Article by Allana; Painting by Angelique
Published April 2022
If I could invite one famous person, living or dead, to a dinner party, I’d invite David Weil. Administrator of the Wage and Hour division in the Department of Labor under Obama (and Biden’s stagnant nominee) and dean of the Heller School for Social Policy and Management at Brandeis University, he wrote this book, The Fissured Workplace, which I had put on my wish list no less than 5 times before I finally bought it. It seemed like every book and article I was reading about the history of workplace economics, gig workers, misclassification, etc cited this book.
Okay, you found me out; I’m a total geek about workers. Spending my working years doing gigs in an industry that’s been full of giggers since the dawn of civilization, I tried to understand what I was experiencing by zooming out. How did we get here and why does it feel so inhumane? When you back up to the macro level, there is no shortage of little threads, just like a Sid Meier’s Civilization technology tree. (I’m a history and game nerd too.)
To speed through history a bit: the recession and Reaganomics happened, the economy became global and highly interconnected, and an incredibly influential stock market with mega-corporations emerged. Businesses needed to become highly competitive and creative in order to survive. Anywhere restrictions or bureaucracy was on the table, there was room to game-theory them out of the way. According to Weil’s research, this inevitably led to what he called a ‘fissured workplace’, a term he coined to illustrate a growing trend in workforce reformation.
What became the answer to this competitiveness is a diving deep into an organization’s core business competency. If what we do is “Manage our Brand” (be it Burger King, Super 8, or The Broadway League), then any workers that are not essential to that competency (for example, *cough* maids in a hotel) are an inefficient use of our resources. Or, in another example, if what we do is “Put on Plays,” then all that other stuff – accounting, payroll, human resources, custodial, and grant-writing, can be outsourced to people who specialize in those skills.
Once the core competency is identified and committed to, the organization would then shed employment and enforce standards over its fissured workforce. Shedding employment lowers costs because externalizing activities, especially to more-competitive markets, eliminates the need for extra HR costs and paying higher wages or benefits. Lead organizations develop specific standards and create contracts or structures that allow for monitoring and imposing real penalties if not followed. These are the essential traits of a fissured workplace. Forms of fissured workplaces include: subcontracting, franchising, third-party management, and outsourcing.
Economists might argue that the fissured workplace makes society better off and here are some reasons why:
- It’s super efficient by reducing waste and maximizing profits.
- It makes the organization more flexible by not having as many full time commitments. Flexible organizations are more innovative, can lower costs, and increase revenue.
- Specialized workers typically have a strong network of peers and other resources in their speciality. This is a great resource for problem-solving unique issues or having a bunch of workers who can step in on short notice.
- More companies have access to these experts because one specialist can work for lots of smaller organizations who don’t need full time services.
That sounds great, so what’s the big deal? The main reasons to worry about a fissured workplace:
- It undermines basic labor standards.
- It complicates production coordination which can result in more accidents and injuries.
- It shifts the surplus money toward investors and away from the workforce.
Below are some examples of the real social consequences to this way of work:
- The bigger companies get to have it both ways: they get to exert control and institute standards and avoid responsibility for consequences of that control. Imagine an opera company who hires a scene shop to build and install the design, exactly as drawn and to be completed by X date. If that scene shop is penalized for misclassifying its workers, the Opera company can avoid any legal consequences, whether or not the negotiated fee for services rendered was enough to cover the cost of employees.
- It has splintered our definition of who is an employee. Defining who has control over the worker is the determining factor in classification. Owners may be ultimately responsible even if they are only minimally involved in the setting of employment policies and their implementation. Thanks to legislation passed when being a full time employee was the norm in most industries, employees have legal rights (that non-employee workers do not).
- As money shifts upward, power also shifts upward. Shifting responsibilities to other parties allows core companies (who likely have the greatest profits) to avoid mandatory payments like insurance, unemployment, workers compensation, and payroll taxes.
- As competition increases, workers get squeezed. The deeper the fissuring goes, the more likely employment is transferred to a complicated network of smaller businesses who operate in more highly-competitive markets. This puts downward pressure on wages and provides the opportunity to deny benefits like health insurance and pensions. It also increases the likelihood that basic labor standards (like workplace safety, wage theft, and misclassifying employees as independent contractors) will be violated.
- Fissured workplaces are harder to hold accountable. Larger businesses are more likely to face inspections, penalties, and public scrutiny. The more these larger businesses can contract-out, the easier it is to avoid or redirect liabilities. There are so many subcontracted companies that regulators and inspectors lack sufficient resources to consistently hold them all accountable and even if that happens, it is much easier for the larger business to claim ignorance and quickly find a replacement company.
- The problem of coordination increases when employment is carved up into smaller pieces. When coordination fails, accidents happen. Additionally, when multiple employers work in the same venue or room, it’s a lot harder to identify who is responsible for safe workplace conditions. It requires more coordination that isn’t naturally built into the hierarchy. A local public high school recently contracted theater architects, Schuler Shook, to install new lighting in the theater. Schuler contracted that work out to a media production company, who hired local IATSE stagehands to perform the work. Everyone took a slice of the fee and the high school had no idea who was in their theater.
- It widens the income distribution gap. Feelings of fairness, particularly perceptions on pay, affect employee morale. In workplaces that have a wide range of wage levels, the lowest earners (and on up the chain) tend to be pulled upward. When lower earners are jobbed out, their wages are considered more relative to the bottom line rather than compared to workers of the core firm.
- It slows down economic recovery. This happens for a few reasons. First, large companies have largely led recoveries – as demand returned, they directly increased employment. Now those employment decisions are delayed as the demand works its way through the chain of need. When the jobs do return, as in the 2007-2009 recession, they tend to be the lower-paid type of jobs and those who lack access to benefits or wage growth. Finally, the system itself is designed to funnel the wealth upward to people who are more likely to save it then recirculate it into the economy.
As Shaun Scott wrote in Millennials and the Moments That Made Us, “We can either do politics or we can have politics done to us.” The fissured workplace is a perfect example of this. As a direct consequence of organizations pursuing their ‘core competencies’ and reducing costs, the workers that they shed have greater hazards and reduced incomes. When possible, we should avoid fissuring the workplace. When it seems unavoidable, we should do everything in our power to mitigate the negative effects which fissuring causes. It’s important to remember that the benefits achieved by fissuring a workplace are principally monetary, while the costs are nearly all human.
There is also incredible value in reaching out to other workers in our venues, making connections with people across the fissure. How many of us know the names, let alone the challenges faced and lives lived, of the custodial and service workers where we work calls? Building relationships with fellow workers in our spaces opens opportunities for discussions and collaborations about conditions and rights. We can share knowledge and listen to ideas for improvement in the workplace. If a slop sink is clogged, you might have a better shot at convincing management to have it fixed than a janitor who doesn’t work for them.