Imaginary jobs at fake firms: living in an age of illusion

Of course, there is no reason why the Upwork contractor might not further subcontract the work to their own shadow workforce. There is a thriving sector of “labor dropshipping” on TikTok in which contractors with good language skills and negotiation savvy serve as the virtual brand, managing a portfolio of subcontractors. On the internet, nobody knows you’re a sub-sub-subcontractor.

Organizations that don’t exist

The high water mark of all this virtual organization may be Madbird, an alleged global digital design agency “housed” in London that went on a hiring spree during the height of the COVID-19 lockdown, recruiting over 50 professionals – mostly in sales. These “employees” were brought on board with the understanding that they would be paid only on commission for the first six months, after which they would receive a salary. Remote workers joined all-hands meetings on Zoom with dozens of colleagues boasting impressive LinkedIn profiles and testimonials from prestigious global clients – but with their cameras off. The company’s website featured photos of an elaborate organization chart full of talent, led by an Internet-famous influencer claiming a world-beating career at Nike. It also listed a swanky Kensington address for its headquarters.

It was all a mirage. Photos of fake employees were downloaded from the web, LinkedIn profiles and testimonials were fabricated, and client testimonials were whole-cloth creations. As documented by the BBC, Madbird had no clients, revenues, or offices – but dozens of unpaid workers, many of whom had quit real jobs to work for the vaporous agency.

Silicon Valley has long lived by the creed “Fake it till you make it”. Theranos, WeWork, and plenty of other enterprises exemplify how this loose relation to reality can continue for extended periods. But Madbird took it to a new level, like an MFA thesis gone horribly wrong.

The 20th-century job market had a clear structure for upward mobility and a clear metaphor: the career ladder. The pyramid-shaped organization chart may have looked like a prison of conformity, but it was clear which way was up, and corporate HR offices expended great efforts to provide legible steps to climb the ladder. Today’s labor market gives us few clues as to how to move ahead, and yesterday’s career wisdom – “learn to code” – can have a very brief shelf life. We may as well be living in a simulation – and it is not at all clear where to get the cheat codes.

Externalizing transaction costs to labor

An underlying theme of this column is that information and communication technologies (ICTs) have dramatically changed the transaction costs for accessing the basic building blocks of business. For suppliers, this looks like Alibaba: a one-stop shop for finding manufacturing vendors. For distribution, it looks like Fulfillment by Amazon: a universal distribution channel for physical goods.

However, in labor markets, the transaction costs and risks have merely been shifted from business to labor. Candidates may spend countless hours completing courses for LinkedIn badges, researching companies, prepping for video interviews, undergoing multiple rounds of testing and completing tasks – all for jobs that may not exist at companies that may turn out to be vaporware. If we are living in a simulation, many of us are ready to declare game over.

The online mediation of labor markets may seem like a boon for employers who contemplate outsourcing their HR function to a bundle of algorithms able to optimize their supply of talent. The costs to workers, however, are increasingly manifest: unpredictable incomes, endless rounds of retraining with uncertain payoffs, shotgun applications to dozens or hundreds of employers, and hours spent pursuing opportunities that may exist only in an illusory jobs board. At the dawn of the online economy, we imagined remote tech workers coding on the beach while slurping a cocktail. Today, navigating employment can seem like a miserable video game with unclear rules and buttons that don’t work.

Adding to the puzzle is that the tools we have relied on to map our labor markets no longer work. Response rates to government surveys of workers and employers are sometimes below 50%, the occupational categories used to describe the jobs people hold no longer fit a world in which new roles come and go at an increasingly frantic pace, and the job listings used to assess the abundance of employment opportunities are filled with rampant falsehoods.

It is past time for governments to create a 21st-century framework to provide stability, predictability, and honesty in the job market and to enable workers to have a fair shot at economic mobility.