I’ve been a big proponent of multiple income streams and freelance work on the side, both as a way of accelerating income production and ergo savings, as well as a way of employing arbitrage and earning a global market wage, which is often higher than the prevailing local wage in all but the most wealthy countries. That strategy may be nearing an end.
In finance, there’s a saying that you need to constantly reinvent your algorithms, because what used to be a solid moneymaker eventually gets discovered by all and then exploited such that there’s not any more easy profit to be wrung. It’s also the case with football. Things evolve and you must constantly innovate – west coast offense, spread offense, zone read, RPO – as defenses catch up and the easy gains are no longer there.
So it is with lifehacking. We identify low hanging fruit, it gets popularized, and eventually the margins are driven down to almost zero such that it’s not worthwhile doing anymore. We see it with all gigs. Uber and Lyft have low margins due to competition from other drivers. For menial tasks, Fiverr, Taskrabbit, and Mechanical Turk have created a marketplace with an endless supply of low cost foreign labour, with unsurprising results as this article shows:
The internet makes all workers equal; there’s no way for a buyer to know who really is sitting behind the computer doing the work. This is a boon for many. Graham talked to people who did not have legal immigration status in the countries where they lived, but were still able to earn a living online, and older workers who had lost their jobs, but had disguised their age and were finding work.
But that also means similarly talented people can charge equal rates, regardless of their actual qualifications, even if they live in countries that have vastly different costs of living—and that Americans and other skilled workers in the developed world have a particularly hard time competing. That’s partly why the Harvard economist Richard B. Freeman warned more than a decade ago that the growth of the global workforce, with its proliferation of educated workers everywhere, “presents the U.S. economy with the greatest challenge since the Great Depression.”
Monika Taylor lives in the United States and offers psychic readings for $5 on Fiverr to supplement her full-time job. She had mostly been selling her readings on Facebook and Pinterest for about $65 to $85, she told me, but when she stumbled across Fiverr, she figured it was a good way to broaden the number of people she could reach. Though she balked when she saw that others were charging just $5 for psychic readings, she decided to list her services anyway, figuring she could raise rates once she had enough clients. She got a few clients over the last few years, but when she raised her rates recently, to $15 from $5, people stopped buying her readings, she said. Now, she has gone back to mostly selling on other platforms. “If I had to make a living on Fiverr,” she told me, “I would be living under a bridge.”
That’s the keyword – you can’t rely on these side gigs (essentially anything that trades time for money) anymore.
The following avenues are still open, but facing increased competition:
- Being elite in any particular field (you can name your price as a top consultant)
- Being niche in your focus (e.g. Pashto expert before the 9/11 attack)
- Being hyperlocal in a job that can’t be digitized and outsourced, ideally in something that’s not very popular (handyman in SF)
- Create a product that generates passive income, ideally attached to your brand
- Rental real estate with enough cash flow to cover costs from tenants
By having multiple streams of income, we can more easily compensate for stagnant strategies and shift attention and focus so that the stream as an entirety continues to grow.