James Joyner points to a chart showing the increasing disconnect between employee productivity and employee compensation and asks what happened in 1972, when the different trajectories were set. The leading candidates are automation and trade.
That makes sense, at least to a degree. When a company invests large amounts of money on capital and the result is that employees are more productive, who deserves the dividends? There are arguments that since such things are out of the control of the employee that they shouldn’t suffer for it, but the most obvious candidate would seem to be the employer that took the risk, bought to capital, and proceeded from there. Which leaves workers in a rather uncomfortable place.
Several years ago, when I was working at Falstaff, I looked at the tools we were using for our job (XML programming) and determined that they could be a lot better. A coworker later took control of the project when I got promoted out of the department. The end results were amazing. Our department productivity increased 86% over the course of a year, per-employee productivity increasing 300%. Training times collapsed from roughly 10 weeks to under four. Once they got wind of our new toolset, the company’s internal tools department threw a fit because they were supposed to be making such tools and not us. They complained all the way up to the COO.
The COO had up to that point been only vaguely aware of how well our division had been doing. Just aware enough that, when there were massive layoffs, they determined that our department could take a huge portion of the hit since we were keeping our head well above water. Internal Tools explained to him that it was their job to create tools and we can’t have other departments doing such things willy-nilly. Our director explained that we’d put in four requests for better tools (with specific recommendations), hadn’t heard anything, and had become tired of waiting. Besides, look at the results. Whatever time we “wasted” outside our job description had been made up for and then some.
The COO ended up creating a “Cash Reward for Ingenuity” and immediately gave my coworker and I said reward. An email went out celebrating our contribution and we got a mention at the next corporate meeting. Oh, and he decided that going forward, new XML programmers would get a 10% pay cut, seeing as how their job had just gotten so much easier. No longer could incoming programmers command the lofty wage of $10/hr, as there was even more money to be saved.
The thing that hurt about that last part is that, from a short-sighted perspective, there was actually some logic to it. Incoming programmers didn’t need as thorough a knowledge of the language anymore. We could hire the prototypical drop-out and they could do the job in a satisfactory fashion. The worst programmers in the department were now outperforming what the best performers were doing two years ago (though, of course, the best were still outperforming the worst). Such expertise was simply less necessary than before.
In the end, I still vehemently disagreed with the decision. By my reckoning, they had failed to understand the value of a good employee. Starting people out lower, identifying the talent, and giving those with talent a big raise would have been okay, too. Performance-based raises, however, were anathema. What you made starting out more-or-less determined your pay trajectory for the next decade (most years we didn’t even get a C-O-L increase, and a lot of promotions didn’t actually come with pay increases). Yet when such short-sightedness becomes common enough, it becomes conventional wisdom.
I don’t know how projectable this story is into the economy-at-large, but I do think that there is a tradeoff mentally between how much an employer invests in capital and how valuable they see their human capital as being. The less reliant employers are on an individual’s capacity and the more leverage an employer has over the individual, in real terms but I think more importantly in psychological terms.
This all gives me great concern for the future. I’m not worried about 40% unemployment as everything gets automated (or sent overseas). Morelike, I’m worried about how the desperation for work will give all but those with the most timely and necessary skills absolutely no leverage. I’m mostly worried because there doesn’t seem to be a clean solution to this. I don’t know how we could legislate this away. We can move money around, but that has its limitations. With it simply come down to mass public employment?