Home > Uncategorized > The Workplace — a few charts

The Workplace — a few charts

from Peter Radford

I have tried to use diagrams to explain the vast impact that the never ending search for higher shareholder value has had on the American workplace. Here is my attempt to show what the old workplace looked like in terms of the benefits to a worker …

This diagram demonstrates that a traditional job brought with it a package of “compensation” far beyond a basic wage. It also helps us understand why, as the cost of parts of the package rose rapidly — healthcare costs being the best example — businesses found themselves ever more keen to eliminate parts of the package, or at least to contain the cost by limiting that part of the package paid as cash wages.

Now let us look at the same arrangement as it exists in the contemporary workplace where so-called “contingent” work dominates. This is what the new arrange,ent looks like from the corporate point of view …

Think of how dramatic this change is.

The corporation, in its pursuit of shareholder value, has shed from its cost base a whole slew of ancillary benefits and has reduced its focus simply to the wage. In has, in other words, achieved an ability to zero in on the immediate value of the worker in terms of the work being done. Peripheral costs have been carved away. Profits can rise. The risks inherent in providing long term compensation such as a retirement benefit have been shed altogether.

Now look at the worker side of this …

The worker, who once received a variety of forms of compensation, all of which added to her sense of security, now receives only a wage. The rest of the old package is gone. More to the point she has to provide all that other stuff out of the wage. If she takes time off for vacation: that’s on her. If she wants to save for retirement: that’s on her, and so on.

This complete re-invention of the package included in the overall compensation paid to workers in the new workplace — a re-invention driven by the pursuit off shareholder value — is what David Weil calls the “fissuring” of the workplace. So let me end with a quote from him to articulate our challenge:

“Federal and State policies are based on a model of employment with a single, well-defined employer with direct responsibility in hiring and firing, managing, training, compensation and development of its workforce.”

“Economic history runs in one direction. As much as we might like aspects of the past, the age of the large corporation directly employing a very wide cross section of American workers has passed”

–David Weil, “The Fissured Workplace”, 2014

  1. robert locke
    October 4, 2017 at 8:33 am

    Old system: consider your employee a company asset, New System: Consider your employee a cost, which must be reduced in order to maximize ROI.

  2. October 4, 2017 at 3:23 pm

    Welcome, all workers to the Financialization of the Economy where Money is King and all else is superfluous.

  3. October 4, 2017 at 3:57 pm

    Thank you for this.

  4. Risk Analyst
    October 4, 2017 at 5:44 pm

    I like the graphic but it does not show the focus on shareholder value directly. You could instead have a balance scale of costs on the left and goals on the right, and the above could show the left over time and the right could show the massive increase in interest of raising stock prices and firm size over other goals of profits and workmanship. That’s just what I jumped to when thinking about enhancements to your nice graphic.

  5. Grayce
    October 5, 2017 at 1:18 am

    As well, it would be informative to see a graphic of the changing ratio of “average worker wages” to “CEO wages” that were once 40x, then 400x-700x, and now are higher, even in not-for-profit organizations.

  6. October 8, 2017 at 11:09 am

    Capitalists don’t learn quickly. They’re generally not the sharpest tools in the shed. But in the 19th century they learned (generally with much pain) that their success depended on well-functioning society whose members had basic education, safe and peaceful housing, and sufficient leisure time. The 20th century all-inclusive corporation provided these directly or supported their provision through government. In many ways the American corporation created the American version of the welfare state. Intended ultimately to benefit the corporation, of course. Even with this proviso, however, corporations and the American economy remained stable for nearly 50 years (1930-1980). Before 1930 the “money guys” ruled America. They nearly destroyed the nation, creating financial crises after financial crisis. During the 1980’s the nation returned to the pre-1930 world, mainly due to greedy bankers, inept politicians and business leaders, and the crude theories of economists that played on this greed and ineptitude. Capitalism is very much like a cocked pistol. It can explode at any time. Contrary to its own needs and wellbeing capitalism exploded beginning in the 1980’s. That explosion has grown larger and more violent every year since. Until in 2017 we have the situation described by Wells and here by Radford. Considering this history, I believe Wells asked and answers the wrong question in his book. Per Wells, “From the perspectives of CEOs and investors, fissuring–splitting off functions that were once managed internally–has been phenomenally successful. Despite giving up direct control to subcontractors and franchises, these large companies have figured out how to maintain the quality of brand-name products and services, without the cost of maintaining an expensive workforce. But from the perspective of workers, this strategy has meant stagnation in wages and benefits and a lower standard of living.” Weil proposes ways to modernize regulatory policies so that employers can meet their obligations to workers while allowing companies to keep the beneficial aspects of this business strategy. I reject the notion of changing regulatory strategies to accommodate this fissuring. We’ve already spent too much time and resources serving the needs of corporations. With little of societal value to show for it.

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