Companies And Their Workers Benefit From Life-Long Learning

Digital technologies are rapidly changing the labor market and social landscape. But, they also have profound effects on the way that we learn by influencing the way we acquire and process information. Christos Makridis, a Research Professor at Arizona State University and non-resident fellow at Harvard Kennedy School’s Cyber Security Project and MIT Sloan’s Initiative on the Digital Economy, wants to understand how individuals can flourish in an era of rapid technological change—and learn while they work part-time or full time. These topics give rise to potent debates in in public policy (See Chapter 7 on 2019 Economic Report of the President on artificial intelligence and cybersecurity), and they also point to an important question worthy of further study: how the expansion of technology is also transforming the way we can learn? Christos answers my questions below.

What are the key takeaways on your research on life long learning?

Just like health insurance is viewed as a benefit, organizations should view education and life-long learning as incentives for increasing engagement, retention, and loyalty among employees. The emerging information economy is increasingly defined by intangible capital — relationships, knowledge, and so on. That means we can’t stick to the same crude set of incentives and expect to get better results. ASU is leading the way in democratizing access to education with its New American University as a “knowledge enterprise” that drives value for students at scale. Companies can partner with knowledge enterprises like ASU to create customized learning solutions for their workers. In fact, ASU has already spun-out an organization called Instride to identify corporate partners and implement learning solutions at scale.

What are the policy implications?

First, if we are genuinely concerned about inequality, then one obvious public policy implication is to design tax incentives that encourage companies to invest more in the human capital of their employees. And, not just in ways that make their employees better at their current job, but also better overall. Companies are often afraid of investing in their employees because they fear smarter workers will leave; but, the alternative of not investing isn’t much better! Second, continuing education and life-long learning shouldn’t be reserved exclusively for knowledge workers. Everyone should pursue some form of education after high school throughout their career, whether a traditional college degree or another certification. ASU is creating a wide array of educational services that allow learners to self-select into the pathway that’s suited for them — at reasonable costs while retaining high quality.

What should we do differently?

The traditional approach to higher education is not sustainable. Universities that pride themselves on selectivity are doing little to prepare the next generation. As Arizona State University President Michael Crow has remarked, institutions of higher education — or knowledge enterprises — should focus on value added: where does a student come in, and where do they leave? The Starbucks/ASU partnership of 2015 and the most recent Uber/ASU partnership are manifestations of ASU’s commitment to embrace a diverse student body: students who sometimes didn’t do well in high school but had a vision for transformation; students who sometimes struggle with learning but are determined to make progress; students who sometimes juggle multiple jobs but are committed to go to school at the same time. Moreover, by creating a subsidiary college-like entity, called EdPlus, ASU has carved out concrete resources and responsibilities to execute this vision at scale. EdPlus is unique in that it also contains its own “think tank,” Action Lab, that analyzes the program data to inform decision-making and ultimately drive value for students. All of these are examples behind ASU’s recent climb in university rankings, including winning the title of the most innovative university for five straight years from U.S. News and World Report. Their results show that institutions of higher education can transform students by empowering them with the tools to learn and achieve their dreams.

What would be the effect of the California regulations requiring Uber treat contractors as employees?

When thinking about public policy, what’s the underlying market failure we’re trying to resolve, and why do we think this regulation can solve it? While the motivation behind the California regulation is a reaction to a very real challenge among gig workers, it will likely have a net negative effect on the economy and the very workers that it’s designed to help in the first place.Whenever we think about compensation, it is important to think about it broadly: wage and non-wage benefits that people trade off as “compensating differentials”—that is, are you willing to take a lower wage to receive an amenity? That could range from health insurance to perks. (There is a debate about whether compensating differentials explain wages, but recent evidence from Stanford economist Isaac Sorkin concluded the roughly 2/3 of the variation in wages is due to compensating differentials, rather than what some argue are “rents”.)

Imagine ridesharing as a job that’s all wage compensation. People can argue whether it’s a high enough wage; perhaps for some it’s not high enough, but for others it might be. But think about the jobs where wage compensation is lower even though benefits are higher. While that might be good for some people, it is not for others. For example, I would personally prefer to have more cash compensation than perks in the workplace, paternity leave, or even generous health insurance coverage for that matter. Gig jobs simply provide individuals with an opportunity that offers higher wage compensation and lighter non-wage compensation—a trade off that will vary person to person. Uber has entered into a unique partnership with ASU to provide drivers with access to ASU online for free—an educational benefit that matters a great deal.

Even setting aside this question of wage versus non-wage compensation, it’s important to take stock of some of the net benefits. Separate research of mine with Yong Paik at KAIST investigates the net welfare gains of ridesharing platforms. Our preliminary evidence suggests that the introduction of these platforms conveyed roughly $633.5 million in net benefits. For example, getting around a city when traveling, or even not having to individually own a car, is much easier. In this sense, while the sharing economy might not be perfect, we must be careful not to impose a regulatory “solution” that makes people worse off.

Some suggest that working as an Uber driver is in some ways the “taxi job”, what one does to make a bridge to the next thing. What are your thoughts?

The great feature of the ridesharing economy and gig economy more generally is flexibilty. Beyond serving as a bridge, it’s also a great form of what economists call “partial insurance” against idiosyncratic and aggregate risk. University of Chicago’s Dmitri Koustas has a stellar paper showing that Uber drivers can cushion against negative events, like a lay off, by driving more. In this sense, Uber as a gig isn’t just a thing to do while pursuing additional education or training, but also a genuine side hustle to drive cash flow.

How can company measure the value of this investment?

Just like other investments, providing workers with educational benefits requires evidence of a return on investment. Companies should consider at least three factors when quantitatively evaluating whether to do it. First, retention: workers are likely to stay with the firm at least until they finish their additional degree or certification. Plus, the extra time gives the firm an opportunity to further make the case for why the employee should stay for the longer term. Second, engagement: related research of mine in partnership with Payscale.com shows that one of the biggest predictors of job satisfaction is the degree to which an employee feels like they are learning and progressing through development and training opportunities. Higher job satisfaction will translate into higher individual and team productivity. Third, brand: given that intangible capital is becoming increasingly important for explaining firm value, organizational policies that authentically signal value and convey it to their employees will have a lasting effect on their reputation. That means the firm will also have an easier time attracting new talent and winning over customers. Admittedly, quantitatively estimating these net benefits is not simple, but it can be done.