Image Image Image Image Image



Labor vs. Capital, when technology’s involved

For a recent project, I spent some time talking to executives in an industry about what new technologies they would like to see. Labor-savings were a priority for (1) safety (some  jobs were dangerous or injury-prone) (20 labor availability (varying degree of  mechanization / labor shortages) and (30 cost savings. [1]  The problem wasn’t unions, but that no one made the kind of new equipment these companies wanted.

Management Consultants are agents of Capital. We are generally hired by, and work for, senior management and other corporate stakeholders. But that doesn’t mean that we are in constant opposition to Labor: all situations are more productive if management  puts down their copy of  The Expropriator’s Handbook for a bit and focuses on improving the company as a whole. But it does further emphasize the socioeconomic and demographic divide that alienates many from labor forces and unions. I was thinking about this recently when reading commentary online about the transit strikes in the SF Bay area. [#]

Silicon Valley types were quick to get angry at BART or other area transit workers on strike. Part of the reason is certainly that it could be hard for a programmer to relate to the challenges that a train operator might face. Many users of public transportation can’t simply call Uber to get where they need to go. There has been enormous income inequality created from Silicon Valley’s success. Beyond empathy, an important piece centers around fundamental philosophy.

Tech types are big on the idea of ‘endless disruption’ and have a very high regard for technological or mechanical approaches to solving problems. To grossly overgeneralize: labor and humans are not well understood, and they are not particularly respected. This is one reason, apart from cost benefits, why a company like Google has difficult even conceiving of adding humans to say, its customer service system. Computers are ‘better’ because they are not people! [2]

A Blue Gene / P Supercomputer at Argonne National Labs. Which is more important: the computer or the technician?

A Blue Gene / P Supercomputer at Argonne National Labs. Which is more important: the computer or the technician? [img1]


This is interesting because, for all that tech workers today are spoiled and highly paid, in many contexts the tech companies they work for are quite adept at putting their labor second behind capital infrastructure – namely, computers and servers. This was one of the most striking things I noticed when I was an intern at Google: that people were slaves to machines, even if they liked the arrangement, or didn’t realize it existed.

After a certain point, a technology organization’s scale becomes such that the computers are not just a little more important than the person – they are orders of magnitude more so. That doesn’t mean the server room is gold plated and someone is taking away the free massages. But it changes the way the leaders of the organization think, when a 1% improvement in computer performance can be worth more than a 100% improvement in a worker’s performance.

Obviously, it isn’t quite so simple… it’s easier to acquire server parts than it is to get good developers. But a lot of those developers don’t realize the extent to which they are servants of something larger than themselves.

TechCrunch writes, “Why Labor Unions And Silicon Valley Aren’t Friends” with some interesting charts to show. I understand the public antipathy against unions in places like that article’s comments; for every story about fast food worker abuses, people will be reminded of things like outdated rules that forbid the MTA to use part-time bus drivers, leading to >$500M in overtime a year[3] (But, there is a distinction between unions and labor that should be made.)

TechCrunch did a quick survey to try to reveal the distinction in attitudes about technology replacing workers in unions vs. tech workers.  I think they presented the results poorly; their chart implied there was just a huge gap. Here’s my revised version based on their data which gives a more complete picture. I would wager that the reason so many tech types were OK with technology replacing their jobs was because they felt capable of getting another one. [4]

If you asked an expert Java / C++ / Python coder at Google if he would want his job to replaced by technology, the ready expectation might be that they would find a new way to manage the robot or further abstract their coding duties. The hotel cleaning staff knows there won’t be a new role available to supervise Employee Roomba.

Yes, unions can stifle innovation. But technology cuts both ways. There are many instances where managers will mechanize something and have the result be slower than a manual process. The advantage was in not having to deal with or manage labor. (Presumably, some amount of re-tooling later, the machines also became more productive than the status quo.)

Likewise, efficiency is not the same as poor working standards. You can have efficient and happy employees – even outside of knowledge industries like the tech space! Yet this myth persists, even in subtle and pernicious ways – as when new hires think that if they just work harder / longer they’ll do a better job (and or, be recognized for it). Often the opposite is true.

Technologies are a reflection not just of intrinsic ‘innovations’ waiting to be discovered, but of the social forces acting upon inventors and markets. Those same executives also talked about wanting new technology to make their workers more comfortable on the job – not just to reduce the need for them. To blame someone of ‘standing in the way’ is to miss the point – the real argument should be able what we value and how to best achieve it.


Notes and Citations


One person I spoke with said that he regularly had new employees quit and leave the job after 45 minutes, simply walking away, because they found the manual work too taxing.


On this, please note that I have never been involved in a project where our goal was something ‘anti-labor’ by nature. Nor anything like Up In The Air ‘consulting’ where someone is brought in to do cost reductions. That is neither interesting nor especially differentiated as a service. It’s also something I would personally not want to be involved in.

Sometimes one might help find labor-related efficiencies; the more common situation relates to productivity. For example, consider a supermarket chain that is trying to reduce stock-outs, where there aren’t enough items on a shelf. That costs money since customers who can’t find the product won’t be able to buy it and may not select an alternative. Helping workers to be more efficient in re-stocking and replenishment means that they are more productive. This doesn’t mean whipping employees… it might be something as simple as helping create a more logical procedure for restocking to reduce number of trips to the stock room.


To be entirely clear, there are a lot of benefits to this kind of thinking, and when applied to solving real problems, it can be very liberating. Cab drivers will be unhappy when they are replaced by driverless cars, but the more interesting application will be when the entire auto industry has to collapse / evolve due to changing utilization. Cabs are constantly driving, but passenger cars are not. You only need your own car because it requires you to drive it. If your car drove itself, you could much more easily share it with others…


The MTA’s situation was pretty innocent, compared with the usual situation where someone would want to increase part time work. That’s usually because part time workers do not receive as many benefits, and are thus cheaper on a per-hour basis even if being paid the same amount. The MTA’s situation was that they wanted to reduce overtime paid to full-time workers, and hire more people in total.

A good example of how an organized labor force was seeking to capture value for itself, but at the expense of a potentially broader pool of workers as well as the organization and its customers. Overtime pay in 2010 exceeded the raised from fare and toll increases…


See TC article and related data here.


Image source: Argonne National Laboratory, Lemont Illinois, USA, 12/10/2007. CC via Flickr

Tags | , , , , , , ,

 Submit a Comment 

Leave a Reply