How do you make a lab rat feel depressed? That sounds like a setup for a joke, but it’s actually a question scientists needed to answer. Their ultimate goal was to test out new antidepressant drugs on these rodents before trying the concoctions on humans. But to test an antidepressant you need a depressed test subject. It turns out there is a simple, guaranteed-to-work method for making an animal depressed: just put it under a bit of low-grade stress and maintain the stress for a little while. Voilà—you’ve manufactured depression.
Scientists call it the unpredictable chronic mild stress (UCMS) protocol. The process involves making small changes, like putting a rat in a new cage, maybe one that previously was occupied by another rat. Scientists might also tilt a rat’s cage, change the cycle of light and dark, or give rats wet bedding or sawdust that has been used by other rats and still contains their urine and feces. They might play recordings of predator birds for ten minutes, or put a rat into a tight restraint tube for fifteen to thirty minutes, and then set it free again. The changes are randomized and altered frequently, so the rats can’t get used to a new condition.
The rats are not deprived of food or water or subjected to any physical pain. Nothing life-threatening occurs, and there is no real danger—just some environmental changes and some mild stress. That’s all it takes.
Within weeks the rats slide into a state that looks a lot like clinical depression in humans. They become apathetic and lethargic. They stop grooming themselves. Their coats get matted and dirty. They won’t build nests, they lose interest in running in their exercise wheels, and they become less motivated to seek out treats like cookies. (Scientists call this anhedonia, the inability to feel pleasure.) The rats gain weight. They show signs of despair, have difficulty making decisions, and experience sleep disturbances. They exhibit immune system dysfunction, problems in the hippocampus and amygdala, and higher levels of cortisol, which in humans has been linked to heart disease and depression.
When I heard about this rodent stress testing, I was taken aback. It all sounded to me eerily similar to what work is becoming for more and more of us humans. Ther’s no danger to our physical safety. But there are constant, random changes. Loss of privacy or familiarity. Dealing with bad, disturbing technologies creeping into our environment.
A new study on rats at West Virginia University suggests that chronic stress diminishes blood vessel function, so much that animals whose weight is normal end up with blood vessels that look like what you find in obese animals. One of the researchers tells me these findings have direct implications for workers. Stressed-out workers could have “an increased risk of cardiovascular disease, high blood pressure, stroke, heart attack, and cardiovascular mortality,” said Evan DeVallance, now a postdoc at the University of Pittsburgh.
Consider how big companies are rushing around adopting Agile and Lean Startup, changing where and how people work, forcing employees to embrace new routines, and crowding workers into stressful new environments like noisy (and sometimes even smelly) open offices. Think about how we’re working longer hours, but also less predictable hours. Or how we now worry more than ever about losing our jobs and finding health care, and whether we will be able to retire. Think about how often you hear someone at work say, “Change is the only constant.”
Squint your eyes a little bit and the whole thing looks a lot like a human version of the unpredictable chronic mild stress protocol. Could the rising antidepressant usage and suicide rates we discussed in Chapter 1 be related? Could other health problems?
Here in Part 2, I’m going to take a deeper dive into the four factors that contribute to worker unhappiness: money, insecurity, change, and dehumanization. Also, I will explore the ways in which Silicon Valley and the Internet have contributed to those four factors.
Why do we now have so much tumult and upheaval, and this sudden flurry of activity, all this talk of reinvention, accompanied by constant “change initiatives,” with their workshops, and classes, and role-playing games? Some of this comes from fear. Companies are scared of getting killed, so they start racing around in a kind of frenzy, trying to tip things upside down and transform themselves.
I wonder whether all of this sound and fury is also a form of distraction, a sideshow created to keep us so busy and so scared that we don’t notice how companies keep eroding the terms of the bargain that once existed between workers and employers. Distract workers with Lego workshops, put them in new offices, ply them with snacks and Ping-Pong and meditation rooms, bombard them with rhetoric about mission and purpose and “changing the world,” and maybe they won’t complain that their pay has gone down, their benefits have been pared back, the pension fund was raided, and their jobs are no longer secure. Maybe it is all just sleight of hand, a form of corporate misdirection. Focus on the cards in the magician’s hand, and you don’t even notice that he’s stolen your watch.
Consider what’s going on at IBM, which is putting all of its 366,000 workers through Agile training—but has also spent the past two decades screwing its workers. IBM’s massive Agile campaign began in 2015 and will take four years to complete, costing hundreds of millions of dollars. So far more than two hundred thousand IBMers have been trained. IBM’s goal is far more ambitious than just teaching software programmers to crank out code faster. IBM wants to completely rewire its corporate DNA, by applying Agile to every part of the business—sales, marketing, and so on. Agile will become “an engine for business transformation,” Sam Ladah, vice president of human resources, wrote in a July 2017 blog post, adding that Agile will help IBM build “a workforce of the future.”
That last bit about the “workforce of the future” was a canny bit of corporate doublespeak that covered up something else that IBM was doing with Agile—using it to get rid of workers. As part of its “business transformation,” IBM opened new offices called “Agile hubs” in six cities in the United States, with groovy decor and desks jammed into pods, in what Quartz described as “a sitcom version of an ‘Agile office.’”
Then IBM told thousands of employees who had been working from home that from now on they would have to work out of one of these Agile hubs. Or they could quit. It was their choice. The problem was that many of these people lived hundreds of miles from the nearest hub. To keep their jobs, they’d have to sell their homes and move. It’s not clear how many quit instead of relocating. In his blog post, Ladah said about five thousand employees would return to working from an office instead of working at home. By some estimates, 40 percent of the company’s employees don’t work from a traditional office, the Wall Street Journal reported.
The reason IBM had so many remote workers was that for years the company encouraged employees to work from home, so that IBM could save money on office space. Now IBM is reeling people back in and taking away the “work from home” perk, but announcing the decision using the happy-face mendacity that big companies love: “It’s time for Act II: WINNING!” read the subject line on a message that Michelle Peluso, the company’s chief marketing officer, sent to the company’s five thousand marketing people when she announced the end of the work-from-home policy. Workers were not cheered by all the WINNING! Many were devastated. The announcement reportedly sent shock waves across the company.
IBM’s Agile campaign comes after two decades in which IBM has slowly but steadily robbed its workers while enriching top executives and Wall Street investors. In the 1990s, under CEO Louis Gerstner, IBM gutted its employee pension fund and used some of the money to boost its earnings, as former Wall Street Journal reporter Ellen Schultz details in her 2011 book, Retirement Heist. IBM also slashed retiree health benefits, which “generated a fresh pool of accounting gains that the company added to income over a period of years,” Schultz reported. In 1993, Gerstner presided over the biggest layoff in corporate history, nuking sixty thousand workers.
Nine years later, in 2002, Gerstner waltzed away with a severance package worth $189 million. His successor, Sam Palmisano, IBM’s CEO from 2002 to 2012, walked out with a package worth $270 million, according to Footnoted.com, a stock market watchdog website. IBM’s current CEO, Ginni Rometty, earned $33 million in 2016.
For the past few years Rometty has been busy slashing jobs, especially targeting older workers. From 2014 through 2017, IBM fired thirty thousand American workers, and twenty thousand of them were over age forty, according to a March 2018 investigative report by ProPublica, which said IBM had “flouted or outflanked U.S. laws and regulations intended to protect later-career workers from age discrimination.” ProPublica later reported that the U.S. Equal Employment Opportunity Commission had launched an investigation.
The thing is, from 2012 to 2017, when IBM was firing all those American workers, the company was turning hefty profits and in fact generated $92 billion in cash. Where did the money go? IBM delivered most of the loot—about 80 percent—to investors, via dividends and stock buybacks, according to Toni Sacconaghi, an analyst at Sanford Bernstein, a Wall Street firm. Sacconaghi said IBM could have used that money to acquire other companies. IBM also might have launched new products and business lines. Instead IBM used the money to prop up its stock price. By buying back its own stock, IBM reduced the number of shares outstanding. That increases earnings per share, since there are fewer shares. Higher EPS tends to boost the stock price. That’s great for investors in the short term. But for the long term companies are better off trying to build new lines of business to replace the ones that are fading away. Devoting money to buybacks often means management is just throwing in the towel, admitting they have no good ideas.
Where did IBM get the cash for buybacks? In part by laying off tens of thousands of workers. In effect, IBM used their wages to buy back shares and pump up the stock price. Why do that? Because the executives’ own compensation is tied to the stock. The trick didn’t really work; IBM stock has shed a third of its value from 2013 to 2018, plunging from $213 to $141. But who knows how much worse things could have been without the stock buybacks? As for management, the ploy worked out great. In 2017, the board awarded Rometty, the CEO, with a pay package worth $50 million, according to Institutional Shareholder Services, which advises big investors. This wasn’t the first time. “IBM’s CEO writes a new chapter on how to turn failure into wealth” was how Michael Hiltzik in the Los Angeles Times put it in January 2016 when Rometty raked in a $4.5 million bonus. But hey! Let’s talk about Agile, and the workforce of the future! Let’s talk about how we’re turning IBM into a start-up!
You see how the trick works.
IBM is hardly alone in the way it has abused its workers. Loads of big companies, including household names like GE, Verizon, and AT&T, raided their pension funds in the 1990s and “managed to take hundreds of billions of dollars in retirement benefits that were intended for millions of workers and divert them to corporate coffers, shareholders, and their own pockets,” Schultz writes in Retirement Heist.
In 1999, near the height of the dotcom bubble and after years of soaring stock market valuations, many big companies were sitting on enormous surpluses in their pension funds—more than $250 billion dollars combined, including $25 billion in extra assets at GE and $24 billion at Verizon. This meant those companies could pay the pensions of all their employees for decades to come, without ever putting in another penny. Companies were supposed to keep the pension money in those funds, but instead they found ways to siphon money out of the pensions and apply it to their earnings. By 2011, Verizon’s $24 billion surplus had vanished and its plan had a shortfall of $6.5 billion. GE’s $24 billion surplus became a $13 billion deficit by 2011, Schultz reports. And that was just the beginning. By 2017, GE had a pension deficit of nearly $30 billion. That was a swing of more than $50 billion!
Where did the money go? Some funds lost money in stock market crashes in 2011 and 2008. But companies also started using pension fund money to pay for things like retiree health benefits, which previously came out of their operating budgets. (Using pension fund money meant they saved that expense on their income statement, which boosted their quarterly earnings.) Another way to get hold of supposedly untouchable pension fund money was to sell off a business unit and package surplus pension money into the deal; in exchange, the buyer paid a higher sale price. Thus the transaction essentially let the seller convert pension money into cash it could apply to earnings.
Siphoning off the surplus money was just the beginning. Companies also started cutting back on pension benefits—basically finding ways to renege on the promises they had made to employees about how much they could expect to receive after retirement. One trick was to change the formula used to calculate how much pension an employee would get in retirement. Another was to switch to cash-balance plans or to replace pension plans with 401(k) plans.
Schultz’s book offers a sickening look at how big-company executives conspired with benefits consultants to slash benefits to employees while lying about it, using tricks like switching to new plans that were so complicated that most employees couldn’t understand how they were being swindled. “It is not until they are ready to retire that they understand how little they are getting,” an actuary from Watson Wyatt, a benefit consultant, declared at a 1998 conference. The comment got a big laugh from the audience, Schultz reports.
IBM used a bunch of tricks. First it changed the formula used to calculate benefits. Next, in 1995 IBM cut more by changing to a “pension equity plan.” In 1998 IBM slashed again by changing to a cash-balance plan. Later, Big Blue saved by offering retirees lump-sum payments when people retired or were let go. Along the way, IBM was using money from its pension fund to pump up its earnings, Schultz reports. Back in 1999, IBM enjoyed a pension fund surplus of $7 billion, Schultz says. By the end of 2017, IBM announced it would contribute $500 million to the plan, but that its assets would still be less than its obligations.
Robbing people of their pensions was just one tactic in the wider strategy of disempowering workers. In the next four chapters, I move on to four factors of workplace despair: money, insecurity, change, and dehumanization.
I begin with money, because if you want to know why people are miserable, it’s usually a good idea to start by looking at their wallets. What you find there is depressing.