On Cheap Labor and the Future of Meaningful Work

by Reihan Salam

Peter Frase has written a post on what he sees as the problem of labor that is too cheap:

A rational manager will only adopt labor-saving technology if it is cheaper than the labor it replaces. And when labor is scarce, wages rise as employers compete against each other for workers, making it more attractive to save on labor by using machines instead. For instance, suppose a self checkout machine for a grocery store ends up costing $10 per hour over its lifetime, when you account for purchase and maintenance costs. If your cashiers make $8 per hour, there’s no reason to use the machines. But if they make $12, you have an incentive to replace cashiers with machines, and manufacturers have more incentive to come up with this kind of labor saving technology.

This isn’t great for the cashiers who lose their jobs, obviously. But in the larger scheme of things, working at a supermarket checkout isn’t the kind of fulfilling and valuable work we really want to preserve, and this kind of technological change is necessary if we want to improve our overall standard of living and move in the direction of a post-scarcity society. That’s one of the reasons I argued that preserving and creating jobs shouldn’t be the left’s main preoccupation. Instead, we need to ease the pain of unemployment for those who are displaced.

But in addition, we need to raise wages. So how do we make labor more expensive? One way is to raise the minimum wage and increase rates of unionization, which are both good ideas. And rising wages in China will hopefully start to improve the situation on a global scale. But in the United States, the most important thing is to get back to full employment–i.e., create labor scarcity throughout the labor market. Just keep in mind that we don’t necessarily need to do it by creating a ton of jobs.

At the risk of stating the obvious, I take strong exception to Frase’s framework for a number of reasons:

I’d argue that fulfilling and valuable work is work that provides individuals with “obstacles that arise naturally and authentically in their path,” to draw on Richard Robb.

It is fairly easy to construct a coherent story for Frase’s notion that supermarket checkout work isn’t sufficiently stimulating to merit survival. Unlike skilled trade work, it doesn’t involve the kind of problem-solving that allows us to stretch our capacities. Rather, it is about offering a service in a friendly and efficient way, which can be taxing but, over time, not necessarily very edifying. I definitely get that idea, and I certainly wouldn’t suggest that we should devote resources to saving supermarket checkout work per se.

But supermarket checkout work needs to be soon through a different lens. If I’m a young adult who had a child at a young age, my fulfillment could plausibly derive from the sense that I am contributing to the well-being of my child by engaging in wage work. The wage work in question might not be terribly stimulating, but to grin and bear it is to overcome an obstacle that arises naturally and authentically in my path to achieving some level of economic self-sufficiency. Granted, I might benefit from a host of work supports, including wage subsidies, etc., but I (rightly) see myself as making a contribution. It is not the work itself that is fulfilling. It is the fact that I am doing authentic work — not make-work designed to teach me a lesson about the value of, say, convincing taxpayers that I deserve my daily bread, but work that someone will voluntarily pay me a wage to do — in support of a vision of myself as a provider that is fulfilling.

I hasten to add that this kind of work isn’t mind-expandingly ideal, but of course the kind of work that is mind-expandingly ideal is very rare. I am convinced that it will never be universal, or at least that it won’t be any time soon. 

If our goal is authentic work that can serve as a source of self-esteem rather than mind-expanding work, the bar is, thankfully, much lower. I say thankfully because it implies far less collateral damage than Frase’s framework. When Frase writes that the goal in his approach is “to ease the pain of unemployment for those who are displaced,” I think he gets things exactly wrong. Pricing large numbers of people out of authentic work that can serve as a source of self-esteem does great violence to people that can’t be eased, I would argue, through generous transfers or through make-work. I say this as someone who supports generous transfers in the context of work supports.

This isn;t necessarily true in every society. One can imagine a society in which people feel entitled to unconditional transfers due to a sense of historical injustice or class entitlement, e.g., my working class ancestors fought to secure social citizenship rights for me, and I am thus quite enthusiastic about drawing on my birthright. As Judith Shklar argued in American Citizenship: The Quest for Inclusion, this is not close to being true in the U.S. case. Our idea of equal citizenship rests on voting and earning. She didn’t consider this a very attractive aspect of American identity, but she diagnosed it with great care: 

The  significance of  the  two great emblems of  public  standing, the  vote  and  the  opportunity  to  earn,  seems clearest  to  these  excluded men and women. They have regarded voting and earning not as just the ability to promote their interests and to make money. They have seen them as the attributes of  an American citizen. And people who  are not granted these marks  of  civic dignity feel dishonored, not just powerless and poor. They  are  also  scorned  by their  fellow citizens. The  struggle for citizenship in America has, therefore, been overwhelmingly a demand for inclusion in the polity, an effort to break down excluding barriers to recognition, rather than an aspiration to civic participation as a deeply involving  activity. 

The project of compensatory justice that Frase has in mind will fail in the American context because it enlarges the class of those excluded from one of the great emblems of public standing, the one I consider most essential. 

Frase has argued that creating opportunities for working and earning shouldn’t be the left’s main preoccupation. I emphatically believe that it should be the right’s main preoccupation, in large part because of its nonmaterial or psychological importance. This is a point that Shklar underlines:

Labor  historians have  been at pains to show how  remote  the independent,  self-directing  “operative” was from the reality of the wage-earning industrial worker in post-Civil  War America with its factories and unemployment.  And they have been puzzled by  the  fact  that  even  when  workers  came  to  associate work  only with the money they might earn, their old Jacksonian  ideology survived  unabated. If, as I have argued, the source of the ideology  of  earning is not in the conditions of  employment but  in political perceptions,  then there  is  really  nothing surprising in its  endurance. Resentment  of  the  idle monopolist and aristocrat, and fear of being reduced to the  condition of a black slave, or of  a black second-class citizen, have not disappeared, because they are grounded  in  lasting political  experiences. The Constitution still prohibits titles of nobility,  and idle and snobbish elites  are still resented,  and the memory of slavery, rendered ever potent by racism, still arouses  predictable fears among white  workers  and haunts blacks. This interpretation of  the  ethos of  earning not only makes  sense of  its centrality  as  a  social value, it  also  corresponds to what  its proponents have  said in the past and continue to  say.

Frase might reply that we need to move beyond this lingering cultural attitude, a view with which Shklar was not unsympathetic:

Does this mishmash of  social values and the realities of industrial society merely  reveal  that Americans  are massively  confused in their  atti- tudes to earning? Perhaps that is the case, but it may be more instructive  to  ask  whether  these  apparently  incoherent views  do not express real social experiences. Surely it  is possible that people who do not enjoy work may  find unemployment even worse, and not  only  because  of  lowered  income.  The unemployed may feel that they have been  disgraced  for no particular  fault of  their own, and that  they  have  become less than citizens. You can think  the boss is a slavedriver, but you may feel more like a real  slave when you  are  unemployed. And there is  nothing  illusory  about  these experiences. [Emphasis added] 

Transcending these deeply ingrained views is much easier said than done. And if Robb — and Nietzsche — are right, that the overcoming of natural and authentic obstacles is constitutive of our sense of self, than this is not a mere American cultural quirk rooted in U.S. political history but rather something much deeper than that. 

It should thus come as no surprise that I take the diametrically opposed view from Frase. While he calls for higher minimum wages and more collective bargaining to manufacture labor scarcity, I favor lowering the fixed costs of employing people. This may well delay the adoption of certain labor-saving technologies. The existence of Ghana and Bangladesh might also delay the adoption of certain labor-saving technologies on a global scale, but the hope is that innovation and improved coordination will nevertheless improve global productivity and living standards. In my scenario, the number of “working poor” will likely increase as the unemployment levels increase, which is where well-designed work supports, i.e., conditional transfers, enter the picture. I see the most pressing and appropriate goal for a society like ours is a more inclusive rather than a more exclusive economy. 

In the Financial Times, John Gapper writes on manufacturing productivity and manufacturing work. It’s a bit cutesy, but the column makes the elementary and familiar point that as productivity increases, it is inevitable that manufacturing employment will decline. 

That is why my guess is that servants and nannies will be the jobs of the future. I wrote a column about this eons ago, and it was widely interpreted as a lament. That wasn’t my intention:

 

From 1995 to 2000 the productivity growth rate increased to 2.6% per year, almost matching the Golden Age. As [Erik] Brynjolffson and [Adam] Saunders observe, this productivity boom was traced to the deployment of IT investment across a wide range of sectors, particularly retail. The more interesting productivity boom, however, occurred between 2001 and 2003, when the productivity growth rate hit 3.6% per year. This productivity spike was driven less by investments in IT than by investments in organizational capital, a catch-all term for productivity-enhancing business practices.

The authors observe a sharp divergence between firms that successfully transformed themselves into effective digital organizations and those that did not. Very bluntly, digital organizations flourish while others wither and die. Brynjolffson and Wharton economist Lorin Hitt identified the defining characteristics of digital organizations, and the most striking were those centered on valuing the strongest performers within an organization: In digital organizations, employees are empowered to make decisions and they are subject to performance-based incentives. Recruiting and investing in top performers is a high if not the highest priority.

The logical implication is that the transition to digital organizations is a recipe for even more inequality. In “Performance Pay and Wage Inequality,” economists Thomas Lemieux, W. Bentley MacLeod, and Daniel Parent maintain that the increasing use of performance pay can account for “nearly all of the top-end growth in wage dispersion.” Assuming this pattern holds, there is no reason to believe that we will see any decrease in wage dispersion. Quite the opposite: The most skilled workers will cluster in digital organizations, and wages at the top will continue to expand at a healthy clip.

This raises the question of what will happen to those trapped in the low end of the labor market. Recently, the cultural critic Annalee Newitz offered a provocative hypothesis: “We may return to arrangements that look a lot like what people had over a century ago,” Newitz writes. As more skilled women enter the workforce, and as the labor market position of millions of less-skilled workers deteriorate, we’ll see more servants and nannies in middle-class homes. While this future might seem disturbing at first, there is no reason to believe that these armies of servants and nannies won’t earn decent wages. But let’s just say that this isn’t the future most of us envision for our children. [Emphasis added]

That last line is ambiguous, I’ll admit. I think that we need to adapt and prepare for this future, e.g., by encouraging the densification of our metropolitan areas so that workers can gain easier access to the most lucrative markets.  

I should note that Frase has an interesting discussion of what he sees as the imperative of make-work in an earlier post. Interestingly, he cites Boldrin and Levine, two thinkers who’ve shaped my thinking on intellectual property.