The linked article mentions outsourcing, but it was this other _fantastic_ article [1] on the structural issues of the current wage economy that really helped me understand just how different things are:
"Thirty years ago, she says, you could walk into any hotel in America and everyone in the building, from the cleaners to the security guards to the bartenders, was a direct hire, each worker on the same pay scale and enjoying the same benefits as everyone else. Today, they’re almost all indirect hires, employees of random, anonymous contracting companies: Laundry Inc., Rent-A-Guard Inc., Watery Margarita Inc. In 2015, the Government Accountability Office estimated that 40 percent of American workers were employed under some sort of “contingent” arrangement like this—from barbers to midwives to nuclear waste inspectors to symphony cellists. Since the downturn, the industry that has added the most jobs is not tech or retail or nursing. It is “temporary help services”—all the small, no-brand contractors who recruit workers and rent them out to bigger companies.
The effect of all this “domestic outsourcing”—and, let’s be honest, its actual purpose—is that workers get a lot less out of their jobs than they used to. One of Batt’s papers found that employees lose up to 40 percent of their salary when they’re “re-classified” as contractors. In 2013, the city of Memphis reportedly cut wages from $15 an hour to $10 after it fired its school bus drivers and forced them to reapply through a staffing agency. Some Walmart “lumpers,” the warehouse workers who carry boxes from trucks to shelves, have to show up every morning but only get paid if there’s enough work for them that day.
“This is what’s really driving wage inequality,” says David Weil, the former head of the Wage and Hour Division of the Department of Labor and the author of The Fissured Workplace. “By shifting tasks to contractors, companies pay a price for a service rather than wages for work. That means they don’t have to think about training, career advancement or benefit provision.”"
I hate this. I REALLY hate this. Creating a full-time workforce by cobbling together contractors is disgraceful. Sure, sometimes contracting makes sense, but replacing your core workforce with contractors just sucks.
Here are some reasons why:
1) loss of corporate identity / camaraderie
2) reduced working training & quality... and loss of control over how work it performed. If you retain control over work methods, they’re supposed to be employees
3) double downward pressure on wages as companies compete and then the contracting firm takes a cut. Pressure increases as subcontractors show up
4) subcontracting! You hire firms with no capabilities, which then hire subcontractors who hire people who know what they’re doing (maybe, see above). Why are these companies making profits? It should all go to the workers.
5) false flexibility. Your HR system might be painful, but good luck getting rid of a toxic contractor if they’re the cheapest person who can do the work. You can take your contract to a new company but they’ll hire the same people you already had.
Contracting obviously has its place - no firm can do everything- but staff replacement just sucks.
> Creating a full-time workforce by cobbling together contractors is disgraceful.
Not paying people but still requiring them to do things (like show up to work or keep their schedule free) is disgraceful. Hiring part-time workers is not disgraceful.
If we want more full-time workers for stable employment, we need to a better job disentangling our social justice policy goals (retirement savings, health care, maternity leave, etc.) from full-time employment agreements (at least exclusively those agreements). If we want a dynamic labor market and employees with the ability to tell their bosses to stuff it, we need to stop leaning so hard on the employer/employee relationship.
That's actually a really good point. I argue for full time employment frequently, especially in retail. It's, imo, a terrible place to work with a lot of scummy tactics against employees.
I'd still say employers need to be held accountable for how they treat part time workers though. For example, they can drop your hours to next to nothing, forcing you to leave the job rather than firing you. They can juggle your part-time days around at random making it insanely difficult to hold two part-time jobs.
You make valid points about the employer/employee relationship, but even if things like benefits were fixed, holding two or three part time jobs can be extremely difficult.
My wife works in pharmacy, retail - and the things she sees from retails stores regarding employees is disgusting. The store seems straight up hostile towards it's employees. It really puts it into perspective how much better I have it, as I've worked salary for ~15 years now.
> I'd still say employers need to be held accountable for how they treat part time workers though.
Sure. I just think the best people for that job are the workers themselves. Making less of life dependent on full time employment will give employers less leverage over employees.
> ...even if things like benefits were fixed, holding two or three part time jobs can be extremely difficult.
It can be. But it can also be simple. You could work Mondays, Wednesdays, and Fridays for one boss and Saturdays for another. Or you could work on a mostly commission basis for two different bosses. The challenges are typically where bosses are getting away with getting something for nothing. There is no minimum wage for "be available these hours" or "get approval before taking on another job".
> It can be. But it can also be simple. You could work Mondays, Wednesdays, and Fridays for one boss and Saturdays for another.
Sure, but that assumes you have the power to dictate your schedule. That right there depends on some respect from employers to employees.
Clearly I'm biased as I have seen disgusting things in retail. In the examples I've seen, they want you 7 days a week, regardless if they will actually pay you on those days.
This is made worse by the job market that gives employers quite a bit of bargaining power. Why take the employee who only wants to work Mon/Wed/Fri, when there's someone else willing to take whatever they can get?
For what it's worth, I'm actually agreeing. I'm saying we've been too hung up on hourly wages and not focused enough on employers externalizing costs (business risks, logistics risks, career viability risks) on employees. Some simple things, like requiring a retainer or salary for mandatory schedule availability, have simple legislative solutions.
What is it, in particular, about contracting that allows businesses to pay the same people less? What can they do with the contracting that they couldn't do without it?
I think this:
>“By shifting tasks to contractors, companies pay a price for a service rather than wages for work. That means they don’t have to think about training, career advancement or benefit provision.”
was an attempt at explanation. But I don't see how it leads to lower wages.
One aspect of this is that it's much more difficult to "work your way up". To start at a relatively low paying position and then put in your time (accruing annual raises) and taking on roles of increasing responsibility and pay.
Previously you could start in the hotel kitchen and then become a line chef or a waiter or bartender and then a manager. And you'd be able to do so by showing you were competent and hardworking and moving up within the organization.
Now, in the extreme case, each of those roles is handled by a different outsourcing firm. The manager is quite possibly not directly taking resumes from people who walk in off the street, they're getting workers from a temp service who only supply low level kitchen help.
Put another way: who is typically going to make more? The person who has worked for Hilton Hotels for 20 years or the person who bounced around between a half dozen temp agencies doing work inside the same Hilton Hotel for 20 years?
Benefits. Benefits can cost up to 50% more on top of salary per employee, sometimes even more. The government requires full-time employees to be covered by health insurance for example. So if you switch to contractors you can save a great deal on this cost.
Lets say you own a business. You need someone to clean at night.
If you hire a cleaner directly you don't want to have to go through the hassle of hiring a new cleaner every few months so you pay them well so they will stay. Since they are your employee you probably include them in other items you give to other full time employees, such as profit sharing and vacation.
If, instead of hiring directly, you pay "Acme Cleaning Services" you know someone will show up every night to clean, even if it isn't the same person. The cleaner is no longer "part of the team." Acme Cleaning Services treats their employees like replaceable cogs in a machine, all they do is hire lots of low skilled labor and keeping pay low lets the company get more business.
There's also a psychological factor at work too. Contractors aren't part of the business "family" but a cost center. So the dynamic changes; instead of a longterm commitment to a person, it's more of a direct business relationship with the outsourcing company.
I think that contractors explain HOW it happens, not WHY.
Let's say in some city the factory was closed due to outsourcing and 3K people are now jobless. They are not applying to be a security guards in city hotels -- there are no vacancies announced, and hotel managers are not aware of opportunity to lower their costs.
But then some dude opens SecurityGuards LLC, hires former factory workers and starts sending out proposals for security contractors, paid by hour. Once proposal reaches hotel manager desk and evaluated, their current bouncer is fired and contract with SecurityGuards is signed. Hotel manager collects yearly bonus for efficient cost control.
So, the root cause is global wage arbitrage, but it appears that owners of contractor businesses are the bad guys here.
I don't know if this is what the article is meant to suggest, but in the past I think promotion from within from menial positions to lofty ones was far more common than it is now and contracting could help, in part, explain that.
Contractors can better utilize workers and equipment by spreading their usage to multiple sites. Since they can have a larger pool of employees, they can take risks on people willing to work for less money.
Basically, a contractor can turn part-time work into a full-time job.
It doesn't. The real reason is due to reduced demand for labor, partly due to increased efficiency from technology, partly due to reduced spending, etc.
At the end of the day, it's always supply and demand. The contracting just helps with creating a third party to deal with employment laws and all that hassle.
I recently stayed at a hotel and didn't even need to talk to anyone. Bought the room on via the hotel's app, the digital key in the app opened the door using the phone's NFC, the receipt was received via email.
What is it, in particular, about contracting that allows businesses to pay the same people less? What can they do with the contracting that they couldn't do without it?
A big one in the UK is it enables dodging of Employer’s NI
The other crooked part about temps / contractors is that they're more expensive for the party hiring their services, but the employees earn less and have worse secondary terms; that extra money? Goes to the higher-ups.
Companies need to be incentivised to hire their own people again.
And why wouldn't they? It's time to bring back mechanisms, legal or otherwise, to prevent this from happening again. Usually the collective workforce of a company has significant leverage over a company, but with the advent of globalization, the "gig economy", and technological unemployment in some ways this leverage is harder to capitalize on, or even worse, nonexistent.
I don't know if there's any empirical proof for this, but like competition between companies, I think "competition" or tension between employees and employers for a given organization is also good for capitalism.
Mechanisms legal or otherwise already exist. The problem is they "have no teeth" meaning the punishment is worth taking to get the benefit of the illegal action.
ie. Its illegal but worst case is we get fined 10% of what we will make anyway. Best case is we get away with it.
The other part is that they are not enforced due to the lack of resources to enforce them. Which again leads to the "have no teeth" since the laws are so broadly "interpreted" it can take years to pursue one case. This part is the hard part since it really is the crux of the problem and no one is working on it nor has any monetary incentive to do so.
There is not logically, morally, or non-exploitative business reason to have a non-compete for a minimum wage employee. Yet this case will probably drag out for at least 6 months if it is handled "expediently"
yeah that's what unions are really about - to think about the employees for the employees good, where HR thinks about them for the good of the company. implementations of that idea are of varying quality which unfortunately gives them a bad rep.
> implementations of that idea are of varying quality which unfortunately gives them a bad rep.
Also giving them a bad rep: propaganda efforts by big employers. Back when I worked for them, Walmart showed new hires a training video that could be summed up as "just say no to card checks; union organizers are trying to trick you into giving up your rights, and you don't need a union anyway because we value our associates so much".
Arguably, unions were so successful that people started asking "what do we need them for anymore?" It's shortsightedness that companies were/are all to happy to exploit.
Some of the reputation is deserved though. When I worked at UPS you were forced to join the Teamsters union and pay union dues. I don't have a problem with the unions in general, but I'm against forced membership.
I think this is emergent behavior rather than something with a malicious source. Profit seeking is one reason but it could also be to remain competitive.
There are so many people in China and India (and allover the world but these 2 have the largest populations) that are smarter, more creative, and much more driven than us in the US that it's inevitable that we regress towards the median.
Our lifestyles are maintained primarily through moats dug a long time ago. However technology continues it flattening rampage making each human equally valuable by unlocking more and more of their potential. What was gated physically and socially is not so anymore due to the ubiquity of computers and the internet.
Ironically it's the executives making these decisions by seeing the equality in all humans. It's not that they can't reduce their own salaries and bonuses but if there are willing and driven people, by denying them they are basically giving charity to the "middle class" that expects them to do so without a thanks. In this situation it's the middle class demanding more without seeing that they are actually asking for charity that results in a schism between the ideal and reality and all the dehumanization that comes with it.
Interestingly, unionization in Canada is still as strong as the strongest years in the US. Despite that, wages are every bit as stagnant as the US and, looking at income data, there is a lot of mirroring between the two countries. The substantial decline of unionization in the US is one thing, but what is Canada doing wrong?
I am curious as to where you are getting the idea that "unionization in Canada is still as strong as the strongest years in the US". That's pretty much the opposite of my personal experience and observations, and it's not the consensus I've been hearing (which is that organized labour has been at an absolute nadir in the past few decades, as much in decline as in the US). Unions have shrunk, membership are down, political clout is down, and a newly unionized company is a rare bird indeed. Perhaps the high rate of unionization in the public sector skews the stats here, because in the private sector, things are pretty much a mirror of the US situation.
From what I can tell, all of the same factors that are driving down wages in the US - increased consolidation, far more 'temp' positions brokered by temp agencies - apply to Canada as well, and have had the same effect.
> I am curious as to where you are getting the idea that "unionization in Canada is still as strong as the strongest years in the US"
Based on the share of the workforce that is represented by unions. Canada is currently at ~30%, the US peaked at ~30% and is at less than 10% today.
> Unions have shrunk, membership are down, political clout is down, and a newly unionized company is a rare bird indeed.
Unionization is indeed down, but what I said is that it is still about as strong as the strongest years in the US. Canada had even stronger unions through the 80s, when it peaked at just shy of 40%. Interestingly, much of the same wage issues we face today were still present at that time. Wages have been stagnant since at least the 70s, according to the Canadian government (and American data echos this).
When you say "represented by unions", do you mean the unionization rate or the coverage rate?
In terms of unionization rate, in 2016 Canada was at 28.4% [1]. By comparison, the US peak was 34.8% in 1954 [2] . (It is now 10.7% [3], which is slightly higher than 10%, not less than.)
While the "~" can justify a rounding to the nearest 10% instead of 5%, that ended up hiding a difference of 6.5%, or 1/5th of the total unionized population. From what I can tell, the current rate of around 28% corresponds to the US unionization rate in about 1970 [3], and not its peak in 1954.
The US peak of 34.8% is closer to the Canadian peak of 37.9% in 1984 than it is to 30%, and corresponds to the Canadian unionization rate in 1991 [1].
The coverage rate for both countries is of course higher. For 2017 in Canada it was 30.4% [5] and in US is was 11.9% [3].
I would say yes, but I am not clear how that relates to the original claim. Are you trying to suggest that this problem is beyond the capabilities of unions?
The globalization of markets presents a real problem for unions which have more of a national or regional focus. I'm not going to say it's beyond the capability of unions to address somehow, but I do think it has reduced their leverage substantially.
The problem with public sector unions are that they are a reverse monopsony. They collude with politicians to elect those who are willing to ignore economic reality and pay unsustainable wages/pensions/benefits[0].
Looking at places like Connecticut/Illinois/New Jersey it is causing starvation of public services to meet pension obligations despite already high taxation.
They are caught in a trap since if they raise taxes further (and/or decrease services) they will lose those most capable of moving- who also happen to pay the most taxes. This is already starting to play out[1].
Private sector unions are tasting the fruits of their corruption via the mafia and general unwillingness to integrate with long term industry needs, ala the German model.
Its incredibly unfortunate, since a modern, ethical and foresightful private union would serve the greater good of the country better than just about anything else I can think of.
Post-contractual non-compete without any compensation. It’s starting to be a thing even in EU. 5-10 years ago I could sign an employment contract blindfolded, now it’s a freaking minefield where in couple of years I can end up without a job, unemployable, and owning multiple monthly salaries to the employer. We have too many bored lawyers.
For non competes, I wish the law was that companies could bench you, but they'd have to pay you 200% of your best comp of the past 5 years. I think it'd solve a ton of problems.
I some jurisdictions, putting overtly one-sided constraints in an employment contract (or any contract, where there is an asymmetry in power between the parties) may render it un-enforceable. For example, a non-compete, for no good reason, and with no compensation attached to it. But you'd still have to take your chances in court though.
It's not a payment for if they get rid of you like a golden parachute. It's a payment for if they want to use the legal system to prevent you from earning a living by working for another company.
As currently constituted non-competes allow your former employer to take the spoon out of your mouth, so to speak. The proposed change would simply say that they have to provide you with an alternate means of supporting yourself if they will prevent you from working.
It's one thing for knowledge work (even there I'd like to see it go away), but there's zero justification for preventing a guy who gets fired from Jimmy John's from trying to work at Subway or Quizno's.
More like you are doing a favor to them, and that should be compensated accordingly. The actual amount should reflect how much the company values this. But the ban shouldn't be anything less than what you could earn elsewhere. So there should be an obligation to match the payout to the highest job offer you are able to get.
Also, companies are still free to strive to keep their knowledgeable workers happy, with an attractive total comp and good work environment.
Worse, post-contractual IP assignment clauses are becoming more common as well. I ran into two the last time I was job shopping (out of 3 where it reached the offer phase).
Non-compete clauses are a pretty weird thing and I've seen them in contracts before. Definitely read up on them. I've refused to sign contracts with them before. They're totally unenforceable in California and a few other states.
In addition it seems to me that labor is not a free market, simply because there is no choice to not offer your labor, since you'd starve. In large parts of the world anyway, and globalization has brought them into the 'free' market.
> Whenever I raise the point that it is immoral to shut us up in a close room twelve hours a day in the most monotonous and tedious of employment, I am told that we have come to the mills voluntarily and we can leave when we will. Voluntary! Let us look a little at this remarkable form of human freedom. Do we from mere choice leave our fathers’ dwellings, the firesides where all of our friends, where too our earliest and fondest recollections cluster, for the factory and the Corporations boarding house? By what charm do these great companies immure human creatures in the bloom of youth and first glow of life within their mills, away from their homes and kindred? A slave too goes voluntarily to his task, but his will is in some manner quickened by the whip of the overseer.
> The whip which brings us to Lowell is NECESSITY. We must have money; a father’s debts are to be paid, an aged mother to be supported, a brother’s ambition to be aided, and so the factories are supplied. Is this to act from free will? When a man is starving he is compelled to pay his neighbor, who happens to have bread, the most exorbitant price for it, and his neighbor may appease his conscience, if conscience he chance to have, by the reflection that it is altogether a voluntary bargain. Is any one such a fool as to suppose that out of six thousand factory girls of Lowell, sixty would be there if they could help it? Everybody knows that it is necessity alone, in some form or other, that takes us to Lowell and keeps us there. Is this freedom? To my mind it is slavery quite as really as any in Turkey or Carolina. It matters little as to the fact of slavery, whether the slave be compelled to his task by the whip of the overseer or the wages of the Lowell Corporation. In either case it is not free will, leading the laborer to work, but an outward necessity that puts free will out of the question.
Food always seemed a pretty free market to me, even though it's necessary. I was taught that free market is more about competition and access to information while necessity of the product mainly affected price inelasticity but that was econ 101 so idk if it's entirely accurate.
Shopping for groceries might be close to a free market, but the production of food certainly isn't.
Also, a big problem with the "free market" is inability and/or disincentive to price externalities, such as environmental damage. Although, it still seems to be a better system than others, we need to work on that front.
I'm referring to subsidies to US farmers and underpriced water also. I'm not familiar with other countries, but the domination by Cargill and Monsanto and John Deere also probably detract from a free market.
Free market means you're free to choose, where you work, what to buy, where to sell. Its not free from consequences. You can most definitely not provide your labor, go and start a self sustaining farm ( you probably only need 1 - 2 acres of land in the right location )
Are you positing that this free market exists and accessible? There are countless examples of people with little to no meaningful choice of where to work, what to buy, and what they can sell.
In some US states you have to pay child support, even if you're unemployed. If you don't pay you go to jail. And while you're in jail the costs keep coming. If that's a free market, then I'm not sure what freedom is.
Describing it as wrath is in proportion to the overwhelming lack of action against corporate issues these days... so yes, slap on the wrist on an objective scale, but 'hey, look, they DID something!'
One thing I wonder- to what extent has the digitization of the job search process contributed to reduced wages? I can imagine several mechanisms that would cause this to reduce wage growth:
1. Widely available data on wages tends to introduce a lagging effect on wage inflation, because workers tend to look at data that is a least a couple of years old (imagine what pool of data is currently being used on glassdoor.com to create the salary estimate of that junior developer job you just looked at)
2. Recruiters have large amounts of data on current wages, and can negotiate from a greater position of power.
3. Recruiters have a larger pool of candidates to draw from and force to compete against eachother.
More like "widely available outdated data." Better (real time) access to data would help the situation, but the wording there makes it sound like you mean to say the opposite.
The affect of bad data on the labor market almost looks like the affect of fake news in politics doesn't it?
> For a long time, economists believed that labor-market monopsony rarely existed, at least outside old-fashioned company towns where a single factory employs most of the residents. But in recent decades, several compelling studies have revealed that monopsony is omnipresent. Professionals like doctors and nurses, workers in factories and meat processing plants, and sandwich makers and other low-skill workers earn far less — thousands of dollars less — than they would if employers did not dominate labor markets.
This is the most shocking part of the article for me. How could economists for years have denied something so plainly obvious?
Interesting the authors cite unionization as an effective protection against this in the past but do not recommend it as a remedy for the future. The problem with simply passing laws as they suggest is that those laws once in place will be opposed by everyone with power simultaneously and forever, with no powerful organized collective force to defend them it is just a matter of time until corporate power grinds them into dust.
Unions give actual power to workers (and are great at motivating them to vote according to their interests!) instead of just passing laws out of the goodness of our heart to protect them and hoping they last through billions of dollars in corporate bribes.
The current problem with unions is labor arbitration. Unions were great when transportation was slow and expensive and communication didn't move at the speed of light. Now capital is more important than labor, and capital can be moved almost freely and at the speed of light. Labor on the other hand is stuck in it's national borders, and much of it has a huge amount of debt.
Giving a union the power to shut down a production line doesn't do much good when a new line can be setup overseas in hours. Corporate power has to be fought at the state and nation level
Like global warming, this may be a problem that we are unable to do anything about except adapt. We need to lean into the gig economy, instead of pulling away.
What we need are mechanisms to ensure that there's always a constant and steady stream of gigs available for any person to work. Many of these gigs might not be full-time or part-time jobs but rather micro-jobs or micro-tasks, that some entity needs to have completed to fulfill some larger mission, which is irrelevant to the gig worker.
The requirements for completing a task could range from simply "Being a human" to "Specialized skills in a specific domain". Profiles for workers could contain all sorts of information that could help them find relevant work quickly and easily, consisting of things like education and trade skills to even body metrics and IQ if necessary. And of course workers can be rated based on previous work history to help them better find future jobs without needing to keep a resume.
A worker should not need to get anything more out of their job than payment for services rendered. Healthcare should be handled by the government, and vacation time is handled by whenever the worker doesn't feel like working.
The major problem I see for the "gig economy" is that as a contract worker one is essentially on their own for things like health insurance and unemployment benefits. While neither are things often talked about on the HN boards, here outside the Valley those become real concerns for employees with families.
Health insurance I agree is a problem that needs to be solved independently from employers. In fact, if we actually manage to solve healthcare at some point in the future the gig economy will only grow more as it will become more feasible to move from employer to employer.
Unemployment is best handled by keeping your own savings I'd say, though that's tough for some to grasp in a nation with little financial education.
Every time a discussion on unions or any sort of organization to "push back" against the big companies in just our own industry is met with a good 50% of HN readers dismissing the idea outright.
And even talking about cutting off the supply of H1Bs - or at least the body shops that probably aren't as prolific at the top companies which are overrepresented here - is flagged and downvoted in minutes.
It doesn't surprise me, given the age of the average HN reader. Once you have a family, house, and have experienced age discrimination at 40, you'll have different views, I'm guessing. Maybe even sooner for many here if the blatant discrimination of white and asian males gets more traction.
I guess the thing that is so disappointing to me about this industry is that we're supposed to be smarter than the rest. But we have completely ignored the history of this country and the battles that our predecessors fought.
Tech folks are incredibly smart on technical subjects. When it comes to politics, power dynamics, seeing through propaganda, empathy, we are not trained in or likely to be interested in any of these "softer" but very important issues at all and it shows. Why do you suspect there are so many Libertarians in tech? It is the quintessential political philosophy of a smart successful person who does not understand these issues.
I am always amazed how many excuses and how many arguments are there when big businesses profit at the cost of the average Joe, but God forbid when a mere employee tries to do the same.
I see no reason to be "ethical" anymore when it comes to employment because I know that it will be one sided - in this case I will act purely in my own interest, just like the businesses do. There's zero reason to play the game where the other side gets to change rules at will and forces you to get along with it.
I think software developers are dumber than average cause their skills are in such demand that they don't bother learning how to generate/use leverage like professionals in other niches do
No-poaching agreements are very clearly illegal and should have resulted in immediate charges being levied against a metric shit-ton of people as the only way that works with all these franchises is if many people are involved. The DOJ has formally acknowledged these practices are illegal and a serious violation of existing laws:
https://www.justice.gov/atr/file/903511/download
Well...it's been nearly 18 months since that announcement. Why haven't I seen a whole bunch of people get charged with felony antitrust violations, as per the DOJ's own statements about its intent to "proceed criminally against naked wage-fixing or no-poaching agreements"?
For salaried jobs in all companies, the only requirement for unpaid overtime should be responding to emergencies.
So for engineering, this would mean always 40hr week unless dealing with out of hours production downtime.
There is way too much abuse happening(frequently implicitly).
How utterly pathetic that a company like Jimmy Johns, whose employees probably make single digit per hour salaries, would do this[0]! This is just one more way the rich crap on the poor.
[0] I realize the article said they stopped, but I still can't help but be very upset about it.
There was similar wage suppression (or should I say, wage theft scheme) in Silicon Valley until very recently. That's why the wages skyrocketed. If the scheme could be broken up in one industry, it can happen again in others.
I wonder if the current high wages in Silicon Valley are a function of job competition in other cities (tech jobs in Austin, Denver, NYC, etc) plus a highly mobile workforce. Tech workers tend to skew younger and are also able to work remotely in many cases.
I bring all this up, because I'm not sure it will be quite as applicable in other industries. It seems that many workers aren't willing to move for work and don't have the competitive salaries in other cities required to bring up the salary. I'm sure it's possible that the scheme could be broken up through other methods, but I'm having trouble seeing an avenue there.
The SV wages I'm seeing seem to be concentrated in a few really wealthy companies who basically enjoy monopoly status in their domains.
It doesn't seem like smaller startups pay that well - though maybe that is fair due to the chance to hit it big.
What I will tell you is that software engineers in the rest of the country, especially in industries that have been decimated by offshoring and H1Bs (banking, insurance, and large companies in general) do not pay that well after about age 35 or so once you hit your ceiling (anywhere from $90K in the Midwest to $150k in high COL East Coast) no matter how talented you are.
I made way better money than most of my peers at 25 - they were still in grad school and paying off loans. By 30, I was still making more, but they were quickly catching up.
I'm imagining by 40, I won't be much ahead of anyone with a professional degree or even those who went into government and now have seniority, pensions, etc.
What I've seen so far with offshoring, H1Bs in my 20s was the first big warning sign for me. Then as I got into my 30's and started seeing how management treats older works, I'm beginning to realize that age discrimination in tech is for real - second warning sign.
And finally, if this whole war on white / asian males picks up steam in other companies, I'm probably going to attempt to pivot out of the industry completely. There is not much of a bright future.
"I made way better money than most of my peers at 25 - they were still in grad school and paying off loans. By 30, I was still making more, but they were quickly catching up.
I'm imagining by 40, I won't be much ahead of anyone with a professional degree or even those who went into government and now have seniority, pensions, etc"
I have seen that myself. I used to make more than people my age but over the years non tech friends have advanced steadily and have passed me. People in government often make around 150k too but they get a very nice pension in addition.
Why are low skill non-competes bad? You can just lateral into another low skill job in an unrelated industry. It’s not as if you have a huge amount of human capital sunk into sandwich prep.
It still causes the same problem. It limits the opportunities people have available to them. Lets say 5 Guys opens up shop right next to Subway and is offering $3 more per hour than Subway. With non-compete's at Subway, those workers would be stuck and there would be no onus on Subway to improve their wages or benefits.
Without the non-compete Subway workers would apply for work at 5 Guys, which would force Subway to become a more competitive employer.
No matter what rung of the ladder you're on, non-compete's hurt employees and benefit employers just as they were intended to do.
It's often not that easy, and what if people don't want to change industries every time they lose their job?
If something like that became standard, it would be used as a tool to further divide our socioeconomic classes. Social pressures from friends, family, children, as well as economic pressures will force people into signing these non-compete contracts.
The issue is that, as a member of a overpopulated labor pool, a low-skilled worker has no bargaining power and so without bans on things like non-competes, corporations could walk all over their labor force. That is a social regression.
Because low-skill isn't unskilled. Employers know that even in these jobs a modicum of experience gives an applicant a decided advantage in applying for new jobs, and not having it serves as a bar for employment which means that this underpaid labor also has to beat the cost of retraining, then likely accept a below-market training wage to get work.
At the same time these clauses reduce the number of potential employers for any given candidate, so any given employer has less incentive to meet a higher salary demand.
When you go to lunch today, show the people making and serving your food the article and ask them if they'd like to be tied to a non-compete. Ask them if it would be easy to "just lateral into another low skill job in an unrelated industry."
>It’s not as if you have a huge amount of human capital sunk into sandwich prep.
Then why in the blue fuck does Subway need a non-compete in the first place?
NC's are suppose to help a company maintain the value in investing in its employees so they are less likely to leave, or to keep said employees from taking customers. In the low value end this make no sense. There is little to no investment in the employee, and there is little risk of the employee taking high value customers.
"Thirty years ago, she says, you could walk into any hotel in America and everyone in the building, from the cleaners to the security guards to the bartenders, was a direct hire, each worker on the same pay scale and enjoying the same benefits as everyone else. Today, they’re almost all indirect hires, employees of random, anonymous contracting companies: Laundry Inc., Rent-A-Guard Inc., Watery Margarita Inc. In 2015, the Government Accountability Office estimated that 40 percent of American workers were employed under some sort of “contingent” arrangement like this—from barbers to midwives to nuclear waste inspectors to symphony cellists. Since the downturn, the industry that has added the most jobs is not tech or retail or nursing. It is “temporary help services”—all the small, no-brand contractors who recruit workers and rent them out to bigger companies.
The effect of all this “domestic outsourcing”—and, let’s be honest, its actual purpose—is that workers get a lot less out of their jobs than they used to. One of Batt’s papers found that employees lose up to 40 percent of their salary when they’re “re-classified” as contractors. In 2013, the city of Memphis reportedly cut wages from $15 an hour to $10 after it fired its school bus drivers and forced them to reapply through a staffing agency. Some Walmart “lumpers,” the warehouse workers who carry boxes from trucks to shelves, have to show up every morning but only get paid if there’s enough work for them that day.
“This is what’s really driving wage inequality,” says David Weil, the former head of the Wage and Hour Division of the Department of Labor and the author of The Fissured Workplace. “By shifting tasks to contractors, companies pay a price for a service rather than wages for work. That means they don’t have to think about training, career advancement or benefit provision.”"
1 - http://highline.huffingtonpost.com/articles/en/poor-millenni...