There Will Be No End of Work

Adolfo Plasencia:

Thanks, Paul, for making time for me in your busy agenda. We are at the MIT Sloan School of Management, the prestigious and universally recognized business school.

Paul Osterman:

Thanks for coming. I'm very happy to be here with you.

A.P.:

Paul, you’re a professor here at Sloan, and your field includes human resources, working practices, and labor markets, particularly in the United States. As the United States has become a model for the entire world, your experience and successes here can serve as an example for everyone.

I want to ask you something that may be obvious to you. MIT is a magnet for people and talent from all over the world. Many of the best young minds of the world come here. With those minds you can work marvels, isn’t that so?

P.O.:

Absolutely. We have incredible students here, but we only admit individuals on the basis of their capacity, and therefore, we have people here who are very willing to work and who come from all over the world to do so.

A.P.:

I know that Sloan has tools for analyzing and observing the global economy and business models that would perhaps form a powerful “macroscope,” to use the terminology of Joël de Rosnay. Using your own pupils, professors, and colleagues throughout the world as sensors, that macrosope is capable of analyzing all the decisive ideas on what is happening in the world economy in real time.

In Spain, where I come from, and throughout southern Europe there has been quite a serious problem in the traditional sectors for a number of years. Industrial manufacturing has largely moved to areas of the world with a considerable difference in salaries and in manufacturing circumstances. Does that contextual labor problem also exist here in the businesses of the United States? Or is it less important and urgent to deal with this problem than in Europe?

P.O.:

We have the same problem. For example, in the automobile industry, we have lost jobs; in the textile and clothing industries we are also losing jobs. But our strategy is always to look for new fields, new frontiers, so as to improve our technology, to innovate. Everyone faces the same problem of countries with much lower salaries. Yes, it’s the same.

A.P.:

That problem in Spanish is called “deslocalización,” or offshoring. I wonder whether in the future companies, instead of moving to Asia, will go to Africa and Latin America.

Can what has happened to us happen in Asia? After all, labor costs are rising quickly in China.

P.O.:

Yes, in the long term, of course. What is happening now is nothing new. If you look at history and the economy over the last one hundred or two hundred years, you can see the same process. And, within—I don’t know—fifty or so years, Asia will face the same problem. But that’s not a bad thing, it’s normal, and the response, as I’ve just said, is to look for new technologies, new products, and everyone will end up better off through that process.

A.P.:

I was, some time ago, in a company that made cell phones in Spain. I asked the manufacturing manager about offshoring, and he said, “Here we don't have that problem because the salary only affects 4 percent of the cost of cell phones.” Do you think he was right?

P.O.:

In theory, he’s right, but the problem is what percentage of real costs comes from salaries. It depends. If they have fixed costs that do not allow them to maneuver and the salaries are a high percentage of the variable costs, then there can be a problem.

A.P.:

That head of manufacturing also said that in Spain there was an abundance of engineers and the living conditions were good, and for those reasons it was a good place for his company. However, we have seen that nonetheless, companies are leaving Europe. Look at what happened to Nokia. And I don’t know if that logic about the engineer supply is still valid or changing.

P.O.:

I don’t know much about the careers of engineers in Europe, but the important thing, I think, is to build a ladder for their careers. We have to show them that they have a future within the companies, that they can climb the rungs of responsibility and technical challenges. If they can see they will have opportunities in the future, they are going to stay in Europe.

A.P.:

There’s an old book by Jeremy Rifkin with the blunt title, The End of Work. I know that Jeremy Rifkin is not taken very seriously by the scientific sectors of economic science, but his books are so widely distributed in Europe that they affect opinions. Rifkin said that we are moving toward a world without work, among other things as a consequence of technological development. It’s been some years, maybe twenty years, since that book was published. The End of Work made a fortune and has often been referred to in recent years. However, it’s quite clear that the end of work has not arrived. Now, in the United States, the employment figures would suggest that he is wrong.

What trends in employment do you see in the United States for the near future?

P.O.:

In principle, I don’t agree with Rifkin. There will always be work to do and there will always be a demand for things, goods, and so forth, so we need people to build and manage all that.

In the United States, we need only consider medical services, for example. There is a lot of work that has nothing to do with manufacturing but with the necessities of life, the requirements of many people. In addition, we still have a lot of work to do in the manufacturing sector, in factories or the high-technology sector, but also in sectors with less technology, so we will have to continue making progress in the process of innovation. That’s the key: to improve the products and the manufacturing process. If we can achieve that, we are going to have long-term work.

A.P.:

The United States, in terms of innovation and experiments in working practices, usually does make progress, doesn’t it? I would like to ask you if those changes of model are a good mirror for us in Europe to look into.

P.O.:

The question of whether the United States is a good model to imitate is complicated because, on the one hand, we have a lot of innovation, which is good, but on the other hand, we have levels of inequality that are much higher than in Europe. We have many more people working for minimum wage, or not working at all. So I believe that one has to be careful about the balance between the advantages of our model and its disadvantages. Europe has to choose which aspects of our model should be copied and which aspects should be rejected. I don’t think it would be a good idea to copy all aspects of our model. You have to pick and choose.

A.P.:

I come from the Valencia region in the east of Spain. Our region has a very special business fabric. Its economy represents more or less 10 percent of the Spanish economy. But within its business ecosystem, an enormous proportion of companies, more than 90 percent, are small and medium-sized enterprises.

Should these small companies recycle their human resources culture as if they were large companies? Should they grow, if possible?

P.O.:

Yes. I'm not an expert on the economy of human resources in Spain, but what I do know is that small companies in Spain are a little behind the times in terms of their human resources strategy. There has to be more training; you have to build ladders, or careers within companies; you have to have cooperation between small companies in order to join forces. So yes, I think family businesses in Spain must change.

A.P.:

In Spain, another surprising thing is that we are the European country with the most university graduates. However, it turns out that often university graduates choose their careers based on a question of social opinion. Often that opinion is stronger than the supply-and-demand factors, and many choose careers that have no future prospects and end up doing jobs at a much lower intellectual level than they are trained for. I read that the same is true of the United States.

Do you think that something can be done about this? At MIT you have pupils from all over the world, so perhaps you have some opinion on this.

P.O.:

Yes, it’s a problem in many countries all over the world. In Asia, for example, in a country like India, they have many law graduates who are out of work. I suppose in Spain it’s the same. There are many people with qualifications in law but without work in the legal profession.

When there is an excess of university graduates in a society, the response is to increase wages in other fields in which more people are needed and to reduce the wages in surplus fields to balance the labor market. This works in the long term. The question is whether the government can help in this process through incentives or whatever so as to push people into fields where there may be more demand, and also whether public policy can ease the costs and pain of adjustment.

A.P.:

Yes, because in Spain, we have arrived at the paradox that a plumber earns three times as much as an engineer or university graduate.

P.O.:

That can happen.

A.P.:

And more than an economist. That’s a problem, isn’t it?

P.O.:

Yes. Although in the United States—I don’t know about Spain—plumbers earn more per hour, but over the whole year they don’t, because they are quite often out of work, and you have to think in terms of annual salary, not just hourly wages.

A.P.:

Some time ago, the New York Times published on its front page that the Chinese computation scientist Chen Yi, who is almost a national hero in his country for the success of his chip creations for cell phones, had been accused of fraud. There was also the case of the South Korean scientist Hwang Woo-suk, who was lauded for his pioneering successes in cloned embryo stem cells but then fell into disgrace for fraud. That case had an enormous worldwide repercussion, especially in Europe, as his work had been published by Science and other prestigious journals. There have been more cases of scientific misconduct, such as Haruko Obokata of the Riken Center for Developmental Biology in Kobe and his later fight with Nature in 2014, and the Schön scandal on progress in semiconductors in Germany. All of these scandals and frauds have become symbols of the imperative to obtain scientific and economic results in the face of the hard economic worldwide competition that the explosion of the Asian economy has produced.¹

Do you believe that high-responsibility professions or jobs exert too much pressure on those who occupy those positions because of the huge competition and the constant economic need to be first?

P.O.:

Yes, there is a problem with the level of competition and pressure to achieve results, but I'm not a scientist; what I do know is the peer review system, which involves evaluating the work done by your professional colleagues.

A.P.:

The only evaluation by “equals.”…

P.O.:

Those that evaluate your work or research are other scientists, and in most cases it works. However, despite that, there are sometimes mistakes. We in the United States also have cases of fraud, but most of the work of scientists is, I believe, honest and clean.

A.P.:

In your students’ case, I imagine that to set up a company, to direct a large company, a world company, there is also a lot of pressure from the competition. In your business school, do you teach them how to handle that pressure?

P.O.:

Yes. At the Sloan School of Management we run ethics courses. That word is in the course title. At Sloan, in recent years, we have increased the number of ethics courses. They are to explain and teach the students that they have to be totally honest in their work. Yes, yes, yes. That’s really important.

A.P.:

That’s why I asked you, because you have been a professor of business ethics and the “fairer” use of the economy, haven’t you?

P.O.:

True. I agree that this has to be taught. I believe there is no trade-off between ethics and good results. And yes, you can have both in business.

A.P.:

We’re now in the middle of the second decade of the twenty-first century. The Social Internet is in full expansion. The second generation, it is said, will be the generation of the collaborative Internet and open knowledge.

Are we going to work in this second part of the decade in a more collaborative way, with the creation and management of more open knowledge?

Or will the most decisive information and knowledge continue to be encoded, closed and treasured by a small, privileged minority, especially in the world of business?

P.O.:

I don’t know the answer to that. In my own work, and in that of everyone I work with, the system is increasingly open, and there is more and more cooperation between us. There are, however, pressures to “close” these issues, pressure that comes from the companies that have more money to gain if the systems remain closed, and pressure from the government too, which is afraid, for instance, of terrorism. All that may end up closing the system even more.

There are, nevertheless, many advantages to an open system, advantages that we must reveal and fight for. I think these advantages are very great and widespread. So there will always be pressure to open the system as well, and I wish it would open up, but I don’t know what’s going to happen. I can guess, but I really don’t know.

A.P.:

I asked you because I collaborated once with the manager of the Ford Factory in Almussafes, Valencia, which is one of the largest, if not Ford’s largest, in the world. I helped him prepare some strategic presentations because, as it turned out, every quarter the directors of many factories of companies in Europe that strongly compete with each other get together to tell each other what they are doing. This surprises people who don’t know much about the economy. I suppose it’s more common than we think, isn’t it?

P.O.:

Yes, it’s quite normal. Information on competitors’ trends is now available, and there is also a trend to collaborate, as competing companies often purchase from each other.

Take the automobile industry as an example. Here in the United States, Ford, General Motors, and Chrysler work together, for example, on devising systems that are cleaner and use less fuel and oil. So yes, there is a balance between competition and collaboration. This balance is something very important in our world.

A.P.:

Paul, the issue of individual quality at work has always been at the center of your research and thought. You published a now well-known book with the lawyer Beth Shulman, the title of which is very illustrative on all this and a veritable declaration of intentions: Good Jobs America: Making Work Better for Everyone Moreover, the New York Times echoed with an eye-catching article titled “The Challenge of Creating Good Jobs.”²

Today, I want to ask you whether you still maintain the thesis of that book. Would you change anything, bearing in mind the huge changes in the market and working practices that have taken place as a result of the growing automation and robotization of many jobs that digitization, among other things, is causing in most areas of human activity?

P.O.:

The challenge of creating good work remains central. The key is to deploy a range of tools. Regulation has a role to play, as does political pressure. The recent success of movements to pressure firms such as Wal-Mart and McDonald’s to raise their wages is encouraging, as are recent developments such as the $15 per hour living wage recently passed in Los Angeles. But we also need to work constructively with employers and convince them that treating their workforce better is profitable and leads to higher quality. This in turn requires creative public policy to enhance workforce skills and to support those employers who choose to follow the “high road.”

A.P.:

Last, I want to ask you about a complex but very contemporary issue. What do you think of the idea by Tim O’Reilly, referred to in a conference at MIT Media Lab, of the Mechanical Turk, which was generally associated with repetitive work and automatons? Tim used that name from an Amazon service in his Media Lab conference to take up the Mechanical Turk concept as a metaphor of “the man within the machine.” According to O’Reilly, it is also the way—metaphorically speaking, of course—the Amazon software developers “live” within their systems, to explain the immense cybernetics that allows the internal machinery of the Amazon giant to function.

It turns out that that same name is also a service, the Amazon Mturk, through which Amazon offers people the opportunity “to earn money from their homes,” and through which they can establish their own working hours and pay scales. In it, each task is called a HIT (human intelligence task).³

Do you think that these new ways of working are temporary and the result of successive waves of new technologies? Or are they signs that we have to rethink and adopt a radically different approach to how we understand the relationship between people and what we have called for a long time now their “work” or their “job”?

What do you think?

P.O.:

There is no question that the organization of work is changing, and the example you give of the Mechanical Turk illustrates this. There are two points to be made here. First, while important, these developments can be exaggerated. The strong majority of employees still work in traditional settings. But, second, these changes require that we rethink the laws and regulations with which we seek to maintain decent employment standards. Many people are in settings in which the traditional definition of employee is no longer applicable. Employment law needs to be updated.

A.P.:

Thank you, Paul, for agreeing to meet me for this dialogue.

P.O.:

Thanks to you.

29 There Will Be No End of Work

Notes