A Politico story by Danny Vinik was published this week with the headline “The Real Future of Work” and a provocative subtitle: “Forget automation. The workplace is already cracking up in profound ways, and Washington is sorely behind on dealing with it.” This is an important story that deserves to be read widely. Automation has the potential to shake-up the labor market, but as this story carefully documents, there is a more immediate trend that is already here and needs to be reckoned with. Yet, to mix my metaphors, I would add to this that there are still more layers to peel back to find underlying root causes.
But let’s back up. How is the workplace “already cracking up in profound ways”? This quote from the article summarizes it nicely:
Over the past two decades, the U.S. labor market has undergone a quiet transformation, as companies increasingly forgo full-time employees and fill positions with independent contractors, on-call workers or temps—what economists have called “alternative work arrangements” or the “contingent workforce.” Most Americans still work in traditional jobs, but these new arrangements are growing—and the pace appears to be picking up.
Indeed, the data suggest that between 2005 and 2015, “all net job growth in the American economy has been in contingent jobs.” The article also does a nice job of convincingly showing that this is a much bigger issue than the gig economy, which might only account for 10 percent of the growth in contingent work. My friend David Weil has also captured the breadth of the “fissured workplace” in his book, and as recounted in this article, did a heroic effort at the Department of Labor during the Obama Administration trying to combat worker misclassification in which firms classify workers as contractors to avoid labor standards that apply to regular employees.
So there is really a twin phenomenon at work here: 1) the actual subcontracting of work and increased reliance on contingent workers, and 2) paperwork maneuvering to misclassify regular workers as contractors and temps. In both cases, the fissured workplace is a serious issue because “For many employees, their new status as “independent contractor” gives them no guarantee of earning the minimum wage or health insurance,” and the negative effects of insecurity are far-ranging. It’s hard to imagine a robust, democratic society with healthy families and communities when so many workers are stuck in insecure, contingent work arrangements. Anyone still doubting the pervasiveness of the trend toward contingent work arrangements needs to read Danny Vinik’s article. And remember that what happens at work, often doesn’t stay at work so the importance of bad work is magnified in our communities.
But what’s behind this powerful shift? The article doesn’t say. My own answer: in a (long) word, financialization. Financialization represents a multidimensional shift away from industrial capitalism in which corporations focused on making a profit by producing valuable goods and services, to financialized capitalism in which financial markets, motives, results, and institutions become dominant. An important part of financialization has been the rise of the ethos of shareholder value maximization.
In response to Japanese production methods, U.S. industry rationalized its operations in the 1980s; with the rise of digital technology, employment has been increasingly marketetized; and in response to globalization, employment has been globalized. Each of these trends were initially driven by corporate strategies to restore competitiveness by restructuring the productive capacity of their workforce in the face of changing technology and competition. But under the pressure of maximizing shareholder value, these efforts turn into cost-cutting exercises for the sake of increasing short-term profitability and driving up stock prices. Workers face wage and benefit concessions, jobs are subcontracted and made contingent, the workplace fissures, and workers are intentionally misclassified—even when companies are profitable.
This is because under the banner of maximizing shareholder value, investors are insatiable in their demands for perpetually higher financial returns. I submit that this represents a fundamental shift in values. We can also see the importance of values in the private equity dimension of financialization in which the shareholder value ethos is pushed to the extreme by seeing companies solely as assets to be traded for maximum profit. All of this is important because values are hard to legislate. If I’m correct, then this means that while efforts to address worker misclassification and other abuses, to make benefits more portable, and other initiatives are important, they do not get at the heart of the problem (or at the lack of a heart).
With that said, this shift in values has been accompanied by institutional practices, specifically deregulated financial institutions, shareholder-friendly laws, corporate governance structures with outside directors, activist shareholders, and massive stock incentives for corporate executives. Consider this last element: these incentives can lead to stock repurchases, which have grown tremendously in recent years. Rather than retaining and reinvesting cost savings and earnings back into the business as was the norm before the shareholder-value movement, cost savings and earnings are increasingly being used to repurchase shares of the company’s stock. This “downsize and distribute” strategy drives up the stock price which not only benefits investors, but also top executives because of their sizable stock options.
To really confront the key trends undermining stable and rewarding work that supports healthy families and communities, we need to dig into the roots of these trends. Financialization is likely a key root, if not the taproot. The better we can do identify causes, the better will be the discussions over what can be done. If financialization is important, then combating contingent work requires a combination of normative shifts (that are hard to legislate) and public policy changes (that are hard to implement). So where to start? Recognizing the harm of shutting workers out of corporate governance and of massive stock options are just two possibilities. Work is too important to be left to Wall Street.
I just received news that my first book—Employment with a Human Face: Balancing Efficiency, Equity, and Voice—will be translated and published in Turkish. I have Dr. Fuat Man, a professor of HRM at Sakarya University to thank for this, and I’m particularly grateful and honored because he has already translated my The Thought of Work (Çalışma Düşüncesi). For personal reasons, I often think about Employment with a Human Face around the holidays (I’ll return to this below), and this news about a Turkish language edition has magnified these reflections.
I can’t believe that it’s been 14 years since Employment with a Human Face was published. It’s now a full-fledged teenager! How is it holding up? Here are the first two paragraphs of the book:
Employment is a critical feature of modern society. The nature of employment determines the quality of individuals’ lives, the operation of the economy, the viability of democracy, and the degree of respect for human dignity. It is therefore essential that modern society establish societal goals for employment. Economic prosperity demands that employment be productive, but should economic performance be the sole standard of the employment relationship? No. Work is not simply an economic transaction; respect for the importance of human life and dignity requires that the fair treatment of workers also be a fundamental standard of the employment relationship—as are the democratic ideals of freedom and equality. Furthermore, the importance of self-determination for both human dignity and democracy mandate employee input and participation in work-related decisions that affect workers’ lives. In short, the objectives of the employment relationship are efficiency, equity, and voice. This book is about these objectives, and the alternative ways in which they can be achieved.
In some situations, efficiency, equity, and voice are mutually reinforcing. A productive workforce provides the economic resources for equitable working conditions that include employee voice in decision making. And equitable treatment and employee participation can provide the avenues for reducing turnover, increasing employee commitment, and harnessing workers’ ideas for improving productivity and quality. But the more important question is: What should happen when efficiency, equity, and voice conflict with each other? This is the critical question that makes the analysis of the employment relationship a dynamic topic with diverse perspectives. Should efficiency—and the closely related property rights of employers—automatically trump equity and voice concerns? Or should the reverse be true—should equity and voice have priority over efficiency needs? Neither of these extreme options is preferable; rather, a democratic society should seek to balanceefficiency, equity, and voice. The power of free economic markets to provide efficiency and economic prosperity is important and should be encouraged, but respect for human dignity and democratic ideals further require that the power of economic markets be harnessed to serve the quality of human life and provide broadly shared prosperity. As such, the imperative for the drivers of employment—individuals, markets, institutions, organizational strategies, and public policies—is to provide employment with a human face—which I define as a productive and efficient employment relationship that also fulfills the standards of human rights. The International Labour Organization (1999) calls this simply “decent work.”
Maybe I’m biased, but I think this is as true as ever. Indeed, in recent years there has been an increased recognition of the deep importance of work, which magnifies the need to think seriously about the goals of the employment relationship, imbalances in this relationship, and to reject pure commodification and efficiency approaches. And there remains a pressing need to strive for a better balance in the workplace and in our societies. In fact, I just received a press release from the World Inequality Lab that confirms the tremendous increase in inequality that has occurred over the last few decades around the world, and calls for “more ambitious policies to democratize access to education and well-paying jobs in rich and emerging countries alike.” In other words, we need to actively strive for a better balance between efficiency, equity, and voice in and out of the workplace, even though this can be difficult, it requires institutional innovation, and there are diverse perspectives on how to best achieve this.
Since the time I wrote Employment with a Human Face, there has been increased thinking around citizenship rights as an alternative to human rights. Although the differences can be subtle, citizenship rights stem from membership in a human community such as a nation, rather than from being part of overall humanity, and thereby more clearly place obligations on the nation to provide citizenship rights. Moreover, whereas human rights are seen as universal, citizens have obligations as well as rights; so characterizing workers’ rights as citizenship rights rather than human rights also makes it easier to allow for workers’ interests such as equity and voice to be balanced with other objectives such as efficiency. The teenage Employment with a Human Face could be slightly more nuanced that the original by connecting equity and voice to citizenship rights rather than focusing on a human rights narrative.
But in either case, I think the imperative is clear. I started with the introduction, and I can close with the book’s concluding passage, to which the teenage Employment with a Human Face would also add pressures from financialization as further impetus for new thinking and new policies:
Public discourse that emphasizes competitive markets, efficiency, and marginal productivity justice; the frequent lack of appreciation for employee voice; the continued turbulence of the 21st century workplace; the focus of employment research on the operation of the existing processes (often solely with efficiency in mind); and the need for “explicitly recognizing the role of moral choices in the labor market” (Osterman et al., 2001, 12) all make it imperative to ground the study of employment in the objectives of the employment relationship—efficiency, equity, and voice. This grounding provides the basis for a fuller understanding of all aspects of the employment relationship, including the alternative behaviors, strategies, institutions, and public policies for balancing efficiency, equity, and voice. From such analyses can come workplace governance practices and systems that fulfill the economic and human needs of a democratic society and foster broadly shared prosperity.
And if you are curious about why I often think about Employment with a Human Face around the holidays, here is my story. The very first copy of the book (so the very first copy of any book I had written), was delivered to my home on Christmas Eve in 2003. But no one heard the delivery person. My wife and I were up late getting things ready for Christmas morning. At around 1 in the morning (so it actually is Christmas by this point) a light snow is falling and for some reason I opened our front door, and a package falls into our front entry. Completely unexpectedly it was the very first copy of Employment with a Human Face. I won’t go so far as to say that it was a Christmas miracle because that would cheapen the significance of the holiday season, but it was a touching moment, complete with a gentle snow on an otherwise still night, that I will always remember.
Happy Holidays, and may your 2018 be filled with efficiency, equity, and voice.
With Thanksgiving comes football, and with football comes…well, this year, maybe politics. While perhaps not as heated as in September and October, the NFL player anthem protest controversy has not been completely resolved. Before reading further, I’d like you to think about what underlies this dispute. Have you thought about it? Once you have thought about it, be honest—how many factors did you identify? My hypothesis is that most people would identify one main cause, or maybe two at most. People might differ in what cause they identify, but my point here is that it’s common to not think very deeply about the diverse factors that contribute to any particular conflict. Rather, the emphasis is typically on dispute resolution mechanisms.
There is a long history of this. New popes are elected through a papal conclave. “Conclave” comes from the Latin cum clave which means “with key.” Following the death of Pope Clement IV in 1268, cardinals met in Viterbo in central Italy to choose a successor. But political infighting prevented an agreement for many months. As the dispute dragged on, frustration with the lack of progress led city officials to lock the cardinals in the Palazzo dei Papi di Viterbo (hence “with key”), reduce their food rations, and even to remove the palazzo’s roof to expose them to the weather. After 33 months, Gregory X was elected pope, and he implemented rules for papal conclaves that included seclusion, food rations reduced to a single meal after three days, further food reductions after eight days, and the stoppage of any payments to them from the papal treasury during the conclave.
Using their bully pulpits, U.S. political leaders have occasionally tried similar strategies to force labor negotiators to reach agreements. President Lyndon Johnson called labor and company negotiators from the steel industry (1965) and copper industry (1968) to Washington, DC, and pressured them to negotiate in the Executive Office Building until they reached agreements. In 2016, Minnesota Governor Mark Dayton called negotiators from Allina Health and the nurses union to the governor’s residence and asked them to keep negotiating in that location until they settled their strike, which they did. While these political leaders don’t have the legal authority to sequester the negotiators cum clave, and they were not deprived of food or a roof, the spirit of these tactics are similar to the conclave pressures—increase the pressure on negotiators to settle a dispute.
By itself, these pressures do nothing to address, or even consider, the underlying factors leading or contributing to a particular dispute. Rather, these tactics assume that the dispute is structural in nature—a power struggle between groups with competing interests—and the solution is increased pressure to compromise. Of course, there are many other options for resolving disputes, including mediation, arbitration, rules, and legal proceedings. Mediation is perhaps the only one that has a chance to address the root causes of a dispute, and even in this case I assert that we need a greater explicit attention on the root causes of a dispute.
Returning to the NFL players anthem protest, when the focus is on rights (“is this legal?”) and consequences (“they should be fired or suspended”), this implicitly reduces the dispute to its structural aspects—who has the power to do what? But there many other layers. For example, miscommunication has contributed to the dispute, as when one of the team owners said “We can’t have the inmates running the prison,” and then issued a statement saying that this was not what he meant. There are also diverse cognitive aspects, including cultural differences that shape people’s judgements, interpretations, and priorities, often magnified by emotional reactions. It’s not just one thing, and how to best or fully resolve a dispute requires tailoring dispute resolution processes to these underlying causes.
So if you find yourself in a conflict on Thanksgiving as relatives with clashing political views gather, or on any other day in myriad other situations, pay more attention to the multiple contributing causes to a dispute before either escalating or jumping to a dispute resolution intervention. And watch this space for more about these issues because I'm working with Alex Colvin (Cornell) and Dionne Pohler (Toronto) to address the frequent oversimplification of, if not lack of attention to, the roots of conflict. Happy Thanksgiving.
Further reading: For an early view of our research on the causes of conflict, see our conference paper "Advancing Dispute Resolution by Unpacking the Sources of Conflict: Toward an Integrated Framework," which we were honored to present earlier this month at the ILR School conference honoring David Lipsky.
The raging controversy over the kneeling by NFL players during the playing of the national anthem took yet another turn recently, this time with labor law in the spotlight. Specifically, there has been publicity and press over the possibility that the National Labor Relations Act (NLRA) protects protesting players against being fired or other reprisals for their actions. Perhaps most notably, the New York Times published an article tree days ago with the headline "N.F.L. Players May Have an Ally in Their Protests: Labor Law." But just like a Hail Mary pass by a desperate football team as time runs out, I think this has low odds of success.
The classic applications of the NLRA pertain to situations involving labor unions, including workers trying to form a union, unions and companies bargaining contracts, and strikes by unionized workers. But as I have blogged about in at least one previous entry, the NLRA’s protections are not limited to situations involving formal union actions. Rather, the NLRA more fundamentally protects collective efforts by workers to improve their work situations. This is the relevance of the NLRA in this situation because even though the NFL players are unionized, their protest actions during the national anthem are not in the context of formal union activities like forming a union or bargaining a contract.
In this context, the New York Times article correctly indicated that “To be protected under federal labor law, an employee’s action must be conducted in concert with co-workers, it must address an issue of relevance to their job, and it must be carried out using appropriate means.” Given the widespread nature of the protests, Test #1 (conducted with co-workers) is satisfied. But unlike the experts quoted in the article, I’m skeptical that the remaining two tests are satisfied.
Test #2: addressing a job-relevant issue. The NLRA seeks to protect workers who join together to improve their wages, hours, and terms and conditions of employment. This has been interpreted in broad terms, including prohibiting employers from preventing employees from sharing their salary information with each other. Political activities are included in these protections, but only when those activities are sufficiently connected to employment conditions. To date, the NFL player protests have been about social justice, police brutality, and inequality. Obviously these are important issues, and I applaud the players’ stands, but these are not issues that are connected to their employment. [With that said, if the tenor of the protests shifts, for example, to expressing solidarity with a player who was reprimanded for protesting, then that solidarity action would fit within the scope of the NLRA. Unfortunately, the implication is that the players would have greater protections under labor law if their actions were more selfish (I guess the NLRA is very American after all).]
Test #3: conducted in an appropriate way. It’s important to remember that the NLRA’s protections are not unlimited. Rather, the law’s key challenge is balancing workers’ and employers’ rights and interests (hence the title of my textbook, Labor Relations: Striking a Balance). So actions that harm an employer’s business are not necessarily protected. In classic doctrine, workers can be prohibited from talking about unions or wearing buttons if this disrupts the employer’s business by undermining efficiency and discipline, by affecting customers, or by harming its public image. Presumably the NFL could argue that the protests are harming its image and business. The burden of proof would be on the NFL so it’s not clear which way a legal ruling would go, but my point is that it’s certainly not clear that labor law is on the players’ side.
Adding to this, insubordination is not protected by the NLRA. Suppose the NFL tried enforcing a policy of standing for the national anthem. Players refusing to obey this one policy but complying with other policies (e.g., playing the game!) could be seen as selectively refusing to follow managerial directives that they dislike while complying with other directives. This would then be more of a case of (unprotected) insubordination than of (protected) collective protest.
In closing, it’s great that labor law is being discussed in this context. Labor law applies to many more situations than is commonly believed, so anything that raises awareness is a good thing. Also, I don’t intend this as a criticism of the players who are protesting. I applaud their desire to raise difficult questions and seek social justice. But for better or worse, I think the extent to which labor law might provide protections in this particular case has been overstated in the media. Labor law can assist workers in many situations, but this might not be one of them.
Whether a group of employees wants to form a union to represent them in collective bargaining is a decision that those employees should be entitled to make. Unfortunately, contingent faculty (non-tenure-track instructors, lecturers, and teaching specialists) at the University of Minnesota will likely not get to make that decision themselves. Rather, the Minnesota State Legislature effectively prevented them from being able to make this decision when it enacted an unnecessary provision in state law over 35 years ago. In the wake of a state appeals court ruling earlier this month upholding this strange legislative provision, it’s time for the legislature to correct its earlier mistake and repeal this provision.
Perhaps some background is needed. When some employees want to form a union, an appropriate bargaining unit needs to be defined in order to specify exactly what positions would be represented by a union if an organizing drive is successful. Standard practice is for the employees or their desired representative (a specific labor union) to initially specify this definition. If an employer objects and prefers a broader or narrower definition, then an expert governmental agency investigates and determines the exact definition of the appropriate bargaining unit. This is exactly what happens in the U.S. private sector (with the National Labor Relations Board handling unit determination questions based on its judgement of which employees share a “community of interest”), and, as far as I can tell, in almost all public sector jurisdictions in the United States (for example, see South Dakota's Public Employment Labor Relations Act section 3-18-4 or Iowa's Public Employment Relations Act section 20.13).
When Minnesota Public Sector Labor Relations Act (PELRA) was first enacted in 1971, this standard practice was adopted by empowering the Bureau of Mediation Services (BMS) to determine appropriate bargaining units when a public sector employer objects to the workers’ proposed definition. For state agencies, the law contained a proviso that an appropriate bargaining unit should consist of “all the employees under the same appointing Authority” unless “professional, geographical or other considerations affecting employment relations clearly require” some other appropriate unit (section 179.74). As is common elsewhere, there were no special provisions for the University of Minnesota, school districts, or others covered by PELRA.
In 1980, however, the Minnesota State Legislature deviated from common practice by changing PELRA to specify 16 (now 17) state bargaining units and 12 (now 13) University of Minnesota bargaining units (see Minnesota Session Laws 1980 c 617 s 40) (in later years, court units were also specified). This has long puzzled me, especially because it runs contrary to standard practice, and it is likely rooted in a desire to impose operational stability or convenience by limiting the number of bargaining units that a state agency or the University of Minnesota has to deal with. But the effect is to impose an outdated occupational structure on contemporary realities and to deny employees their rights to form unions and engage in collective bargaining. This is clearly not the way to balance efficiency, equity, and voice—a principle that I have long advocated as the key objective of work-related public policy (also see this, and this).
Getting back to the plight of contingent faculty at the University of Minnesota, the way the process should have worked was for BMS to have had the discretion to use its expert judgement to analyze contemporary realities and decide whether it was best to include contingent faculty with tenure-track faculty, or to define two separate units. But with the unit definitions pre-specified by state law, contingent faculty are not allowed to have their own unit, and the state appeals court ruled that they are not part of the tenure-track unit. So this ruling means that contingent faculty are included in a catch-all unit of all professional and administrative employees at the University of Minnesota. The diversity of this unit is hard to grasp. By one count, there are over 300 job titles in it, presumably many more than in 1980. By my reckoning, this will kill the contingent faculty union drive because in order to unionize they'll need to get a majority of accountants, cartographers, athletic trainers, and numerous others to all vote for a single union, which is close to impossible. It strains credulity to think that this diversity (a) represents a community of interest for these employee groups and (b) serves anyone’s interests except the administration of the University of Minnesota because it makes unionization almost impossible (which might explain why the administration spent 18 months trying to get this ruling).
The processes of labor relations work best when they are allowed to be dynamic and to adapt to changing situations by those directly involved. Collective bargaining has proven to be adaptable to many industries and occupations, and can handle economic, technological, and other changes when labor and management negotiators have the freedom to determine the scope and tenor of their negotiations. Similarly, determining appropriate bargaining units should be a flexible process in which an expert agency has the ability to adjust to changing trends. The world of work has changed significantly since 1980, and it’s silly to think that even a well-intentioned legislative intervention in 1980 is still the best approach today (exhibit A: the tremendous rise of contingent faculty at the University of Minnesota).
But there is an easy solution: simply repeal sections 179A.10 Subd. 2 (defining state units), 179A.101 Subd. 1 (defining court units), and 179A.11 Subd. 1 (defining University of Minnesota units). No language is needed to replace these unnecessary passages. In their absence, the authority to determine appropriate bargaining units will revert back to BMS under section 179A.09, and common sense practice found throughout the rest of the state and most of the country will be restored. And contingent faculty at the University of Minnesota, and perhaps other employee groups, too, will be able to act like the autonomous, dignified human beings that they are and make a decision whether to unionize or not.
It’s been an “interesting” week. First, a Googler was firedfor his infamous memo on the alleged biological roots of gender inequality. And now Top Dog, a California hot dog chain, has fired a cook because he was identifiedon social media as a participant in the white supremacist demonstration in Charlottesville. These firings are probably legal in the United States because of employment-at-will, but should they be?
Most workers in the United States are at-will employees. As explained by a Tennessee court way back in 1884, this means that employers “may dismiss their employees at will, be they many or few, for good cause, for no cause or even for cause morally wrong, without being thereby guilty of legal wrong.” Employment-at-will is not unlimited. Workers covered by union contracts or similar civil service rules are likely shielded from the vagaries of at-will employment by policies that require a just or good cause for being disciplined or terminated. And there are legal exceptions, such as nondiscrimination protections (you can’t be fired because of your gender or race, for example), and some very specific judicial exceptions. But these exceptions are much narrower than most people believe. Most workers can’t be fired for a reason that violates a specific nondiscrimination law, but otherwise employers generally do not need a good reason to fire someone. So even if the cook has been misidentified, he can still be fired because Top Dog doesn’t need a good reason for firing someone.
But what about the First Amendment protection of freedom of speech and expression? Doesn’t this protect the Google engineer and the hot dog cook? No. The First Amendment protects freedom of expression by restricting governmental limitations on freedom of speech; it does not prohibit private organizations like Google and Top Dog from limiting speech and expression. Contrary to popular beliefs, U.S. workers generally do not enjoy the right to free speech and expression. So the firings of the Google engineer and the hot dog cook were likely legal.
But should they be? In our book Invisible Hands, Invisible Objectives: Bringing Workplace Law and Public Policy Into Focus, Steve Befort and I advocate for broad freedom of speech protections for employees. The effectiveness of the political process as well as respect for human dignity require that employees be able to exchange ideas, complain, attend meetings and demonstrations, and blog or tweet about issues of either public or private concern. With that said, a difficulty with any free speech protection is how to accommodate views that are unpleasant and contrary to our own. These difficulties will never disappear, but currently they are solved in the work arena by giving employers all the power. I think it would be better to have some protections.
And yet, the events of the past week dramatically highlight that these protections should not be unlimited. Rather, there should be statutory protections for employee free speech in which private and public employers are not allowed to violate an employee's freedom of expression either in or out of the workplace absent a legitimate business justification for a specific limitation. If a worker who has been disciplined or discharged can make a case that this stemmed from expressive activity (which isn’t in doubt for the two workers here), then the employer must demonstrate a "substantial and legitimate business reason" for the action to be legally acceptable.
What would this mean for the Google engineer and the hot dog cook? Would their reprehensible actions be protected? Probably not. Behavior that harms the employer’s reputation as well as behavior that causes other employees to be unable to work with him or her are generally seen as giving the employer a legitimate business reason to discipline or fire a worker even when that worker is protected by a just cause contractual provision (as in the United States) or wrongful discharge statute (as in Canada). So firing the Googler and the cook would likely be legal. We do not have to concede all employee rights to freedom of expression in order to denounce the behaviors of the past week.
Admittedly, there might be other circumstances which might make us uncomfortable. Would firing a worker who attended a Black Lives Matter rally be acceptable because racist co-workers refused to work with this individual? Or would it be illegal to fire someone charged with sexual assault outside of the workplace if that worker doesn't work with anyone else (see the Ontario case of Merritt v. Tigercat Industries)? There are no easy answers here, or in many other areas of legal standards. But I submit that some standards are better than none.
So the Google engineer, the hot dog cook, and many other U.S. workers should have greater speech and expression protections than is currently the case. But these protections shouldn’t be unlimited. Granted, this isn’t as efficient as giving employers unilateral authority. As with many other aspects of the employment relationship, we need to find a balance between complex, competing interests.
The workplace is not like Las Vegas—what happens at work, often doesn’t stay at work. Nearly 250 years ago, the father of modern economics, Adam Smith, worried that mind-numbing jobs would cause workers to lose the ability and motivation to be thoughtful, engaged citizen-people outside of the workplace (The Wealth of Nations, Book V, Chapter I, Part III, Article II). This is perhaps one of the few areas where Karl Marx would have agreed with Smith, and Marx’s rejection of capitalism is deeply rooted in his concerns with the far-reaching, negative effects of work. The detrimental effects on someone’s personal life and on their community might be fairly obvious for workplace injuries, and there is increasing recognition of the mental health risks of lousy work. But does the nature of the workplace affect other aspects of society, like political participation?
Some argue that the workplace can be a breeding ground for pro-democratic attitudes and political behaviors. That is, the use of deliberative and other participatory skills in one’s work can give someone the confidence and the skills to want to participate in the political arena. And hearkening back to Smith and Marx, the absence or repression of autonomous decision-making in the workplace can undercut attitudes and skills that promote political participation, thus weakening political engagement. But does this actually happen in practice, at least to a magnitude we can observe across many workers?
To investigate this, my co-authors and I analyze European Social Survey data on over 14,000 workers across 27 European countries. These workers reported their level of political participation in nine activities (such as voting, contacting a politician, wearing a campaign badge, and belonging to a political party) and also their interest level in politics. Moreover, they also answered several questions on the extent to which they have autonomy and participate in decision-making in their jobs. We combined these several questions into an index of individual voice or workplace democracy.
We then undertake a number of multivariate analyses and find that that employees with greater levels of individual voice at work are indeed significantly more likely to engage in a broad array of pro-democratic behaviors, and we find strong results even when controlling for a wide-range of employee and job characteristics. Or to put this in a negative frame reminiscent of Smith and Marx, dictatorial and authoritarian workplace practices are likely to be related to reduced political participation in the democratic arena.
This relationship appears just as strong as the commonly-accepted relationship between labor unions and political participation. We further show that the results do not appear to be driven by a small number of specific countries; rather, the relationship between workplace democracy and political democracy is one that is apparent across diverse countries, and hence across diverse institutional environments.
These results imply that the importance of organizational practices extends beyond the workplace, and public policy interventions might be warranted to prevent dictatorial work regimes that dampen political engagement. And while we use accepted econometric techniques to account for the possibility that the causal arrows runs from the workplace to the political arena, our findings are still important if causality actually runs from the political arena to the workplace. In such a case, then a participatory workplace should be seen as an important outlet for individuals valuing political involvement. In particular, workplace participation can prevent individuals from getting frustrated or losing their deliberative skills, thus reducing the likelihood that they withdraw from the political arena. So regardless of which way the causal arrow points, the workplace-political engagement nexus is an important one that deserves greater attention.
What happens at work, doesn’t stay at work. Rather, work is an inseparable part of our lives and our communities. As such, it deserves continued scrutiny by all of us.
Source: John W. Budd, J. Ryan Lamare, and Andrew R. Timming (forthcoming) "Learning About Democracy at Work: Cross-National Evidence on the Effects of Employee Participation in Workplace Decision-Making on Political Participation in Civil Society," Industrial and Labor Relations Review. Click here to read the full paper.
If one had to come up with a shorthand for the values of the field of employment relations, a strong contender would be “industrial democracy.” For starters, employment relations scholars seek to understand the rules of the workplace. Organizations are therefore seen as industrial governments that can be autocratic, technocratic, or democratic. The employment relations ideals of fairness and self-determination are best served by the democratic form of industrial government (“industrial democracy”) in which unilateral, unchecked managerial authority is replaced by orderly rules, participatory rule-making, checks and balances, and due process in dispute resolution. That (non-Marxist/critical) employment relations scholars see the employment relationship as analogous to a pluralist political society in which multiple parties (e.g., employers and employees) have legitimate but sometimes conflicting interests reinforces the preference for decision-making and dispute resolution processes that respect a diversity of rights and interests.
The main vehicle for delivering industrial democracy has typically been labor unions because imperfectly competitive labor markets and capitalist legal systems favor employers over individual employees. Labor unions that are legally and financially independent of management are the needed counterweight to managerial power, and are therefore necessary for giving employee voice legitimacy through the negotiation and enforcement of collective bargaining agreements. Consistent with this thinking, labor unions have a long history of promoting collective power as a way to bring democracy to the workplace, and to strengthen political democracy by creating independent and responsible rather than subordinate and repressed citizen-workers.
We’ve already seen what happens to employment relations and labor unions when the “industrial” part of industrial democracy disappears. That is, the decline of manufacturing and traditional blue collar occupations have paralleled the steady decline in private sector U.S. union density. Though the relationship isn’t necessarily causal, it’s hard to deny that labor unions have struggled as the nature of the economy and the workforce have shifted, and probably not coincidentally, the size of the field of employment relations has simultaneously declined.
But clearly there should be an important space for post-industrial worker voice as well as for employment relations scholarship. Unions are experimenting with different representation strategies, new institutions (especially worker centers) are emerging to give non-traditional workers a voice, and employment relations scholarship is broadening beyond a traditional focus on labor unions.
But perhaps a new challenge looms…the decline of support for democracy. In “The Democratic Disconnect” (Journal of Democracy, July 2016), Roberto Foa and Yascha Mounk report disturbing trends from individual responses to the World Values Survey. For example, 26 percent of U.S. millennials characterize choosing leaders in free elections as unimportant and 24 percent indicate that democracy a bad way to run a country. These percentages are significantly higher than those reported by older generations. Similarly, 72 percent of Americans born before World War II say that it’s essential to live in a democracy, but among millennials that percentage plummets to 30 percent.
I incorporated these statistics into a presentation I made earlier this month entitled “Two More Problems Facing the Field of Employment Relations, and the Need for Inclusion” at the annual conference of the Labor and Employment Relations Association (LERA). To be honest, I did this primarily to be provocative, and maybe we shouldn’t place much weight on attitudinal surveys. But other indicators keep popping up. In "Why Republicans (and Trump) May Still Win Big in 2020 —Despite 'Everything'," Grover Norquist outlines how the Wisconsin strategy to eviscerate public sector unions (via Act 10) provides a desired model "for Republican political dominance" because "if Act 10 is enacted in a dozen more states, the modern Democratic Party will cease to be a competitive power in American politics" (Ozy, May 28, 2017). In other words, Norquist is championing a blueprint for one-party politics. Other examples consistent with a decline in support for democracy include trends toward greater restrictions on free speech ("Under Attack," The Economist, June 4, 2016) and toward increased support for dictatorships ("America’s Foreign Policy: Embrace Thugs, Dictators and Strongmen," The Economist, June 3, 2017).
The industrial change was a compositional one, not one in fundamental values. But if support for democracy is truly declining, this could be much more damaging for industrial democracy and for the field of employment relations. The tendency to defer to strong leaders in the name of efficiency and expediency is even stronger in business than in government. If democracy isn’t robustly supported in the political arena, it will presumably be even harder to generate support in the workplace. If achieving post-industrial workplace democracy has been a challenge, imagine the challenge of post-industrial post-democracy.
So what's to be done? I don’t think there are any easy answers. We need to monitor these democracy-related trends, and if they are real, they need to be reversed. The industrial democracy values of employment relations continue to need champions. Whether post-industrial or not, the values and value of industrial democracy need to be explicitly recognized, not taken for granted.
I’m no expert on stock options or executive compensation. So maybe you should stop reading, and I should stop writing. But here I go anyway…Target Corporation’s latest executive pay plans were revealed yesterday in its proxy filing with the SEC.
The CEO didn’t get an incentive bonus. Makes sense…Target hasn’t been hitting its financial performance targets. Some other top executives received bonuses for strategic initiatives. I have no basis for doubting that these are valuable strategic initiatives, so this makes sense, too.
But I became more confused when the Star Tribune reported the following in today's paper:
Target's board decided to offer more stock options to executives to help keep pay levels up since the company's recently lowered growth targets for the coming year would likely mean financial and performance goals previously used to trigger bonuses won't be reached in coming years.
So…executives are given incentive pay in order to push their performance. And when those performance targets are not met, the natural consequence is to not receive rewards. Hopefully my personnel economics students can tell you that that’s a fundamental principle of incentives. But what Target’s board seems to have done is to add more stock options so that executives don’t miss out on payouts when the performance targets aren’t hit.
My first reaction was that this seems to be a confused understanding of incentives. It’s not really an incentive if there aren’t consequences for failure (alternatively, a lack of rewards for a lack of performance). So is executive compensation really just a game to give executives lots of pay, and the talk about incentives and performance is just a nice public relations spin?
I’m not sure. So I looked up Target’s proxy statement online. In that document, the compensation committee explained that Target has now committed over $8 billion in store and customer-experience investments. These are likely to reduce profitability in the short run, thus making long-term incentive performance targets unlikely to be achieved. So to make up for the presumed lack of long-term incentive plan payouts, additional price-vested stock options were granted.
The principle here seems to make more sense than I initially thought. Those investments are likely important, and it’s important that they be done well. But why not change the performance targets to reflect new realities? And more puzzling (to me, the admitted non-expert on executive pay), why the continued obsession with stock options? Wall St. is notoriously short-term focused. If these store investments are meant to have long-term payoffs, why magnify the linkage between compensation and stock options? And doesn’t this just further reinforce the incentive for executives to buy back shares rather than invest in the business? This latter phenomena is a major issue with our increasingly financialized world.
Admittedly, designing effective incentive systems are harder in practice than in theory (that's why I teach the theory!). But new approaches beyond stock options seem to be needed.
Earlier this month, a New York Times article “How Uber Uses Psychological Tricks to Push Its Drivers’ Buttons” received a lot of publicity for revealing how Uber is using “behavioral science to manipulate [drivers] in the service of its corporate growth.” A company trying to get workers to act in the interests of the organization? Shocking.
The point of managing workers is to get them to do things that benefit the organization that is issuing their paychecks (or not even issuing paychecks as with diverse forms of slavery and unfree labor throughout history). I can’t be the only one tired of an “everything in the sharing economy is new” mindset. Sure, some of the specific tools might be different in the sharing economy, but the tools for managing workers have always been changing. In the industrial revolution, workers were organized together into factories to be watched more effectively. The famous Hawthorne experiments in the 1920s uncovered the importance of social factors in shaping worker productivity. I’m sure there are examples of various workplaces with real-time information on production goals displayed on a chalkboard for all to see long before there were LED or smartphone displays.
But back to the New York Times article: Good news for industrial relations, bad news for human resources. Why good news for industrial relations? “Underlying the tension was the fact that Uber’s interests and those of drivers are at odds on some level.” There you have it, a central industrial relations premise that employers and workers have some conflicting goals. And when employers have the upper hand (“Uber is continuing apace in its struggle to wield the upper hand with drivers”), we need to take seriously the need for various mechanisms for looking out for workers' interests and well-being, whether through unionization, laws, or other supports. More on this in a minute.
And why bad news for human resources? An MIT Technology Review article followed up the New York Times story with its own headline: “Uber Is Engaged in Psychological Warfare with Its Drivers.” Here is part of what's labeled as psychological warfare: “To stem that tide [of many new drivers leaving before completing 25 rides], Uber officials in some cities began experimenting with simple encouragement: You’re almost halfway there, congratulations!” That’s right, Uber is “exploiting” that well-known human “weakness” of responding to encouragement toward a concrete goal. When encouragement is seen as manipulation, that can’t be good for human resources.
This begs the question as to what people think human resources should be doing. Do we want human resources to simply be an administrative function that hires and pays people? Human resources can and should be doing more. For at least a century, the leading edge of human resources has been trying to take what we know about human behavior (at that time) to find hopefully win-win ways to benefit employees and employers. Can ethical lines be crossed? Certainly. But the principle of using the science of human behavior--rooted in economics, psychology, sociology, and beyond--to design human resources policies that create mutual gain is longstanding and worthy.
I’m not intending to be an apologist for Uber. The rise of Uber and other sharing economy arrangements raise serious issues—too many to address here. As just one example, an academic paper “The Taking Economy: Uber, Information, and Power” by Ryan Calo and Alex Rosenblat discusses a number of ways in which Uber could potentially exploit its drivers. My interpretation of many of these is that they boil down to intentional or unintentional wage theft. For example, a driver may think they accepted 100% of ride requests, but bugs or manipulation may lead Uber to report a lower number, leading to negative consequences for the driver. Or a driver may wait the required 5 minutes to get a cancellation fee, but Uber doesn’t pay because its data shows a lower waiting time, again either due to intentional programming features or unintentional problems with connectivity and the like.
So how to address serious issues that arise out of the gig economy? Meaningful debates over the role of behavioral science in shaping managerial practices should be welcomed. Though rhetoric around "psychological warfare" probably isn't very helpful. Additionally, everyone can probably agree that Uber drivers should be truly free to sign off when they want, though there are different perceptions of what "truly free" means in this context.
And is this freedom enough? Certainly not for issues like wage theft that truly reflect unequal power and asymmetric information (what did you expect an industrial relations scholar to say??). Calo and Rosenblat argue for updating consumer protection laws for the digital age. That might be a good idea, but from an industrial relations perspective, we also should be talking about updating labor law. Rather than relying on government regulation to specify standards, identify violations, and remedy them, let’s figure out ways to empower workers—broadly defined to include Uber drivers and many others in the gig and contracting economy. Then they can act collectively with adequate power to give a meaningful voice to the material, psychological, social, and other concerns they identify as the most pressing in their own particular work arrangements.
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