The human staplers of Silicon Valley

But according to Neil Irwin for the New York Times, 21st century capitalism – as exemplified by the tech industry – is moving to a very different model:

“…major companies have… chosen to bifurcate their work force, contracting out much of the labor that goes into their products to other companies, which compete by lowering costs. It’s not just janitors and security guards. In Silicon Valley, the people who test operating systems for bugs, review social media posts that may violate guidelines, and screen thousands of job applications are unlikely to receive a paycheck directly from the company they are ultimately working for.”

He illustrates this great shift by comparing the experience of two women – Gail Evans, who worked as a janitor at Kodak Eastman in the 1980s and Marta Ramos, currently one of the cleaners at Apple’s HQ in California:

“The $16.60 per hour Ms. Ramos earns as a janitor at Apple works out to about the same in inflation-adjusted terms as what Ms. Evans earned 35 years ago.”

So decades of zero wage growth – as is typical of working class America. But that’s not the worst of it. As a proper employee, Ms Evans was part of the company – with access to opportunities for promotion that are not available to outside contractors. Her own rise through the ranks to senior executive level was an exceptional one, but evidently not impossible.

As we all know, the plural of ‘anecdote’ is not ‘data’. So what evidence is there that contracting out ‘non-core’ roles is generally bad for workers?

“…across a range of job functions, industries and countries, the shift to a contracting economy has put downward pressure on compensation. Pay for janitors fell by 4 to 7 percent, and for security guards by 8 to 24 percent, in American companies that outsourced, Arindrajit Dube of the University of Massachusetts-Amherst and Ethan Kaplan of Stockholm University found in a 2010 paper.”

Irwin then cites a separate study showing that outsourcing accounts for “20 percent of the wage inequality increase from 1989 to 2014.”

Ultimately, the issue comes down to relationships:

“When an automaker needs a supplier of transmissions for its cars, it doesn’t just hold an auction and buy from the lowest bidder. It enters a long-term relationship with the supplier it believes will provide the best quality and price over time. The company’s very future is at stake — nobody wants to buy a car that can’t reliably shift into first gear.

“But when that same automaker needs some staplers for the office supply cabinet, it is more likely to seek out the lowest price it can get, pretty much indifferent to the identity of the seller.”

Basically, this is how today’s corporates view the outsourced workforce – as human staplers “to be procured at the time and place needed for the lowest price possible.” That might be an easy (though not easily forgivable) way of thinking when your auxiliaries are unseen and unheard in some distant location; but as a way of treating someone who works alongside you in the same building, it is truly cold-hearted.

With the most profitable companies in the world relegating much of the workforce to the so-called ‘contracting class’, it should be no surprise that support for capitalism is contracting too.

---

Peter Franklin is Associate Editor of UnHerd. He was previously a policy advisor and speechwriter on environmental and social issues.

peterfranklin_