The End of the Job as We Know It

tenuous over time. This was brought to our attention because of this really interesting Wall Street Journal article that came out this week by Lauren Weber. It was called the Second Class Office Workers, and she dives into this world of contract workers. She says, there are millions of them, and there are people who work at companies next to full time employees, often doing the same work, but they're not full time employees, so they don't get the benefits

associated it with that. Yeah, and especially I think when you sign on for years and years as one of these contract workers, you can really suffer from not getting some of those benefits. Um. There was another article a couple of months ago in The Guardian that featured a family husband and wife who both work for Facebook in the cafeteria. So their contract workers are not technically employed by Facebook, but and they're actually paid pretty well hourly.

But that puts them in sort of a weird in between space where they're not full time employees, so they don't qualify for the company health insurance, but they make a little bit too much money to qualify for any state or federal medical benefits. So I think that contract workers can get sucked into this sort of middle space for years and years because a lot of companies have have used this contractor scheme as a way to basically

get the equivalent of a full time worker without the benefits. Yeah, the Wall Street Journal article goes into a lot of the darker sides of having that weird relationship. So of course you don't get held insurance benefits, but you also can be fired at pretty much any time. And also

you culturally have a weird relationship to your employers. So she talks about how people have different badges, for example, and that is something that themes really innocuous, but it does make people feel like they're second class citizens, are lesser than I think those little slits can add up,

you know. It's like, especially if your co workers are kind of always reminded that you're not one of them, Like if you're all doing the same work, like you said, but they all got any email that you didn't because you're not on some official list, and so you don't get to go to some big company wide meeting. It's like those things don't really matter. But they constantly remind you that the company isn't investing in you the same

way it's investing in its other employees. And she points out to relationships that these people have with their managers are often weaker because, like you said, it's it's just not the same investment. I'm really glad that the Journal dug into this issue of contract workers because it really is fascinating, and I think it's kind of not talked

about enough. But we can back up and look at this from an even broader angle, and I think there's a bunch of different ways that the traditional relationship between

the employer and the employee is breaking down. Yeah. I first think of the gig economy, which is this promise from tech companies that we can be free from the shackles of traditional employment and have flexible schedules and the work we want if we work at lift or uber or companies like fivere or task rabbit, you already have a car and an apartment, so why not let it work for you exactly. And I remember when these first

came out, people were buying into that. And this coworker of mine when I used to work at fast Company, wrote this article where she tried to live off of the gig economy and basically learned that she was making less than minimum wage and didn't have any marketable skills. Yeah, she was like, yeah, I'm not a handyman. People. We're paying me like five dollars an hour to bag jewelry and I couldn't get enough gigs to make enough money. And I think that is a reality of love of

a lot of people who are doing this. Yeah, if you're doing any kind of freelance work at all, you you have to do a lot of hustling that's unpaid around any job you get. So when you shrink that down to like little tiny micro modules of work, you're still doing all of that. Like you're going from job to job. If you're a task rabbit, you're not getting paid for that, and so it just becomes I think

it could easily eat up your life. Yeah, and then, just like the contract workers, you don't get benefits, you don't really have an employer. There's no stability, you don't get any of those comforts that used to come with a traditional salary job. You don't get job security, you don't get sort of time to figure out your next step and do your own thing without having to worry about constantly making money. And generally the contract between employers

and employees has just changed. I feel like this sense that accompany owes you something and you owe them something is disappearing. What you're talking about is company loyalty, and that's not something that even full time employees have any expectation of having with their employers. But how do we get to this point? Our guest today is Rick Wartzman. He's the author of the End of Loyalty, The Rise

and Fall of Good Jobs in America. Right now, in many different ways, the contracts between the worker and the employer is weaker than ever. We want to know how did we get to this point? Well, it's a it's a long story, and there are many forces that have, you know, really put pressure on workers. We know about globalization and the rise of competition from low age countries.

Automation and technology, certainly over decades has has had an effect on certain industries and in particular UH and put downward wage pressure and eroded job security for many workers. You've had the decline of unions, which has been a really important factor as well. Mainly from my reading of history. Employers really set out to just crush organized labor and

they've they've done quite a good job of that. We've gone from you know, twenty five up to thirty five per cent or so of the private sector workforce being unionized to just about six percent today. UM, so that's

had a huge effect. And then the last element, which I think has just amplified all of these things is UH this shift in corporate culture and I talk a lot about this in my book, the shift from a real stakeholder mindset, where in this post war period, from say the late nineteen forties to the early seventies, companies explicitly talked about how they were trying to balance the interests of all their constituencies, so the communities they operated in, customers,

their shareholders to be sure, but also their workers. And that has given way to a predominant culture of trying to maximize shareholder value. And when you put investors above all those other stakeholders, including workers, the pie gets carved up differently, and sure enough, investors have gotten a bigger slice and workers have gotten a lesser slice. Your buck. Looks at the corporate histories of for American corporate giants

gm GE, Coca Cola, and Kodak. What would you say it was like to work at companies like that during what you see as sort of the Golden age for workers? Yeah, so the first thing I should say is this golden age came with a big asterisk. So this post war period again, you know, from mid to late forties up to the early nineties seventies was golden mainly for white men.

People of color and women were really blatantly discriminated again in the workplace and hadn't entered the workforce in uh the numbers that they certainly began to in the sixties and seventies and has accelerated through today. And of course many still faced tremendous blatant discrimination in lots of ways. But this again, this was really a golden age for

white men. Um that said, there was a huge swath of of the workforce that was lifted up and saw steadily rising pay and benefits, and good job security and good benefits, I should say on both kind of the healthcare front, where company provided health coverage just got steadily stronger in terms of what it would cover and who it would cover, in terms of bringing in your family members if you're an employee, uh, and very solid retirement security.

I mean there were full pensions back in those days, not not just four O one K type plans um and that was true across these four companies. And then over the last forty years the story has really been the same. You've seen a rooting job security. You've seen an erosion in benefits. You have seen pay that has been stagnant for many workers. Even companies like ge Um have gone, you know, at least we're going for a while to a two tier wage system and their factories

so that they could pay new workers less. And so you've seen the decline in the corporate social contract. And of course you have four very different companies too, in General Electric and Coca Cola that over this entire seventy five year arc have done quite well. And then you've had to that of course, have really struggled. Right. You had General Motors that went into bankruptcy and it's you know,

a shadow of what it was at its height. And Kodak that also went bankrupt and is you know, a much much tinier, very different company than it was and it's hey day. But it doesn't matter if you worked for one of the successful ones in Coca Cola and GE or one of the real laggards in GM or Coda. As a worker, the story was pretty much the same. Um. The social contract rose and then it unraveled. You mentioned organized labor. Was that the only motivation for companies to

treat employees this way? No, not at all, um. So coming out of World War Two, I think there were uh several forces at work, um that set off this golden age. So one was these big US companies at that time they could just frankly afford to be extremely generous. We had as a nation bombed our global competition to its knees, and many look at it, and I think there's a lot of truth to this. This was an

extraordinary time and exceptional time. Because these were exceptional circumstances, These big US companies produced an inordinate amount of the world's goods um again there was very little competition, So that was one thing. And then on the home front, by the way, you also had all these returning UH servicemen and coming back from the war and set off the baby boom and the emergence of really the great American middle class, this giant rise of the middle class.

Another was there was some fear at this time. There was concern about all these returning service men and some some service women, but mostly men coming home, tens of millions of them who had who had been off to

war now they were coming back. And a lot of corporate leaders expressed the concern that unless we provide good jobs, with good benefits and good security, we may end up with another great depression on our hands, perhaps one that would be even worse than what unfolded in the nineteen thirties. And in turn, the fear was that if that happened, there might be long breadlines again, and capitalism might actually give way to socialism or you know, God forbid communism

on American soil. And so there was some feeling that we've got to provide and provide well for people, or the capitalist system itself might be at risk. So fear was an impulse. There was also an impulse of just keeping the economy humming. There was a common kind of almost Kinzian notion back then that you've got to put enough pay in people's pockets so that they can keep

this great consumer economy going. UM. There's a great quote early in my book from Charlie Wilson, the president of General Electric, who said something like, how are they going to buy my refrigerators if we don't give them enough wages to do it with? And this is a very common kind of thinking that that you know, prevailed in in corporate culture then. UM, and some interestingly today have

raised this concern. Right. Larry Summers, the former Treasury secretary, has sort of raised the question have wages stagnated for so long to the point that it may be cutting into consumer spending and the overall growth of the economy.

And he's talked about this secular stagnation UM from essentially just not paying people enough not compensating them moment And then finally I'd say that the other again big factor is there was just a different mindset I think coming out of the depression and World War two, UM, corporate leaders really thought in we terms you know, we're kind of all in this together. That was the kind of national culture, and I think it was reflected and reinforced

by corporate culture. And I think as America shifted more to an eye from a wee kind of ethic. UM that's also been reflected in UH in corporate culture. And again we've gone from the stakeholder mindset to a maximize shareholder value mindset. And when did that corporate mindset start

to change and why so? It it really started? I mean, some people trace it to UH an article that Milton Friedman, the University of Chicago economists wrote famous piece in the New York Times Sunday magazine in nineteen seventy believe it was the Fall of nineteen seventy, and in it he said that business really has one social responsibility and that was that was the words he used, and he said that this social responsibility was for manager is to act

as the agents of the shareholders. Um, that was their only job. And shareholders wanted one thing. They wanted profits to go up and in turn stock price to go up. And that was pretty much what executives and managers were there to do. And for them to do anything else, including trying to foster employment was in Freedman's words, I believe I have this correct. He said that was just

practicing pure and unadulterated socialism. And so this this idea um called agency theory um, which maybe began with Freedmen, but there were certainly other thinkers. I mean, this was a period when people began to hold up the market place as something sack or sank and if we just let the market do its job, it would take care

of a lot of our our problems. Um. There was a whole school of thought that rose up around this in business schools and law schools, among economists, and and before long this sort of went from the ivory tower and began to permeate the realm of practice. And then the last piece was EO pay began to be explicitly linked to UM how stock price did so. CEOs are always compensated uh with stock and stock options. Even if you go back to the nineties, fifties or sixties, you

see that as part of their compensation packages. But it was a pretty tiny part, you know, small fraction. Now depending on how you measure it, it's somewhere between fifty and eighty percent. For a typical big company CEO his and it's mostly his uh, you know, or her pay is now tied to stock. And so when you do that, it becomes in their interests, you know, it's their own personal interests to try and drive up share price in the short term. And uh, when you do that, you

know what's what's the quickest way to do that? Well, you you cut costs, and suddenly employees look like costs, an avoidable expense, not really like something you want to invest much. I'm wondering if it was really better for a lot of workers back then. And I know you mentioned some of the things like how maybe people like me and Francesca wouldn't be included in this idyllic version of the workplace, But was it. Are we looking at those with rose colored glasses a little to some degree? Yeah,

we we definitely are. And I think this is particularly true as President Trump has romanticized a lot of these old manufacturing jobs and cold jobs and so on. First of all, they were they were brutal, I mean they were they were often you know, just backbreaking and dangerous. Uh. And um, you know, there's a lot of recorded evidence in oral histories. You know that I've I've read and a lot references in my book worker voices that talked about how tough these jobs were. But again, they put

you at least on on a solid economic footing. You had good pay, you had good medical benefits, you had good retirement security. Um, your your kids could do well. They could you know, you could afford to send your kids to college. They were often the first generation that went, so there, you know, there were some real advantages that way. They were probably not as good jobs in some other ways.

Even if you had more of a technical job, say at a general electric in the old days, it was much more of a kind of i think paternalistic, bureaucratic, top down kind of system, it probably wouldn't have been as enjoyable, you know, again depending on I'm sure it

varry's department to department and manager to manager. But right we've we've moved to a corporate culture on the high end where there's a lot more collaboration, where there's a lot more team orientation, you know, where there is some flexibility, where where good companies like ge try and coax ideas from the bottom up. Um and and it's a bit more of a meritocracy than it probably was in the in that so called golden age. So some things are better about it now, I think, by and large across

the board. Um, But again I think those things are largely reserved for people who have the skills and knowledge to take advance image of that part of the employment system. It's clear we're never going back to this golden age that you described, Like even high skilled workers who have the best benefits right now don't have pensions, for example. But are there things being done to make things better? Uh?

You know, look, the things that I think may make things better, particularly on the knowledge worker end, younger millennial employees and all the evidence shows want to work for companies and are putting pressure on their employer to have the right values and to work at a place that

is trying to make the world better. And even though again, if you if you're coming out of college and you're you know, you land one of these knowledge jobs talent, and you're you're being recruited, you know, you're probably gonna do okay yourself. But I think there's also increasing demand to say, we want to work at a company that treats all of our workers, down to those on the front lines are colleagues on the front lines that may not be may be in more of a low skilled

kind of job. We want them treated right too. Um. And so I think there's pressure coming from you know, the employee side. I think there are pressures coming from the consumer side. Um where uh, you know, there's more and more access to information, a lot of it digitally now where you can you can go on glass Door, pay Scale or um. This online bank Aspiration has this app that you can use where you can look at

the places you're shopping. You know, they know through your debit card purchases and online bill paying where you shop, and they'll rate the merchants where you're going. They'll give them a People's score and a Planet score. Right. How how where I'm shopping do they are they in line with my values? And you know they sort of benchmarket against other merchants that sell the same stuff. Maybe maybe they'll be. I think there's pressure that is coming from

consumers and more pressure that way. Um. You know, we've seen what happens that you know and an uber for example, right, they didn't add a tipping option I thing for their drivers out of you know, because out of the goodness of their hearts. You know, they did so because there was pressure from right from workers wanting there from sorry,

from consumers wanting their workers treated better. So, UM, I think that's another avenue where where maybe we're gonna start to see some some pressure and things moving in the other direction. And then, of course, investors, a lot of the kind of socially responsible impact investing has been more

on the environmental side of things. UM, but I think that there is a movement to to try and look at e s g. Environmental social and governance metrics that also cover the people's side, and that um, social people

are interested in impact investing and socially responsible investing. UM. You know, that's a real place the capital markets can can leverage pressure against companies to do the right thing and treat their people right in terms of compensation, in terms of investing in their training, making sure that they're following labor standards and and so on. So I think those are all pressure points that I think companies are beginning to feel how quickly and how forcefully they can

add up and overcome this maximize shareholder value mindset. You know, I don't know if it will be strong enough to roll things you know back or how far. Yeah, it sounds like the only way companies do anything is if they feel like they have to thank you so much for taking the time and coming to talk to us. Oh it's a pleasure, Thanks so much for having me. So there's a perfect example of the shareholder value principle that Rick was talking about that I read about. A

couple of months ago. American Airlines announced that I was giving pay raises to its pilots and its flight attendants, and basically Wall Street freaked out and the stock went down. Wow. So the specific thing that Wall Street was upset about was that basically American was giving like a little leg up to its workers. And it's funny because Rick was saying that, you know, maybe one hope we have for

things turning around is consumers putting pressure on companies. And I guess in this case, like for consumers, you want happy flight attendants and pilots, and everybody's always complaining about how terrible the flying experiences. So maybe what it would take to convince American Airlines shareholders that it's good to give pay raises is if consumers hated the experience so much that they demanded it and then that sent the company's stock price down. But it seems very round about.

It's honestly hard to think about how we could get back to anything that Rick is talking about for lots of reasons, like I even think that he said that these pressures we see from consumers are small. But I also think, you know, he was talking about how there are a lot of people that were left out of

this economy and left out of this great world. And you know, he described it as an effect, but I wonder if that is almost why it was that way, when you're leaving out a lot of people of the company Titian, it creates a scenario where more where yeah, where all the white men can be the ones who succeed. Well, he did say that there has been some pushback in academia and people, you know, and and how economists think about this to the theory that you know, shareholder value

above all is most important. So maybe over time the zeitgeist changes to where we can actually convince investors that companies make more money by treating their employees better. But it does seem like the only way things really changes if it's in the economic interests of corporations. Yeah, I see that a lot in my reporting. All of the benefits trends are a companies that are having trouble hiring. So you want to hire the best people, you have

to treat them well. I think that the hard thing is, and he mentioned this a little bit, is just that there are fewer people that fit into that bucket. So people are trying to think of ways where more people can be included. Maybe we'll get there one day and out of time for half takes half fake takes, you can call into our hotline and leave us your own half bake take at two and two six one seven zero one six six Francesca, what's your half bag take?

It's about work karaoke. Favorite topic on this occurring theme on Game Plan. Uh, it should be against the rules in some kind of corporate manual or just you know, you should get reprimanded by your manager if you go to any kind of karaoke. But let's keep it work related. If you go to work karaoke and don't sing, you should just be required to do it. Of course, you're going to look down. That's the point. You can't go and watch everyone else. You don't get the privilege of

watching everyone else make a fool themselves. The contract you make is that we're all gonna look equally dumb. It doesn't worrk as a bonding if not everyone does it. I'm actually gonna go one step further because i feel strongly that private room carry okay, is kind of a joke. No, it's fine. I know everybody loves it because you get to order your dumplings fears, and you know what happens.

Everybody gets too comfortable because there's not enough humiliation and there's not enough vulnerability, and everybody sends it, ends up singing along to every song and everyone's just shouting over each other by the end. If there is some public humiliation, like a bar full of drunken people that you don't know and you have to get up in front of them and sing, it just raises the stakes a little and it makes your performance really special. Also, I really

like watching people sing who can't sing. I just think everyone to know that you're an above average singer and that's why you don't mind the humiliation. But very machiavellion. Okay, thank you for saying that I don't enjoy watching people be humiliated. I actually find that when people can't sing and they know that they can't sing. It's one of the sweetest things in the world to watch them sing.

Like I love why people sing Happy Birthday because it's like they're not singing a Happy Birthday to show off how good they are singing. They're they're doing it to like celebrate. But then you hear everyone sing off pitch, and I actually think it's really sweet and cute. I don't like it when people think they can sing but can't say this is like a lot take. This is

like coming together. Is more of like a thesis take if I had to write yeah, if I had to write like my thesis for half Big Take school, I'd be singing yeah. Anyway, I have a lot of thoughts about karaoke. Um tweet at me for more Becca, what's

your half big take? So you know how you have to leave your seat sometimes depends are kind of worker you are, but yes, okay, So I often have to leave my seat, leave my computer screen and go to meetings or do various things, go to the bathroom, and some people might put their computer to sleep, but I'm not going to do that because that's way too much work. But I do select the perfect tab to leave open that everyone can see. Yeah, and it's actually quite stressful.

I could see like our clicking through tabs and you're like that one's not good, that one's not good, that one's not good, Like, oh, yeah, that's study I was reading about, like worker rights. Yeah, yeah, leave that up. I'm right there with you. I do exactly the same thing. I totally curate my screen when I walk away from it. And it is a lot of pressure because you need

to convey that you were doing work. But like I don't know, you also need to find something that isn't gonna like you don't want to leave your email open. I don't know, it can't be something. Yeah, it has to be something work related. I usually tab through for like a very uh innocent but work related chat. Like I'm not going to leave open up chat with you. I'll leave over to chat if it's like a chat that is that everyone has access to. That's just about

like interesting what's going on the home? I don't always be like an article or a journal interesting strategy. What does your tabs say about you? Let us know? And this has been half Big Takes Ethic Takes. Thank you for listening to another episode of game Plan. You can find me on Twitter, I'm at our Z Greenfield and I'm at Francesca today. Tweet at us or call us and leave a voicemail at two one to six seven

zero one six. If you like the show, head on over to Apple Podcasts or wherever you listen and rate and review and subscribe. We love hearing from you. You can also subscribe to our newsletter if you want to hear from us more throughout the week, and you can do that just by going to Bloomberg dot com slash newsletters and checking game Plan. This show was produced by Liz Smith and Magnus Henrickson and the head of podcast As franchise to leave. We'll see you next week. Bye.

I couldn't help but wonder it's my relationship with you know what