I recently attended a thought provoking Chicago Humanities Festival forum discussing the effects of automation on work with Louis Hyman and Darrell West. What is work in the new millennium? It is not as straightforward as the post-World War II social contract between employers, employees and unions. The very nature of employment and what work is changing at an accelerated rate due to globalization of capital/labor/shipping, advances in automation and a growing contract worker marketplace. This is disrupting the meaning and value of work, where and when it happens and how it is compensated. It is less about worker displacement from automation and more about social and economic adaptation.
Automation and workforce displacement is nothing new. The legend of John Henry competing and winning against a steam-powered rock drilling machine but dying as a result is a popular trope. The industrial revolution created machines that transformed the textile industry producing more in shorter amounts of time to a higher standard of mass-produced quality. This period was disruptive and violent, but it did have adjacent effects on the macroeconomic agreements of labor and work, the creation of new types of jobs, the birth of unions, the five day workweek, and the rise of the middle class.
Work and the Eight Hour Work Day
Work at its elemental level is the use of mental and physical skills to do a specific task that achieves a purpose. Labor at its elemental level is the aggregate work of a group organized and regulated by management to produce goods and services for markets to consume. Work is usually compensated in some way, usually in the form of wages and benefits.
Robert Owen, a Welsh industrialist is credited with advocating for a ten-hour day in 1810, and by 1817 he had formulated the goal of the eight-hour day and coined the slogan: “Eight hours’ labour, Eight hours’ recreation, Eight hours’ rest.” This became a standard and coupled with the rise of unions and collective bargaining, these factors created a growing middle class.
One hundred years later, the economist John Maynard Keynes predicted in his 1930 essay, “Economic Prospects for our Grandchildren” that future generations would work 15 hours a week from a combination of efficiency and automation in the year 2000. However, habits are hard to break. In 1950, American workers put in about 38 hours a week. Today, Americans still work 34 hours a week. Yet, Forbes estimated that today’s workers are eight times richer than their counterparts in the early 1930s, adjusted for inflation and work shorter hours if labor is segmented into market (jobs) and household (care and feeding) production efforts.
The 40 hour workweek has been constant, regardless of increases in productivity and automation. Why? To many economists, it is due to the human desire to acquire more resources for a better quality of life which has kept labor hours constant – something that is so well-established that it is considered normal.
Up until 1970 increases in productivity had equal increases in wages. In 1970, productivity kept its regular trajectory upward, but wages flatlined and are in the same state of affairs today. Why? There is no one direct reason, but automation, commoditization of skills, offshoring and displaced workers feeling more vulnerable by doing more work for decreased per-hour wages may be four powerful factors. With increases in income inequality, decreases in real wage growth, and reduction of benefits, these have retarded the ability of workers to rise up the economic ladder.
Work is being Redefined.
Until the 1990s, work arrangements seemed simple. For most people employment was full-time with benefits for years at a stretch. Workers would commute to a building that had offices and workspaces where work was completed. For the most part, work infrastructure was on-site as most work could not be done at home.
Currently in the United States there are approximately 158 million workers. About 140 million are traditional full-time employees, 18 million are in “nonstandard employment” such as independent contractors, contract by third party firms or are seasonal workers. Part of the problem in understanding the numbers is unreliable self-reporting of employment status. Complicating this picture is that the US Government Accountability Office in 2017 reported that 40.4% of all U.S. workers are now contingent — that is, people who don’t have what we traditionally consider secure jobs. “At-Will” agreements are more the standard which allows both employers and employees to quit or be laid off at any time.
Globalization and automation has played a large part in both the benefits and problems of increased productivity. As automation commoditizes specific “work” and the “labor” to produce it, there are changes to technologies, skills and tempo of redefined work. There is also the creation of new types of work and roles where older workers are displaced and new workers meet new production capacities. Between 1980 to 2007, half of the employment growth in the United States was accounted for by new types of roles. Two high growth areas of employment are :
- New Collar Jobs are new types of technical roles that were either recently invented or are still forming and most cannot be filled by a traditional four-year college degree. Community collages and certificate programs are addressing the need for skill-based workers and for example IBM has been a leader in creating six year high schools that will combine high school and community college together to create the volume of workers needed by the technology sector.
- Gig Economy Employment connects short-term workers to customers through third-party platforms like Uber and Taskrabbit. These services offer more flexible on-demand work arrangements which many gig workers like. These workers also lack many of the protections and benefits that come with being a traditional employee such as overtime or a minimum wage and has experienced a race to the bottom in terms of wages.
Kevin Roose of the The New York Times attended the recent Davos World Economic Forum and automation was widely discussed. “They’ll never admit it in public,” Roose writes, “but many of your bosses want machines to replace you as soon as possible” in order to “. . . to stay ahead of the competition, with little regard for the impact on workers.”
Infosys President Ravi Kumar who wants this business sees it from a different perspective that the work of the future will be a blend of humans + gig workers + robots. Physical robots and intelligent digital systems will expedite certain types of work, but it will also help workers, managers and executives make more informed decisions through better judgement.
“But today, the focus is moving beyond T shaped skills to the development of broader skills in what I have coined, “Z-shaped skills.” Z-shaped skills combine deep business & digital literacy with soft skills of the Five C’s: Collaboration, Critical Thinking, Communications, Cultural Fluency and Change Management along with a focus on Creativity and Innovation.”
Today work is more informal, try before you commit, project based with smaller teams and the sharing economy is changing workspaces and shared work tools. Young people will now have many jobs in their lifetime with shorter-time employment histories. This will be due to a much more dynamic work marketplace, reduced commitments of employers and employees to work more than to commit longer than a few years, and changing needs and skills moving to ongoing skill certifications. This means that there will be more responsibilities on employees to continually retrain and keep relevant in an ever shifting employment market to recontextualize their existing skills for new contexts. This is about adapting to changing markets, rather than worker displacement.
Due to these forces, employment fluctuations based on effects of automation has not been tracked for that long to understand trends. There are many estimations on how many jobs will be affected by automation. MIT Technology Review assembled 18 reports on the effects of automation on labor that predicted everything from a gain of nearly 1 billion jobs globally by 2030 to a loss of 2 billion.
Where does work happen?
For most of recorded time, work happened where both command/control and resources were located. In 1970 Jack Nilles at NASA worked remotely and coined the term “telecommuting” and by 1979, author Frank Schiff coined the term “flexplace.”
This new type of offsite self-directed work could be done at home using less resources to get the same amount of work completed. Telework reduced traditional real estate and other related costs with an average savings of $10,000 per employee per year, according to Global Workplace Analytics. IBM embraced telecommuting to such an extent that by 2009 40 percent of IBM’s 386,000 employees in 173 countries had no office at all and allowed IBM to divest of 58 million square feet of office space saving nearly $2 billion dollars.
According to Gallup:
• 43% of U.S. employees work remotely all or some of the time
• 28% of workers surveyed said they chose remote work for productivity gains,
• 7% did so to save money
• 16% said they worked remotely to reduce or eliminate their commute
• 14% craved a healthier work/life balance.
Today, broadly speaking, most work is stressful because teams are put together in a haphazard manner based on who is available rather on the needed skills to get a particular task completed, and the increase in multiple meetings to check work and to get a team aligned but actually retard work getting completed. The effect of just these two factors is that people are working more than eight hours to get work done, not factoring in daily commuting time. Yet overwork may also be a perception problem. For a typical 40 hour workweek, there may not be enough work for one person due to waiting and not having independence to define work to meet a goal so they work slower to fill the week. A recent study of idle time at work by Andrew Brodsky & Theresa Amabile noted that :
- 78% of workers report having “idle time” – periods when they are waiting for a task to be ready for them.
- 22% reported this challenge every day and leads people to work more slowly.
- This problem is usually masked and managers do not know about it.
Marissa Mayer, the former CEO of Yahoo began a conversation about where work should happen. In 2013 she ordered all Yahoo employees to report to an actual Yahoo location which on the surface sounded reasonable to gain from the power of presence and to create more value. While this did not help Yahoo survive, other large enterprises ordered their workers back to a single office for the same reasons.
Companies had to re-enter long-term leases and all associated costs back on their books to support co-location. Work now usually happens on-site at a shared workspace bullpens in open agile workspaces to increase interaction and communication between employees. Offices of today now fit more employees per square foot and some rotate employee that float in open spaces with couches since work are done with cloud tools and services that can be accessed on secured computers and mobile devices.
The notion that co-location will create higher performing teams sounds reasonable as a statement, but I question based on experience that this is factual. It is true that having everyone on site allows management to allocate units of work to a team, but their ability to execute the work at a higher level onsite is questionable.
While organizations think most of the work is happening onsite – through vicarious observation – it is not. It is happening wherever workers want to do it : at home, on their commute, at work, or even on vacation. Team member can also work asynchronously with their team from anywhere – and keep team communication and work progressing. So work and labor is now diffused which may be causing workers to feel things are out of control.
Moving to goals-based work
Several companies have been experimenting with modifying the 40 hour workweek by going to compressed workweeks or moving to goals-based workweeks. The basic fact is companies want employees to have clear goals rather than focusing on how many hours to complete them as humans are wildly inaccurate on how long something takes to get completed. Andrew Barnes, CEO of Perpetual Guardian stated that with these new work arrangements “This is about productivity. Negotiating on productivity – hours are irrelevant.” So productivity and output is the measure of success because the value is in a deliverable.
Jason Fried of 37Signals recently released “It Doesn’t Have to be Crazy at Work” which outlines how to break instilled historical habits that get in the way of doing meaningful work in 2019. He is striving for “the calm company” to directly ameliorate the chaos and stress outlined in this post. Fried’s message is simple: to reduce wasted rituals that create stress and distraction from the real work and to be mindful of your mission, keep focused on individual commitments and the rest will fall into place. If this happens, then teams and individual contributors can be anywhere and be effective. The mindset of the team is their ability to communicate, iterate and produce at greater velocities on-site and offsite, synchronously or ansynchronously, and using shared platforms where all work is visible. This will change what work and labor means.
If companies begin to move to weekly goals and not hours, this could redefine where work happens and how work happens:
- Can workers become more loosely coupled in terms of the current command-control management model of work distribution yet be tightly aligned on the goals of a company and how their work outputs contribute to the goal?
- Can management let go of command-control and provide goals and let workers determine how best to accomplish meeting the goal?
If both do this, they will determine the culture to support more valuable goals-based work, where it should happen (a mixture of onsite and offsite) and when it should happen (some daily contact time but individualized flexible work hours). Less importance should be on the importance of co-location where bad habits just get amplified in one place and more emphasis on culture, tooling and ownership which will reduce waste and increase both relevancy and productivity. It will also open up buried talent pools with greater retention, reduced stress, increased productivity, and lower overall costs.