to do this. The thing is, as you
mentioned income volatility– I mean, if you have
a 40%, 50% swing in your income for a week– no matter how educated
you are, there’s pretty much nothing you can do. And unless you have access
to the right kind of product at the right time, you’re in a
really, really bad situation, and then your options
become so limited. You don’t even– again, it
doesn’t matter what you know. You really only have
one path forward to some of those
entities you mentioned. I mean, the
alternative to them– there are alternatives to
them, but that’s really bad. So I often struggle, and we had
this really awesome exercise at PayPal– it’s called the Financial
Exclusion exercise. So you actually turn in your
cards and your bank account and all that stuff, and you have
to go and do a bunch of tasks. You have to pay a bill. You have to send some
money to your mom. You have to buy
something, and you have to get around the city. And so anyways, I remember this. It was in January. I’m out in the cold in DC. It’s freezing. I had four or five tasks. I had $50. First, I had to
cash a check, which I don’t know if I have ever– I mean, I do all this stuff. It takes four hours. I pretty much fail
at most of it. I’m out of my money by the
time the exercise is done. And the big takeaway
to me on top of all the fees I had to pay
the actors I had to deal with and the neighborhoods I had
to kind of interact with was I could have done everything
here without leaving my desk in two minutes
with a bank account and with technology. So again, I appreciate so much
what you were talking about. This is a huge part of the
population that we just kind of don’t really– we don’t live in
the same places. We don’t deal with
the same things. LOUIS HYMAN: Or they
live in a very different institutional setting. So it’s not simply– I think your
instinct is correct. We need to educate
them, but we also need to foster institutions. So payday lenders, which
are notoriously predatory– we need to support
banking reform that allows banks to make
microloans to different kinds of populations. Pew Charitable Trusts has
been very involved with that. USMAN AHMED: They’ve
done excellent work. LOUIS HYMAN: And
it’s something that’s important because
it’s not just about– there is that other
hurdle where in school, when we were in school, we
all learn how to write a check and sign our names. It’s very different
than that learning how to rebalance a portfolio
across eight asset classes, and the kinds of minimum
knowledge for that is just terrifying,
which, of course, if you have a defined pension,
you’re not encumbered by that. So that everyone has
to become an expert in finance kind of
seems crazy to me as a society, yet that’s what
we’ve asked people to do. So I think figuring out
institutional access to these things, are
part of which is digital. USMAN AHMED: I think it
has to be going forward. Pew also did a study that found
that 60% of unbanked people have a smartphone. So that’s a really
great way to reach some of these
populations, deliver, to your point, the
type of education that maybe they can access
and understand and use. I think that’s going to be key. Thank you for the question. SPEAKER 8: Do you
foresee a day where the IRS, Department of
Labor, some other US governmental organization
comes to you and says, right now you’re charging
a payee approximately 5% to receive a PayPal remittance. We want you to charge
17.5%, and then whatever is above the
17.5%, it’s your profit. So that way you look more like
ADP or paychecks or whatever. Has that question
been litigated? Or do you see that
down the road? In other words, a
1099 versus a W-2. USMAN AHMED: So the IRS goes
to a payment provider that is being used by an
employee and says, you need to basically make that
person into a W-2 employee? SPEAKER 8: Well,
essentially, they’re not doing that with ADP. But would they come to
you or your competition and basically say the same
thing is a policy issue? In other words, we want
you to be more equated with a W-2 for our remittances
rather than a 1099. So in other words, rather
than depending a 1040, the employee one,
we’re getting 17.5%. We want you to do it just
like ADP is doing it on a W-2. USMAN AHMED: So
I mean, there has been in the last couple of years
legislation, both state level and federal level, about
reporting 1099 transactions so that if they don’t meet
a certain threshold, you don’t have to report it. If they do, then you do. So you are seeking
action in this space about leveraging some of the
data that either a payments company or the
platform that is being leveraged to access the work. But again, you’ve got
Department of Labor earlier this week
saying, these are not employee-employer relationships. So they’re kind of indicating
from their perspective, maybe you shouldn’t be
treating it that way. So I would be
completely speculating if I said what I think
is going to happen. I have no idea what’s
going to happen. This is a rapidly-evolving
space, and I think one of the– again, why we did this study on
the consumer financial services life is understanding the unique
challenges of these people is going to be the
key, rather than trying to put them into the old
buckets and saying you’re this or you’re that. SPEAKER 9: Early
on, you mentioned universal basic
income, and I was curious what your thoughts are
on that and whether any data came out about that
or just how you think that could play a
role, or and whether maybe it should play a role
in this landscape that you’ve described to
help people deal with some of these challenges
and the volatility that we’re talking about. USMAN AHMED: Yeah, we didn’t
ask the everyday worker that we surveyed about
universal basic income. We did ask almost every expert. And I think you talk
about it in your book and welcome to talk about it
here, but what I would say is across the board, we did
have some experts, particularly in the technology
sector, who are saying, we should have
something like that because technology is just
going to change everything, so massively, and we’re going to
be in this very precarious world with massive income inequality. And so we should have that. I would say no
other group of folks that we talked to said
something along those lines. Some said, no, we
don’t need it at all. It disincentivizes work. And I would say a
good healthy chunk in the middle said,
portable benefit– we need benefits, and we
need to rethink benefits, and benefits aren’t
designed properly for a much more precarious
world with much more job churn. One of the stats that remember,
to the earlier question about preparing for work is it’s
like, if you were born in 1950, you had three jobs over
the course of your life. And if you’re born now, the
expectation is like 10 plus. So that notion of
figuring out a benefits system that makes sense for that
kind of world was a big theme. But I think most of
the folks did not frame it as a universal
basic income in that way. LOUIS HYMAN: I think we have
time for one more question. Does anyone else
anymore– over there. SPEAKER 10: Thank you. My question was really
to get more of an opinion from both of you relative
to this time in history. Do you believe this
particular set of problems is a constructive dilemma
or a destructive dilemma? And as such, if you’re
on the constructive side, how do you benefit from this? And if you’re on the destructive
side of this dilemma, how do you manage it
if you can’t change it? USMAN AHMED: Great question. I will turn first
to the historian. LOUIS HYMAN: I’m an optimist. I think there can be bipartisan
solutions in DC, which may– USMAN AHMED: There can be. There can be. LOUIS HYMAN: I mean, I
think there can be, too. I think that this is an
amazing opportunity for humans to become more human. We’ve seen billions of people
come out of poverty globally. I think Americans often
just think about ourselves, but we’ve seen an
incredible transformation in the world in the
last few decades. And we hear all these dark
clouds, these scary stories, and certainly there are things
to be afraid of like climate change and things of that sort. But I do think that we are
at this crossroads about what kind of society
we want to be in, and I think that we can make
it work if we think creatively and take advantage of the
opportunities in front of us. USMAN AHMED: I work
at a tech company. I’m an optimist, right? And I hope, I hope for a lot of
positive things in the future. But I do think, and
the next project that I am really
starting to ramp up on is kind of looking
at the history of the e-commerce industry,
which has changed a lot, obviously. And the question is, is it
something completely different, kind of to your question. Are we at a moment where this is
something completely different, something we’ve never
taken on before? And the hope is– and
looking back at history, I would be curious for
your perspective on it– it usually requires
that kind of mentality that this is something different
to get to meaningful solutions because if you just think
it’s the same thing, then you don’t
actually put in place the solutions that are needed. Because the world is changing–
regardless of whether you think it’s a step change or not,
the world is changing, and we’ve kind of– especially in the last
couple of decades, from a policy and
social perspective– struggled to make changes. So that’s the challenge. But again, I’m hopeful
that we can understand that whether this is
a step change or not, we need to be
changing as a society. LOUIS HYMAN: I think the
most dangerous thing for me– and I say this as a historian–
is a nostalgia for the past. I love reading about the past. I would never, ever
want to go there. It’s a terrifying place. And I think that
even if you have one of those good
jobs in a factory, you were a union
worker, which we know we’re excluding
many, many people from those kinds of jobs. If you’re an office
worker, these are soul-crushing jobs,
doing people work all day or working the line. No one is nostalgic for that. People are nostalgic
for security. They are nostalgic for family. They are nostalgic
for the weekend. And these are things that
I think we can do again, just the way we made the
industrial economy work for us, at least for a few decades. For most of the history of
the Industrial Revolution, it was a great place
to lose an arm. It was a great place to be
impoverished and immiserated. So again, I think it’s
about how we create policies and organizations
that take advantage of this new productivity. And I think, again,
this is about choice. USMAN AHMED: Again, as a private
sector company, and you talk about this in your book– what can the private
sector also be doing to really change itself
and to change the model and to structure it in a
way that can lead to more of these positive solutions? I think that’s a conversation
that I don’t think was happening when the
Industrial Revolution was happening so much. It was very much a top-down,
let’s kind of fix this. And so there is a potential
to potentially solve this problem in a different way,
which could be really unique. LOUIS HYMAN: But there
was that in the 1930s. So we hear a lot about FDR. We hear less about the
Citibank executives. They were part about
restructuring and finance to invest in housing, to invest
in rural electrification, to invest in
unproven technologies like aerospace that really
created millions of jobs. So I think this is why it’s so
important that conversations like this that really
show that there is an important need for
conversation between labor and capital as they would
have put it in the 1930s. USMAN AHMED: Wonderful. LOUIS HYMAN: All right. Thank you guys so much for
coming, and come drink the wine and eat the food. And let’s thank them again
for Usman coming here? It’s been really good. USMAN AHMED: I appreciate it. [INDISTINCT CHATTER]

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