The degree to which both costs and risk are shifted onto workers is at times astonishing:
“After paying about $1,500 for home office equipment: a computer, two headsets and a phone line dedicated to Arise; after paying Arise to run a check on her background; after passing Arise’s voice-assessment test and signing Arise’s nondisclosure form; after paying for and passing Arise’s introductory training, to which she devoted three days, unpaid; after paying for and passing a certification course to provide customer service for Arise client AT&T, to which she devoted 44 unpaid days; after then being informed she had to get more training yet — an additional 10 days, for which she was told she would be paid, but wasn’t; and then, after finally getting a chance to sign up for hours and do work for which she would be paid (except for her time spent waiting for technical support, or researching customer issues, or huddling with supervisors), Tami Pendergraft spent three weeks fielding telephone calls from AT&T customers, after which she received a single paycheck.
For $96.12.”
Thankfully some law firms have taken the approach to overwhelm Arise with individual arbitration claims. Arise likely calculated in to their model as a cost of business expense, so the best that can be done is to make that expense grow.
If you feel strongly against arbitration clauses, activism to get people to use them is the fastest way to kill them as the cost benefit will quickly become a negative.
https://www.theverge.com/2020/2/12/21135474/doordash-workers...
Ok not really almost, but for a brief second.
In the meantime create a tool to allow for mass arbitration actions.
Or forbid it entirely.
What exactly is the problem with writing a law to stop an abusive practice?
I see mandatory arbitration as a trade-off, and would simply prefer that people take that kind of clause into account when they transact with others.
The root cause is the demand for that type of labor is dwarfed by supply for type of labor, and the long lasting solution would be to provide those people with better options.
Plus again scale shifts profits away from labor: https://economics.mit.edu/files/12979
AT&T and Arise are not people. People made these decisions and put Tami in this position. We should use their names.
But getting to the core of your point, how would you allocate blame? Is the CEO responsible for every mistake? Do you part it out to various levels of management, based on their involvement with this specific case? Do you think it's better if more corporations copy Google's approach, and outsource all the low-wage work to avoid bring blamed for problems?
To be clear, I am not sure who is to blame for what, but I think the real problem is a shortage of opportunities for people at the bottom of the corporate ladder (as well as for those struggling to get on it). The average HNer isn't protected from exploitation by laws, they are protected by their BATNA (best alternative to a negotiated agreement).
In general with larger corporations this feels like it makes the most sense. With resources like LinkedIn it should be a lot easier to determine the person or person(s) in charge of these decisions along with the CEO.
Here in Michigan we had a front row seat to this happening with manufacturing. Everything peaked in 1973 and has been on a slow decline ever since. Sure there have been booms but the long term trend has been down.
The Japanese started importing cheap motorcycles to the West coast, then cheap cars. We didn't see them in Michigan and if auto execs did they would have laughed. The Big 3 saw VW and their Beetle as the big import threat. Suddenly those Japanese cars became better in quality. Then the Koreans went through the same cycle and Japan introduced luxury cars as well.
Because wages were much less in Asia even after accounting for shipping this exerted downward pressure on wages. Give America back the monopoly it had in the fifties and sixties and minimum wage would be $24 an hour.
It would take a lot more than that. Remember that the gains labor made after world war II were built upon decades of struggle by labor, including frequently being targets of violence by armed militia hired by corporations [1]. Despite that, America desperately needed labor for world war II (where the alternative was defeat at the hands of the Nazis), so for that moment in history capital and labor found themselves in a obvious win-win scenario. Most of the gains made by labor in America were made during this period.
The minimum wage does not naturally rise - it is a policy decision, one implemented under pressure from labor. And as labor's political power has waned and capital's political power has increased, minimum wage has stagnated.
Under our current system that heavily favors returning productivity gains to capital instead of labor, returning America to that global monopoly (which would require the highly improbable destruction the industrial capacity of the rest of the world while leaving America's untouched) would just turn the hypothetical gains of that monopoly over to the owners of capital.
Realistically, any attempt to return to the prior American monopoly would result in a massive regression in the American standard of living, through the destruction of purchasing power abroad for American goods and services (remember, we have a lot more people today than we did back then, and many of them - especially farmers - work in occupations that sell to other countries).
1. https://en.wikipedia.org/wiki/Anti-union_violence_in_the_Uni...
The minimum amount of money you have to pay for someone to show up for any job rises (and falls) alongside demand for labor in the broader economy.
> Under our current system that heavily favors returning productivity gains to capital instead of labor...
If you look at the profit margins of those companies that employ a lot of low-end labor, you will find that they're generally in the single digit percentages. I think that's a pretty fair deal for organizing all that labor and taking on the capital risk. Profits aren't guaranteed, after all. There just isn't that much money to redistribute here, you would have to raise prices, which can make you uncompetitive.
Oh, what that it were so simple. There are far more factors governing "market wages", which you are describing, including labor supply at a given skill level, automation, political representation of laborers vs employers, and how that representation manifests as power in the local and global economic contexts.
The "minimum wage" specifically is a policy designed to put a floor under the standard of living of people whose market wages in the economy would provide a standard of living below what the society considers humane. Some societies have no such humanity based floor.
Maybe that's the intention, but what a minimum wage actually does is remove the possibility for anyone to work below an arbitrary number of dollars.
If that value is lower than the going market rate for low-skilled labor, minimum wage makes no difference.
Above that, it removes more and more people from the "eligible to work" pool. There's nothing humane about preventing people from being able to work, especially when you don't have a welfare system to pick up those who are now doomed to unemployment.
My reading of the argument (maybe different from OP) is the choice to work a low wage job isn't a choice made completely by one's own volition due to a huge stack of societal factors.
Let's break your counterargument down a bit, preventing people from being able to work denies them sustenance yes, but also embedded (IMO) in your argument is the intrinsic value of a job as a part of someone's life. Here we agree and this is why I don't support cradle-to-grave welfare and think it would be a disaster if implemented. It is something welfare advocates tend to ignore, to the detriment of their credibility on other economic matters.
A retraining program coupled with a large hike in minimum wages and temporary retraining assistance could sustainably raise the minimum standard of living with no government takeover of the economy. The program itself can be a private one if designed the right way. Prior retraining programs didn't work due to 1) lack of accountability and 2) lack of demand for upskilled labor. A very high minimum wage fixes that on the cost side and also on the aggregate demand side. (Something approaching the median US wage today or possibly 1.5x-2x higher, phased in over several decades to give business a measure of predictability and planning capacity.)
Most low paying jobs can be automated, when they aren't it is because human labor is so cheap that the expense of capex to automate isn't worth it. By raising the floor cost of labor, government provides business an incentive to retool the economy around higher-wage paying activities. Any business that can't automate and relies on cheap human work to do drudgery isn't worth saving in my opinion. A bonus is that the resulting capex will generate second and third order effects that will catalyze economic growth and spare many otherwise impacted small businesses from failing.
We want to idealize the person who starts out in a fast food restaurant, learns discipline and organizational skills, and moves on to higher paying work. Several decades of data have shown us this is a nice theory that fails in practice in most cases. Those people remain stuck and that is bad for economic growth in addition to causing needless suffering. Keeping the minimum wage low hasn't solved this problem and won't solve it in the future.
It should be paired with a federal jobs guarantee and universal healthcare then.
It shouldn't be normalized to be a "lifelong" thing, in the same way we think it's unusual for someone to be a lifelong college student. At least one without milestones such as degrees, etc.
The last forty years has been redistributing profits from labour to capital.
There is nothing at all wrong with reversing that.
Society needs to find a way to have people gainfully employed keeping the minimum wage at poverty levels is not a good choice.
Unless you're saying that the problem is that the US doesn't make every new auto manufacturer a UAW shop with no opt-out?
The US specifically did not want this to happen, which is why it made unionization only valid on the basis of the adversarial, shop-vote model, but grandfathering in some unions that already functioned along similar, sectoral lines, such as the Hollywood unions.
Why do those other people get some automatic raise?
Because other people are constantly told how great Europe/Scandinavia is. So these 'other people' just want to have good life by moving there.
https://en.wikipedia.org/wiki/Scandinavia#Use_of_Nordic_coun...
Then it's often interesting to point to various places in the world where in fact, the thing is possible.
As you said, oil helps, but it’s not determinative. Norway is interesting in that they’ve used their oil money very wisely, but it seems pretty clear that other policies are necessary in order to ensure that economic prosperity is well distributed.
There were a few potential inflection points / events that happened around then.
1971 saw the perhaps ill-considered abandonment of Bretton Woods - arguably this ineluctably led to an ongoing boom / bust cycle.
(Can recommend John Ralston Saul's discussion around this in his book 'The Collapse of Globalism'.)
What are these other companies doing that we are not? What can we do to make ourselves more competitive such that each employee has enough productive capacity to easily receive $24/hr or equivalent? The peak of 1973 is gone and not coming back, we have to look to the future now.
And/or the fruits of globalism have not been fairly shared. Depending on whom you ask.
The surprising thing about the current era is just how little wealth is inherited and how much has been largely generated during the owner's lifetime, in many cases due to labor and receiving compensation in the form of stock. The vast inheritances we read about from the 19th century aren't there this time, barring a few exceptions. Thomas Piketty wrote about this in Capital.
What do you think about that? Did they make any errors?
Edit: Also, from the link, this is very fishy to me. You could argue the medical benefits they exclude aren't meaningful because of healthcare inflation not being linked to better health outcomes. You can't make that argument for capital gains. It's likely not be meaningful because there are indeed severe inequalities among Americans in capital assets holdings, it is still an omission however.
> And it takes into account capital gains but, due to certain technical constraints, only for those above the 90th percentile.
I have an issue with this. By some definition, of course. But there is still something very different about the kind of labor which goes on there. Class, opportunity, connections, access to capital, and access to political influence further entrenching their position. It's almost like the nobility of yore.
I find pointing to the 1% labor as some kind of redeeming quality of the system, is instead a distraction from capital vs labor. For the regular labor to have a chance to enter the top 1% of labor, is just as much of a pipe dream as them falling into Big Capital.
We need to fix our relationship with work, especially for the sake of those currently unable to do "fun" jobs that pay well. I don't think working less or a redistribution scheme via the government is an honest solution.
Instead, a much higher minimum wage coupled with retraining and temporary economic assistance that can spur a mass automation of "drudgery"-type jobs is a better answer. This in turn would allow society to redesign work so that it is more humane and more valuable. I also don't buy the belief that only some are capable of creative work.
[1] https://www.theatlantic.com/business/archive/2016/09/the-fre...
I think that’s kind of what the OP you responded to was getting at. I know professors at large state universities making $100,000+ in medium to low cost of living locations. Some make even more. They aren’t 1% but they might be top 10%.
I guess what’s piqued my interest here is, at what point do we consider labor to be labor?
If you get a nice UAW job for 30 years and plow money into the market, are you not a capitalist?
Is a surgeon not labor since he or she may not own the hospital? Sure they may make $700,000/year, but... aren’t they working for a living?
The Meritocracy Trap is a great book I’d recommend that’s related to this question/issue. Wealth and the bourgeoisie used to just hang out all day and go for walks in the park. Now they work 120 hours/week.
https://www.theatlantic.com/business/archive/2016/09/the-fre...
A salient quote:
'Elite men in the U.S. are the world’s chief workaholics. They work longer hours than poorer men in the U.S. and rich men in other advanced countries. In the last generation, they have reduced their leisure time by more than any other demographic. As the economist Robert Frank wrote, “building wealth to them is a creative process, and the closest thing they have to fun.”'
How do we maintain it? An obvious factor is our military capacity. That means defense spending. Under a capitalist system that also requires a competitive commercial defense sector and also a strong economy capable of sustaining such a sector via tax revenue.
Most tax revenue comes from individuals. In an era of mobile capital, corporate taxation is sub-optimal. So the economy's health is linked to the prosperity of individuals, in aggregate. Prosperity can come from competition, but the most durable forms of prosperity are tied to increasing productivity.
Continuing on this first principles trajectory should lead to a stable structure. It's not one that is dominated by "print-and-export-dollars"-style industries.
I have two theories on this. One is that we simply have improved our management processes. The economy became more developed and you could realize real efficiency gains from outsourcing. From a pure GDP perspective - this was good.
The second is more messy and i'm still working on it but it ties into a lot of macro issues. It used to be much easier start out with no experience, say as a janitor, and work your way up to a higher position in the same company. This was possible because it was all the same company. Now with outsourcing this is impossible, if you start as a janitor, the only thing you can do is maybe run the janitor company, but you won't ever become the CEO of the company whose office you clean. At the same time, you've made entry-level positions at the company harder to attain. The floor is no longer janitor, it is now junior developer (to take a software example). This is one of the reasons why I think there is such a bifurcation in our labor market. A college degree is now the minimum requirement to get your foot into the door. Again, it used to possible to start at the very bottom and work your way up but now there is a hard cap on growth unless you go the college route.
I think this was a clever way for companies to also push costs onto employees. Training used to be a thing companies did but now it's basically been abandoned. Go spend your own money and get a degree before even talking to us is the attitude.
I remember when I wanted to sell in France, I had to find a French distributor, make a French version of the product, guess how many would sell there, ship a pile to the distributor, the distributor collects most of the money, and unsold merchandise is scrapped. If I didn't have a distributor, the merchandise was always getting hung up in customs, would disappear in the mail, would take 6 weeks to deliver, I'd get paid in dollary-doos that no bank would exchange, etc.
Rinse, repeat for every country.
Today, I ship all over the world via the internet for $0, have no stock, no scrap, no middlemen, get paid instantly, ship instantly, and the transaction cost is 1% for paypal and 3% for credit cards.
Still have to pay taxes, though :-)
This all true, and empowering for those who have the relevant know-how and opportunities. However, these apparent efficiencies are built on the back of the factors that GP points out. Empowerment for some relies on structures that disempower others. Agency staff live precariously; the companies that use them have ever tighter margins, they are increasingly hollow shells that serve only to generate cash not to provide the security of employment.
The convenience we appear to benefit from is an ever-thinner veneer that disguises deeper problems.
I've seen many guides to doing this in the form of blogs. This is not hard information to come by.
There's also an implication that it's simply okay to let job security rot away, that people in precarious work should simply read a few blogs and retrain. I'm not convinced that it's a good plan to ignore creepingly pervasive employment insecurity.
An interesting outcome is that is becomes more difficult to rise to high levels unless that is what you’re optimizing for early. Ironically, this creates the same pressure that makes high levels so competitive and potentially miserable
The productivity gains went to either things that got automated (e.g. speciality equipment operator - wages are higher but there are less jobs) or knowledge workers (software engineering salaries have skyrocketed).
The wages in lots of sectors without productivity gains have gone up because they must compete against sectors where productivity has gone up. This is known as Baumol's Cost Disease.[0]
It's not a coincidence that there is a rotating crew of Russian speaking janitors who clean my office building and Spanish speaking landscapers outside my apartment. I'm not discounting that many of them are legal immigrants, just lower skilled and working their way on up. More power to them.
I can also see though how this situation is easily taken advantage of. Contracting firm hires undocumented workers for below market rates and is able to under bid for contracts. Big company fires their in house workers to save money and hires the contracting firm. Big company then gets the advantage of undocumented labor wages without the liability.
Wages are a function of supply and demand. If the people cleaning hotels had better options, their wages would go up (or hotels would shut down, or ask people to clean their own room before they leave, etc.)
> Yet the biggest difference between their two experiences is in the opportunities they created. A manager learned that Evans was taking computer classes while she was working as a janitor and asked her to teach some other employees how to use spreadsheet software to track inventory. When she eventually finished her college degree in 1987, she was promoted to a professional-track job in information technology.
> Less than a decade later, Evans was chief technology officer of the whole company, and she has had a long career since as a senior executive at other top companies. Ramos sees the only advancement possibility as becoming a team leader keeping tabs on a few other janitors, which pays an extra 50 cents an hour.
The spreadsheet story is nice, but even having these skills back in the 80's was way less common than today. The article should also have looked at how much tuition was relative to the cost of living/salary Evans was making, and if Ramos could afford it today.
> Evans was a full-time employee of Kodak. She received more than four weeks of paid vacation per year, reimbursement of some tuition costs to go to college part time, and a bonus payment every March. When the facility she cleaned was shut down, the company found another job for her: cutting film.
She was able to bootstrap her career at least in part because Kodak offered tuition reimbursement and other benefits.
I did.
What I would be curious to read is an accountant taking a look at Ramos finances and figuring out how she could afford (or not) to get the same degree.
Oh, you all weren't paid for your overtime? Sorry, you don't work for Hilton. You work for Rent-a-Janitor. And they just filed for bankruptcy and closed shop. Hilton had previously dropped their contract with them due to their unscrupulous practices. We have now contracted with a totally different company, Rent-a-Janitor 2.
(This is a made up example. I have no idea if Hilton does anything like this, but most all huge companies do it.)
It doesn't, you're literally paying a middleman to take away the risk and hassle of hiring an employee. That's the added value here.
Otherwise, you could just hire the worker directly for what that middleman is paying them. Working as a contractor, you get a pretty good idea of what your "rights" are worth in pure dollar terms.
It's sometimes difficult to fire employees as a way of lowering wages. The people left behind who are expected to make up for that through raised workloads and losing the experienced for green new hires might complain.
But if the employee is via third party, there is no hiring or firing involved, limiting the liability of the first company.
In that regard the sales pitch is similar to how Microsoft can sell a company email and word processing so that the company doesn't have to figure out how to write business software.
* X is available more cheaply from a third party supplier (who presumably has achieved some kinds of economies of scale) than our fully-loaded cost to deliver the same
* X is a commodity product where we do not feel we can differentiate ourselves by doing it in-house
* X is ancillary, but important, to our core business and we lack the expertise to do it well, so we will buy in rather than build that expertise
Not many hotels are bothering to drill their own wells these days, bearing in mind that water is available from utility suppliers - why would room cleaning service be immune from the same forces?
* Purchasing X through a third party allows us to circumvent laws and regulations meant to protect workers and/or consumers
You can argue that such agencies are more likely to disregard laws and regulations, but how would you fix that? With laws and regulations?
I can think of a couple different legal metaphors for this:
1. Something similar to banking's Know-Your-Customer could work... maybe call it Know-Your-Suppliers.
2. People are criminally liable for possessing child pornography even if they had no participation in the direct crimes of its creation. In other words: in this case there is no immunity just because the crimes happened somewhere "upstream".
For instance, how likely are your Fly-by-night employee or sub-sub-contractor to rat out the Fly-by-night? They may get a beating, their checks withheld, the Fly-by-night go under.
If it still happens, Big Publicly Listed company pays for it to go away in a settlement.
If it goes to court, they Big Company can say "we work very diligently to avoid this situation in the future and what happened is in no way indicative of our values".
Etc.
Agency work is extremely common here, especially on the lower level of the job ladder. Gig economy and contractors are common even in higher settings, such as software development.
Do you really belive there is a collective of business owners who thought "yeah, let's outsource everything, because f..k employees"?
Obviously it's about specialization. Why a software house should hire a cleaning lady? They are not in the business of cleaning, they know nothing about it and they don't want to even think about how you go about hiring someone for cleaning.
Or the other way around. Should a cleaning company hire software developers? They would fail so hard at it. Not to mention the frustration.
World got more complex, business got too.
I honestly think that having people in house to do these kind of jobs can be a benefit. A good receptionist for example can be a real asset. But they are hard to find.
All the rest are contract. Desk clerks, cooks, nurses, doctors, therapists, janatorial....
The structural shift to contractors is part of a broad trend after 1970 suggesting American labour isn't, economically speaking, a growth engine.
There is a fantastic long form article that articulates this better than I can at:
https://highline.huffingtonpost.com/articles/en/poor-millenn...
The portion relevant to this discussion:
"Thirty years ago, she says, you could walk into any hotel in America and everyone in the building, from the cleaners to the security guards to the bartenders, was a direct hire, each worker on the same pay scale and enjoying the same benefits as everyone else. Today, they’re almost all indirect hires, employees of random, anonymous contracting companies: Laundry Inc., Rent-A-Guard Inc., Watery Margarita Inc. In 2015, the Government Accountability Office estimated that 40 percent of American workers were employed under some sort of “contingent” arrangement like this—from barbers to midwives to nuclear waste inspectors to symphony cellists. Since the downturn, the industry that has added the most jobs is not tech or retail or nursing. It is “temporary help services”—all the small, no-brand contractors who recruit workers and rent them out to bigger companies.
The effect of all this “domestic outsourcing”—and, let’s be honest, its actual purpose—is that workers get a lot less out of their jobs than they used to. One of Batt’s papers found that employees lose up to 40 percent of their salary when they’re “re-classified” as contractors. In 2013, the city of Memphis reportedly cut wages from $15 an hour to $10 after it fired its school bus drivers and forced them to reapply through a staffing agency. Some Walmart “lumpers,” the warehouse workers who carry boxes from trucks to shelves, have to show up every morning but only get paid if there’s enough work for them that day."