Monday, March 10, 2014

The Cost Of Treating Workers As Costs

A few weeks ago, a friend of mine from a networking group that I attend, came up with some very interesting observations about the differences between companies when he was getting started in business, on the one hand, and companies today on the other..  When he first started working in business, he worked for a large corporate entity that was paternalistic.  The company had a five thousand person factory that had no unions because it was offering benefits beyond those that a union would normally be able to obtain in negotiations.  Among other benefits, the company had a self-funded insurance program and its own clinic.  When necessary, it could bring in medical specialists for the workers.

Anyway, the company invested in my friend by paying for his M.B.A. education.  By doing this, the company was giving my friend the opportunity to grow and to qualify for higher-paying jobs within the company, for jobs in middle and upper management.  Benefits like these made a person loyal to a company.  The person would end up working for the company for thirty to forty years.  The company had created an environment that engendered a sense of family.  The company did this, because it saw a worker as an investment on a balance sheet, upon which it would expect to see a return.

My friend sees company attitudes today as being very different.  Today a worker is looked at as being an expense on a profit-loss statement rather than an investment on a balance sheet.  The key moment for this change, not only in the United States but in many other countries around the world, came around the time of the presidency of Ronald Reagan.  The president adopted supply-side economics as his guiding strategy for dealing with the American economy.  According to this theory, made famous by Arthur Laffer, the economy could be best stimulated by lowering taxes, particularly on the wealthy members of society, who had the means to invest in business.  More money for investment meant more jobs and paradoxically more tax revenue for the long run.

This theory went against a theory previously in vogue, the demand-side economics of John Maynard Keynes.  There were many aspects to Keynes theory, but the important point here is that Keynes thought that the economy could be best stimulated by putting money into the hands of working-class and middle-class consumers.  These were the people who needed to spend their money on everyday life needs.  Anyway, Keynes strategy could be carried out by creating government work projects, by raising the minimum wage and by lowering taxes on the working and middle classes.

There is a connection between my friend’s observations about how workers have been perceived and these two economic theories.  When employees are perceived as investments, it is because one gives them the opportunity to work well and earn well and live well.  Then they take what they earn and put it back into the economy by spending it quickly and moving the money through the economy.  This is demand-side economics. 

Employees are perceived as costs, when the focus on stimulating the economy is on putting money into the hands of company owners and investors, who are supposedly motivated to generate economic activity when they are allowed to pay out as small a percentage of revenues as possible in taxes.  So supposedly, the owners and investors should take the money they save from taxes and invest it back in their companies and create more and better-paying jobs.  But that hasn’t been what has happened in recent decades, when there have been major tax cuts.  Investors and owners have held back a lot of the money they have gained from tax cuts.  They have hoarded it for personal purposes.  There hasn’t been increased business activity leading to increased tax revenues though at lower rates.  There hasn’t been much growth in jobs.  And why should there be a growth in jobs, when employees are viewed negatively as costs anyway.

This view of workers as costs is, in my view, connected with a deeper attitude towards workers among owners and investors today.  Workers are no longer really perceived as people.  They are viewed as robots.  They are hired with skills that are fixed, not evolving.  They are worked as hard as possible for a certain number of years with as few benefits as possible.  And then they are let go, if possible, without a pension.  As robots they are machines that depreciate with use.  Why pay them anything when they are no longer useful? 

This is so different from my friend’s experience when a company invested in his growth, because it knew that what was good for my friend was good for the company.  My friend was a growing person, not a depreciating machine.

            Let’s take this analysis one step further.  The reason that business owners and investors view workers consciously as costs today and unconsciously as robots is because workers are beginning to blur together with the increasingly complex technology that they operate.  They are becoming what they use.  The complex entities of these machines act as models for how people should behave and mirror back the behavior that they, the people, then adopt.  And as people start acting more and more like robots, the company owners and the investors who own the complex machinery merge the workers into the machine system as components barely distinguishable from the actual machine components. And if workers are merely robots, then they are incapable of leaving organic imprints on the owners and investors for whom they work.  The suffering they experience from wages on which they can’t live, from minimal or no benefits, and from job insecurity does not leave an impression on the owners and investors.  If the workers are merely robots, their suffering simply translates into mechanical dysfunction.  Too many complaints and the robot can be replaced with another one that is less troublesome.  Taking it one step, further, a worker today is a free-floating figure in a vacuum.  He has no economic grounding in his society.  There is little formal protection of his job from the government and little informal protection of his job from his community and social groups.  And because he lacks any meaningful grounding within his own sense of self, he doesn’t inspire any bonding emotions like compassion, concern or respect from the owners and investors.

 Returning to our original discussion, the economic attitude of a worker being viewed as a cost is based on the experience of the worker as something not-human, as a robot, as a machine, as a free floating ungrounded figure.  A question arises as to how such an attitude can coexist with the concept of the dignity of the individual human being that is fundamental to modern democratic societies.  A robot cannot be a citizen of a democracy.  So if a human worker is actually a person, then he should have the opportunity to work in a situation where he is truly treated like a human being and not like a robot.  The transformation of more and more workers into robots is not conducive to the maintenance of a democratic society.  While it is still possible, modern democratic societies will have to find the means to start protecting its working citizens from gradually sinking into non-human economic status.  If not, modern democratic societies will cease being democratic.  This is why it is important that workers be seen as investments on a balance sheet and not costs on a profit-loss statement.

© 2014 Laurence Mesirow

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