Across most of the world overnight it was a pretty meek and meagre day on the markets. The S&P 500 snapped a six day run of gains to finish slightly in the red.
It’s earnings time in the US, so it was bound to end at some stage.
Apple and Facebook actually had decent earnings and improved, but it still wasn’t enough for either to finish up for the day. Overall it led to a pretty poor day which flowed on around Europe also.
Back home on domestic soil things are warming up for the Federal Budget, which is now just a few weeks away. And although the outlook for the Australian economy remains wobbly, the Aussie market hit a post GFC high yesterday, with the benchmark S&P/ASX 200 Index up 0.7%.
One of the interesting topics of conversation in the last few weeks has been on wages and standards of living.
Graham Burke, co–executive chairman of Village Roadshow, made an interesting comment this week about it all.
He said the increase in movie ticket prices is a reflection of increasing Australian wages. So now we know why you need to re–mortgage the house to see the new Spiderman movie.
And in early April, BHP made an interesting comment about its workforce. They said some of its coal–mining workers get paid 50% more than the equivalent employees in the US.
Dalla Vale, BHP Billiton Coal President specifically said,
‘Using our systems, I can identify that it costs our business approximately 1.5 times more for a truck operator in the Bowen Basin compared to the same truck in New Mexico in the USA.’
He continued to say,
‘This highlights the productivity and cost challenge we have in Australia. We must always remember that the world sets our prices and Australia sets our costs.’
However, this week CBA Chief Economist Michael Blythe said,
‘Wages are running behind CPI inflation with real wages falling,’
He also remarked that a lack of job security was leading to a fall in wages growth.
Effectively prices in Australia’s economy are outpacing wages. In other words, Australia is continuing to be an expensive place to live. And it’s been excessive wage increases over the last decade that’s driven it, and is now coming back to bite us.
With these factors in play, the standard of living has begun to fall, as you will see below.
Another way to look at the unaffordability of Australia is to look at the change in average house prices versus average wages.
In 1967 the average annual income was $2,964 and the median house price in Melbourne was $9,400. A ratio of 3.2 to 1.
In 2010 the average income was $51,610, and the average house price in Melbourne? $555,000.
That’s a ratio of 10.8 to 1.
So although both Mr Burke and Mr Vale are correct, the real fact of the matter is Australia is simply becoming unaffordable.
Wages are too high for too little productivity and the whole country is starting to feel the pinch. The result is a falling standard of living as people simply can’t afford things anymore.
Now I’m not going to go into the complexity of the economics behind it all and potential paths to domestic economic freedom.
I’m going to tell you what you can do to make more money. And despite this current state of affairs in the world there’s surprisingly a lot of work around, if you’ve got the motivation to go and get it.
Of course there’s also potentially a great investment opportunity as well as a way to add some extra funds in your pocket to afford to live in Australia.
Freelancer.com is, ‘the world’s largest freelancing, outsourcing and crowdsourcing marketplace by number of users and projects.’
And when they say the world’s largest, they’re not kidding. Freelancer records over 10.9 million verified users. There have also been in excess of 5.8 million projects posted to the site in the last 13 years.
Matt Barrie is the man who founded and runs Freelancer. He also took the company onto the ASX last year. Freelancer currently has a market cap of about $523 million.
And if the growth in the business is anything to go by, that’s only going to get larger. Barrie has been in London to launch freelancer’s European HQ. In a Forbes interview he said, ‘Today, all the white collar jobs are done on computers, so anyone, anywhere, can do a job for you.’
He went on to say, ‘We’re the eBay for jobs.’
And therein lies a great point. Freelancer is a pure marketplace, where anyone can register and bid for work. You can make as little as a few dollars a job up to a few thousand a job.
All it depends on is your skill, pricing and value for money. In other words it’s the perfect free market system.
It’s globalising white–collar jobs and bringing competition to the jobs marketplace. Not artificial competition, but global competition.
Here’s a good example of what I mean.
Under the Category ‘Legal Research’ on the Freelancer website someone has posted a job titled ‘privacy policy’.
The brief is, ‘I want a writer who can write a privacy policy and terms of use for my website’. The project budget is $30—$250 Canadian Dollars.
There have been 18 bids for the project with an average bid of CA$149.
Now the skills required for this are specific legal skills. And that’s one of the prerequisites to secure the job. 18 people bidding for a job might sound like a lot, but if you’re skilled enough, have a good enough reputation and are good value for money, you’re a good shot of getting the job, and what would seem to be a good bit of cash for a not excessive amount of work.
The beauty is there are low bids, and there are high bids. But the person who’s posted the project will get to make the ultimate decision of if they want something cheap or something of higher quality.
And the thing is most people are willing to pay a premium for expertise and a higher standard of work.
The other thing to protect job posters is they only pay once the work is satisfied. And because freelancers get ratings after each job, it’s in their interest to do good work. The reputation freelancers build from successful jobs is the essence of how Freelancer.com works so well in today’s times.
Freelancer makes money from a US$3 or 3% fee of the project (whichever is greater) for people on free memberships. And for people who pay a monthly subscription…well it’s obvious how Freelancer make their money there.
Freelancer is a great example of a technology driven network based on a system of reputation and an online social community.
This is something we’ve talked about for some time now. These reputation networks like Freelancer, AirBnb, Uber and eBay will drive the new online economy of the 21st century.
We went into detail on this point with John Robb at our World War D conference in a special one–on–one interview. John even went so far as to say reputation will be worth more than gold!
And as this trend of reputation networks continues, it’s companies like Freelancer that’ll be at the forefront of it.
So that gives you a couple of options.
You can get onto Freelancer.com, register and start browsing and bidding for jobs. This could mean potentially a few extra grand in your pocket over the space of a year. And it doesn’t necessarily have to impact your daily grind. It just depends on how much you want to work. And typically you can do it from the luxury of your home.
The other option is to consider Freelancer as an investment. They trade way over normal P/E ratios. And their valuation goes against pretty much every conventional financial principle. But to me, they’re one of the most interesting tech companies listed on the ASX.
Freelancer is a great company. Not too many companies out there genuinely provide two ways to make money from them. It just depends on which approach you might take.
Hopefully one way or another it pays off. And Freelancer can help make living in the 5th (Sydney) and 6th (Melbourne) most expensive cities in the world that little bit easier.
Regards,
Sam Volkering
Editor, Tech Insider
From the Port Phillip Publishing Library
Special Report: Mining Boom Act II