work

Error message

Deprecated function: The each() function is deprecated. This message will be suppressed on further calls in _menu_load_objects() (line 579 of /var/www/drupal-7.x/includes/menu.inc).

A Financial View of Labour Markets

Published by Anonymous (not verified) on Sat, 03/10/2020 - 7:19am in

We are used to thinking of workers as free agents who sell their labour in a market place. They bid a price, companies offer a lower price and the market clearing rate is somewhere between the two. Free market economics, pure and simple. 

But actually that's not quite right. The financial motivations of workers and companies are entirely different. To a worker, the financial benefit from getting a job is an income stream, which can be ended by either side at any time. But to a company, a worker is a capital asset. 

This is not entirely obvious in a free labour market. But in another sort of labour market it is much more obvious. I'm talking about slavery. 

Yes, I know slavery raises all sorts of emotional and political hackles. But bear with me. I am only going to look at this financially. From a financial point of view, there are more similarities than differences between the slave/slaver relationship and the worker/company relationship - and the differences are not necessarily in the free worker's favour. 

So, let's look at our slave labour economy. The purchase of a slave is a capital purchase in exactly the same way as the purchase of plant. The carry cost of that asset is the upfront purchase amount depreciated on some reasonable basis, plus the present value of the expected cost of maintaining that asset over its lifetime (food, shelter, medical costs), plus the present value of exit costs (funeral expenses). The exit cost can be avoided by selling the slave before death if there is a secondary market in nearly-dead slaves. The slave can "go wrong" (become ill and therefore unproductive) and need fixing, which may be a greater cost than the value of the slave - an eventuality for which the company might wish to take out insurance. But unlike a free worker, the slave can't voluntarily leave and can't be sacked without incurring a capital loss. Once purchased, the only way of eliminating the carry cost of the asset is to sell the slave, and that may be for considerably less than the purchase price.

Therefore the company will only buy the slave if the present value of the anticipated future income stream from the slave's productive labour exceeds the cost of carry. As with all capital purchases, estimating future income streams is informed guesswork, and much depends on the company's confidence about the future. If the company is confident that the slave can be productively used far into the future, they are likely to buy. But if the economic outlook is bleak, and perhaps the future of slavery is uncertain, they are not likely to buy slaves. They will use free workers instead.

You see, the main difference between buying a slave and employing a free worker is the up-front capital expenditure. A free worker is still a capital asset but it is, if you like, leased rather than owned. The carry cost is recruitment costs (if any), plus the present value of remuneration over the anticipated period of employment including benefits and taxes and the present value of anticipated exit costs (redundancy, pension payments). We would expect that the remuneration package for a free worker would be more than the cost of maintenance for a slave, and exit costs may also be quite a bit more - but in a difficult labour market this isn't necessarily the case, as I shall explain.

The important point, from a company’s perspective, is that up-front capital expenditure is far less. So when companies wish to hoard capital, and are worried about the future, free workers are a much better option than slaves. Free workers can be recruited at little cost and, often, dismissed at little cost - particularly if they were recruited on a casual, temporary or self-employed basis. And their remuneration stream can be limited to payment for the work they actually do, because the responsibility for ensuring that they have food and shelter doesn't rest with the company (since it doesn't own them).

In a difficult economy where there is considerable competition for jobs, free workers can end up being paid less than the maintenance cost of a slave. This has actually happened at various times in history - Steinbeck's depiction of the plight of migrants from the American mid-West in the Great Depression immediately springs to mind, but there are numerous other examples of worker remuneration falling well below the cost of living, resulting in starvation. When jobs are scarce, companies are likely to be less benign to free workers than they would be to slaves - after all, buying a slave is an investment, whereas a free worker on a temporary contract is only as useful as his current production and is not a long-term commitment. We would do well to remember this. 

Of course, there might be a very deep and liquid market in slaves, in which case companies could buy and sell slaves as required to meet operational needs. There would still be up-front capital cost, but for short-term use this might be netted out with forward sale contracts, and there would then be little difference between free workers and slaves - in fact slaves would be preferable because they can't resign and the company has complete control over their deployment. Or there might be agencies that provide slaves for particular purposes on a just-in-time basis - perhaps to cover peaks and troughs in production demand, or to cover skills shortages. There might be slaves with specialist skills that earn fees for their owners through being sent out to provide expertise to client companies. And companies could outsource some functions to slave farms, perhaps in a different country. Please tell me how any of this differs materially from the free labour market? 

Now, of course, we don't have a slave economy. We have a free labour market. Or - do we? Read all of the above again, substituting "robot" for "slave". And then tell me why it is that the wages of free workers are falling and there is huge growth in temporary, casual, self-employed and zero-hours contracts. 

When companies are hoarding capital and worried about the future, it is not in their interests to invest in plant , which is what robots are. Companies' outlook is essentially reactive and short-term, so they want a reactive, short-term workforce. They don't want to undertake the capital expenditure required to automate. They don't want to invest in workers long-term either, because training and development is also a capital expense. And they don't want to wait for full productivity: they want to buy in workers who can "hit the ground running", hence the impossible requirement for young people entering the workforce to have "experience". However you look at this, there are structural problems in the labour market caused by companies' short-term outlook and lack of confidence about the future. And the UK's highly flexible labour market encourages this, at the expense of economic stability and people's well-being.  

For at least the last decade, and probably for much longer, the major problem with the UK economy has been failure of corporate investment. The reasons for this are unclear: there may be a lack of profitable investment opportunities, and since the financial crisis there has undoubtedly been a lack of business confidence and a shortage of demand for goods and services. But if we erode employment protection and encourage growth of unstable, short-term and poorly-paid jobs, we actually make matters worse.

Despite the fears of modern-day Luddites, investment in robots doesn't seem to have significantly displaced investment in people. The truth is that companies have been investing in neither people nor robots. Instead, they have churned an increasingly insecure and impoverished - though nominally "free" - workforce. And we are the poorer for it.

This piece was originally published on Pieria in May 2013 under the title "The Financialisation of Labour". We have not moved on signifcantly since. There is still a dearth of corporate investment in either robots or people. The unstable, short-term and poorly-paid service jobs created by the thousand after the financial crisis are now disappearing by the thousand as the pandemic destroys the "gig economy". But as unemployment heads for the moon, governments are reaching once again for the ideology of highly flexible labour markets. Secure, well-paid jobs are not what they want to create, and they don't seem too keen on investing in training and skills development, either. When will policymakers realise that tight labour markets drive corporate investment?

Image: Slave Labour Mural, Banksy

Related reading:

The Grapes of Wrath - Steinbeck

Risk pricing in labour markets - Coppola Comment

Bifurcation in the labour market - Coppola Comment

Perverse incentives and productivity - Coppola Comment

The Future of Work

Published by Anonymous (not verified) on Mon, 21/09/2020 - 7:53am in

“I can’t remember — do I work at home or do I live at work?“ See below insightful books on various aspects of the phenomenon reflected in the cartoon. The point is, although they were written in the pre-COVID-19 world, … Continue reading →

Trump’s Worst Attacks on WorkersDonald Trump campaigned as an...

Published by Anonymous (not verified) on Wed, 29/07/2020 - 5:06am in

Trump’s Worst Attacks on WorkersDonald Trump campaigned as an insurgent outside of the political establishment who would restore the long-neglected working class. That was a lie. As president, he’s turned his back on working people, governing instead as a lackey for billionaires, CEOs, and corporations. Even during a public health and economic crisis, Trump has left working people in the dust.

Consider his signature tax law, sold as a benefit to working people. More than 60 percent of its benefits have gone to people in the top 20 percent of the income ladder. In 2018, for the first time in American history, billionaires paid a lower tax rate than the working class.

Trump said every worker would get a $4,000 raise, but nothing trickled down. Instead, corporations spent their tax savings buying back shares of their own stock, boosting executive bonuses and doing nothing for workers. To make matters worse, some of the richest corporations are paying nothing in federal income taxes, despite making billions in profits.

Meanwhile, Trump’s corporate lobbyists and industry shills have systematically dismantled worker protections – rolling back child labor protections, undoing worker safeguards from exposure to cancerous radiation, gutting measures that shield workers from wage theft, and eliminating overtime for 8 million workers.

Trump has even asked the Supreme Court to take away the health insurance of 23 million American workers by invalidating the Affordable Care Act –  in the middle of a global health crisis, no less! If Trump gets his way, protections for people with pre-existing conditions will be eliminated.

Oh, and remember his promise to rein in drug prices so working people can afford the meds they need? Well, forget it. Remdesivir, a drug to reduce the severity of COVID-19, from pharma giant Gilead, was developed with $70 million of taxpayer funding, yet Trump is letting the company charge $3,000 per treatment. And he is omitting pricing protections from federal contracts to develop drugs for Covid-19 – making it likely that life-saving treatments and vaccines will be out of reach for people in need.

Donald Trump doesn’t give a fig for working-class Americans. He even wants to end the extra unemployment benefits that countless Americans are depending on to get through this crisis.

So whose side is Trump really on? 

Well, here’s a clue: Tucked away on page 203 of the COVID stimulus package backed by Trump, is an obscure provision that delivers a whopping $135 billion in tax breaks to millionaire real estate developers and hedge fund managers. One real estate tycoon who stands to profit handsomely from the provision is none other than the president’s son-in-law and senior adviser, Jared Kushner.
In total, the cash secretly spent on tax cuts for millionaires in the COVID-19 package is more than three times as much money as was included for emergency housing and food relief.

Kushner isn’t the only Trump insider getting paid off during the pandemic. Forty lobbyists with ties to Donald Trump have helped clients secure more than $10 billion in federal COVID aid. And if Trump succeeds in getting the Supreme Court to repeal the Affordable Care Act, the richest 0.1 percent of Americans will get an average additional tax cut of $198,000 each per year.

Donald Trump is no working-class champion. He’s a corporate con man – the culmination of a rigged-for-the-rich system that’s shafting working Americans at every turn.

How Your Household Can Survive and Thrive in This Pandemic

Published by Anonymous (not verified) on Sat, 25/07/2020 - 3:34am in

Tags 

leadership, work

You can survive and thrive in the new abnormal of the pandemic by identifying and addressing fundamental needs of your household: safety, connection, and self-esteem.

AIQ: Artificial Intelligence Quotient

Published by Anonymous (not verified) on Thu, 02/07/2020 - 2:15am in

Tags 

intelligence, work

As artificial intelligence affects more aspects of our lives, we'll need help understanding how these systems reason.

3 Key Empathy-Based Methods to Learn About Your Stakeholders

Published by Anonymous (not verified) on Mon, 22/06/2020 - 11:00pm in

These three empathy-based social intelligence methods will help you uncover the truth about your stakeholders' needs and empower you to build stronger relationships with them.

Can Optimistic and Pessimistic Employees Work Well Together?

Published by Anonymous (not verified) on Sun, 14/06/2020 - 3:29pm in

Tags 

Pessimism, work

The science-based secret of getting optimistic and pessimistic employees to collaborate effectively by taking advantage of their unique strengths.

Back to Work We Go: What Are the Costs and Benefits?

Published by Anonymous (not verified) on Fri, 12/06/2020 - 4:32am in

Tags 

creativity, work

Are the habits and structure of working from home influencing our motivation, mood, productivity, and creativity? Having some balance may be the secret.

Work. Democratize, Decommodify, Remediate

Published by Anonymous (not verified) on Sat, 16/05/2020 - 5:19pm in

What follows is a manifesto that has been published today in its original in French in Le Monde and translated and published in 37 other places, which will be listed at the end of the text.

Working humans are so much more than “resources.” This is one of the central lessons of the current crisis. Caring for the sick; delivering food, medication, and other essentials; clearing away our waste; stocking the shelves and running the registers in our grocery stores – the people who have kept life going through the COVID-19 pandemic are living proof that work cannot be reduced to a mere commodity. Human health and the care of the most vulnerable cannot be governed by market forces alone. If we leave these things solely to the market, we run the risk of exacerbating inequalities to the point of forfeiting the very lives of the least advantaged. How to avoid this unacceptable situation? By involving employees in decisions relating to their lives and futures in the workplace – by democratizing firms. By decommodifying work – by collectively guaranteeing useful employment to all. As we face the monstrous risk of pandemic and environmental collapse, making these strategic changes would allow us to ensure the dignity of all citizens while marshalling the collective strength and effort we need to preserve our life together on this planet.

Why democratize? Every morning, men and women rise to serve those among us who are able to remain under quarantine. They keep watch through the night. The dignity of their jobs needs no other explanation than that eloquently simple term, ‘essential worker.’ That term also reveals a key fact that capitalism has always sought to render invisible with another term, ‘human resource.’ Human beings are not one resource among many. Without labor investors, there would be no production, no services, no businesses at all.

Every morning, quarantined men and women rise in their homes to fulfil from afar the missions of the organizations for which they work. They work into the night. To those who believe that employees cannot be trusted to do their jobs without supervision, that workers require surveillance and external discipline, these men and women are proving the contrary. They are demonstrating, day and night, that workers are not one type of stakeholder among many: they hold the keys to their employers’ success. They are the core constituency of the firm, but are, nonetheless, mostly excluded from participating in the government of their workplaces – a right monopolized by capital investors.

To the question of how firms and how society as a whole might recognize the contributions of their employees in times of crisis, democracy is the answer. Certainly, we must close the yawning chasm of income inequality and raise the income floor – but that alone is not enough.

After the two World Wars, women’s undeniable contribution to society helped win them the right to vote. By the same token, it is time to enfranchise workers.

Representation of labor investors in the workplace has existed in Europe since the close of WWII, through institutions known as Work Councils. Yet, these representative bodies have a weak voice at best in the government of firms, and are subordinate to the choices of the executive management teams appointed by shareholders. They have been unable to stop or even slow the relentless momentum of self-serving capital accumulation, ever more powerful in its destruction of our environment. These bodies should now be granted similar rights to those exercised by boards. To do so, firm governments (that is, top management) could be required to obtain double majority approval, from chambers representing workers as well as shareholders. In Germany, the Netherlands, and Scandinavia, different forms of codetermination (mitbestimmung) put in place progressively after WWII were a crucial step toward giving a voice to workers – but they are still insufficient to create actual citizenship in firms. Even in the United States, where worker organizing and union rights have been considerably suppressed, there is now a growing call to give labor investors the right to elect representatives with a supermajority within boards. Issues such as the choice of a CEO, setting major strategies, and profit distribution are too important to be left to shareholders alone. A personal investment of labor; that is, of one’s mind and body, one’s health – one’s very life – ought to come with the collective right to validate or veto these decisions.

Why decommodify? This crisis also shows that work must not be treated as a commodity, that market mechanisms alone cannot be left in charge of the choices that affect our communities most deeply. For years now, jobs and supplies in the health sector have been subject to the guiding principle of profitability; today, the pandemic is revealing the extent to which this principle has led us blind. Certain strategic and collective needs must simply be made immune to such considerations. The rising body count across the globe is a terrible reminder that some things must never be treated as commodities. Those who continue arguing to the contrary are imperilling us with their dangerous ideology. Profitability is an intolerable yardstick when it comes to our health and our life on this planet.

Decommodifying work means preserving certain sectors from the laws of the so-called “free market;” it also means ensuring that all people have access to work and the dignity it brings. One way to do this is with the creation of a Job Guarantee. Article 23 of the Universal Declaration of Human Rights reminds us that everyone has the right to work. A Job Guarantee would not only offer each citizen access to work that allows them to live with dignity, it would also provide a crucial boost to our collective capability to meet the many pressing social and environmental challenges we currently face. Guaranteed employment would allow governments, working through local communities, to provide dignified work while contributing to the immense effort of fighting environmental collapse. Across the globe, as unemployment skyrockets, job guarantee programs can play a crucial role in assuring the social, economic, and environmental stability of our democratic societies. The European Union must include such a project in its Green Deal. A review of the mission of the European Central Bank so that it could finance this program, which is necessary to our survival, would give it a legitimate place in the life of each and every citizen of the EU. A countercyclical solution to the explosive unemployment on the way, this program will prove a key contribution to the EU’s prosperity.

Environmental remediation. We should not react now with the same innocence as in 2008, when we responded to the economic crisis with an unconditional bailout that swelled public debt while demanding nothing in return. If our governments step in to save businesses in the current crisis, then businesses must step in as well, and meet the general basic conditions of democracy. In the name of the democratic societies they serve, and which constitute them, in the name of their responsibility to ensure our survival on this planet, our governments must make their aid to firms conditional on certain changes to their behaviors. In addition to hewing to strict environmental standards, firms must be required to fulfil certain conditions of democratic internal government. A successful transition from environmental destruction to environmental recovery and regeneration will be best led by democratically governed firms, in which the voices of those who invest their labor carry the same weight as those who invest their capital when it comes to strategic decisions. We have had more than enough time to see what happens when labor, the planet, and capital gains are placed in the balance under the current system: labor and the planet always lose. Thanks to research from the University of Cambridge Department of Engineering (Cullen, Allwood, and Borgstein, Envir. Sci. & Tech. 2011 45, 1711–1718), we know that “achievable design changes” could reduce global energy consumption by 73%. But… those changes are labor intensive, and require choices that are often costlier over the short term. So long as firms are run in ways that seek to maximize profit for their capital investors, and in a world where energy is cheap, why make these changes? Despite the challenges of this transition, certain socially-minded or cooperatively run businesses — pursuing hybrid goals that take financial, social, and environmental considerations into account, and developing democratic internal governments– have already shown the potential of such positive impact.

Let us fool ourselves no longer: left to their own devices, most capital investors will not care for the dignity of labor investors; nor will they lead the fight against environmental catastrophe. Another option is available. Democratize firms; decommodify work; stop treating human beings as resources so that we can focus together on sustaining life on this planet.

Signed on behalf of more than 3000 professors, scholars and scientists:

Isabelle Ferreras (University of Louvain/FNRS-Harvard LWP), Julie Battilana (Harvard University), Dominique Méda (University of Paris Dauphine PLS) Julia Cagé (Sciences Po-Paris), Lisa Herzog (University of Groningen), Sara Lafuente Hernandez (University of Brussels-ETUI), Hélène Landemore (Yale University), Pavlina Tcherneva (Bard College-Levy Institute), Ingrid Robeyns (Utrecht University), Olivier De Schutter (UCLouvain, UN Special Rapporteur on extreme poverty and human rights), Jean-Pascal van Ypersele (UCLouvain), Elizabeth Anderson (University of Michigan), Philippe Askénazy (CNRS-Paris School of Economics), Aurélien Barrau (CNRS et Université Grenoble-Alpes), Neil Brenner (Harvard University), Craig Calhoun (Arizona State University), Ha-Joon Chang (University of Cambridge), Erica Chenoweth (Harvard University), Joshua Cohen (Apple University, Berkeley, Boston Review), Christophe Dejours (CNAM), Nancy Fraser (The New School for Social Research, NYC), Archon Fung (Harvard University), Javati Ghosh (Jawaharlal Nehru University), Stephen Gliessman (UC Santa Cruz), Stefan Gosepath (Freie Universität Berlin), Hans R. Herren (Millennium Institute), Axel Honneth (Columbia University), Eva Illouz (EHESS, Paris), Tim Jackson (University of Surrey), Sanford Jacoby (UCLA), Rahel Jäggi (Humboldt University), Pierre-Benoit Joly (INRA – National Institute of Agronomical Research, France), Michele Lamont (Harvard university), Lawrence Lessig (Harvard University), David Marsden (London School of Economics), Chantal Mouffe (University of Westminster), Jan-Werner Müller (Princeton University), Susan Neiman (Einstein Forum), Thomas Piketty (EHESS-Paris School of Economics), Michel Pimbert (Coventry University, Executive Director of Centre for Agroecology, Water and Resilience), Raj Patel (University of Texas), Katharina Pistor (Columbia University), Dani Rodrik (Harvard University), Hartmunt Rosa (Max-Weber-Kolleg, Erfut), Benjamin Sachs (Harvard University), Saskia Sassen (Columbia University), Debra Satz (Stanford University), Pablo Servigne PhD (in-Terre-dependent researcher), William Sewell (University of Chicago), Susan Silbey (MIT), Margaret Somers (University of Michigan), George Steinmetz (University of Michigan), Laurent Thévenot (EHESS), Nadia Urbinati (Columbia University), Judy Wajcman (London School of Economics), Léa Ypi (London School of Economics), Lisa Wedeen (The University of Chicago), Gabriel Zucman (UC Berkeley), and many others.

The full list of signatures can be found here, as well as an invitation to anyone else to sign the manifesto: www.democratizingwork.org

Published today in Argentina (Ambito), Brazil (La Folha de Sao Paulo), Perú (El Comercio), United States (Boston Globe), Uruguay (La Diaria), Peru (Disonancia), Chile (Radio UChile), China (Made In China Journal), Hong Kong (South China Morning Post), India (The Wire), Belgium (De Morgen; Le Soir), Czech Republic (A2larm), Denmark (Politiken), Estonia (Delfi), Finland (Helsingin Sanomat), France (Le Monde), Germany (Die Zeit), Iceland (Stundin), Italy (Il Manifesto), The Netherlands (De Groene Amsterdammer), Norway (Klassekampen), Poland (Gazeta Wyborcza; Krytyka Polityczna), Portugal (Diário de Notícias), Spain (Publico; El Diario; La Vanguardia); Switzerland (Le Temps), Turkey (Cumhuriyet), United Kindgom (The Guardian), Australia (The Guardian), Israel (Davar), Morocco (Média24; Lakome2), Tunisia (La Presse; Assahafa), and here at Crooked Timber.

Is Retirement Bad for Your Mental Health?

Published by Anonymous (not verified) on Mon, 11/05/2020 - 7:45pm in

Tags 

aging, Health, memory, work

A new study shows that older Americans can stay psychologically fit long after retirement, but only if they keep themselves mentally challenged.

Pages