Working Harder Doesn’t Pay Better October 16, 2013 2 Comments Share tweet Chi Ling Chan Columnist By: Chi Ling Chan | Columnist For as long as I can remember, my mother has been working as an office secretary, a 9-to-5 job that isn’t the most exciting in the world. But it was a livelihood that, though not well paying, sustained the family. Over the years, I have noticed two things: her pay has hardly risen– and, in fact, decreased in real terms– and her working hours have become longer. This is in spite of the fact that her productivity has increased significantly: Whereas 20 years ago she would tabulate sums manually with a calculator, she now uses Excel to accomplish the same tasks at a much faster pace. Where did all that working smarter, working better (which economists call “productivity gains”) go to? It certainly wasn’t reflected in her paycheck, nor had it led to shorter working hours. Across the world, as far as data suggests, majority of workers are working harder and becoming more productive, but they are earning less in terms of real income. This should be puzzling to us. In 1930, Keynes had predicted that by the century’s end technology would have advanced sufficiently that developed countries like the United States and Great Britain would have achieved a 15-hour work week. While it is true that technology has led to massive gains in overall productivity, a three to four hour workday simply hasn’t materialized. If anything, people are working harder and being paid less (relative to their output): In the United States, for example, worker productivity has increased by 254 percent from 1948 to 2011, but hourly compensation has seen only seen a 113 percent increase, which is less than half of what it should be if pay follows productivity. Workers are constantly told to increase their productivity through obtaining new skills, but, as we can see, it just doesn’t really pay off for the workers themselves. At the same time, governments are investing heavily in technological innovation, seeing it as the key to increasing productivity, lowering costs of production and fostering greater competitiveness. While new technology is often readily adopted, the social costs that come with such changes are virtually never discussed. It seems as if everybody has held a quasi-religious faith in the automatic beneficence of technological progress, assuming that greater investments in technology naturally brings about economic growth, jobs and shorter working hours. But it hasn’t. Laborsaving technologies have not been used to save workers’ labor but rather to accrue greater profits for the top echelons. Productivity gains have gone to those with power, at the expense of those without it. To the extent that there have been tangible benefits from automation, they have gone in only one direction: up. Today, labor’s share of income is declining, contributing to greater inequality and CEO and managers sitting on fat bonuses and paychecks. The Occupy Movements shed some light on these inequalities, but little has changed after its fizzling out. So what have we got with all that technological progress? Instead of being relieved of effort, workers have been relieved of their livelihood. As I have written in a previous column, technology is putting people out of work faster than ever. Theoretically, that might be a good thing because people are now relieved from mindless, menial jobs that sap the human soul. But in practice, unemployment in capitalist societies that provide little welfare provisions means a very hard life, not self-actualization. Unless, of course, you are living in Switzerland, a country that is going through a referendum to give every adult a basic income of 2500 francs (USD$2800) regardless of employment status. Such proposals would probably be met with suspicion even in the most liberal quarters of United States: “Work” and “ethics” have such a strong link in people’s heads that paying someone for not working is simply unacceptable, and well, “socialist.” In the United States, that label is apparently a sufficient reason to kill a proposal regardless of its merits. “Radical” proposals aside, it is probably time to take a break from singing paeans to technological progress to take stock of unexamined assumptions. We have blithely assumed that once we get the competition going in a capitalist system, it will promote technological progress and things will take care of themselves, when really this is an ill-defined faith that is rarely articulated with logical rigor and clarity. When we examine these assumptions closely, we see that the causal chain is ambiguous at every link: Adoption of new technology does not necessarily lead to increases in productivity, and productivity gains might not translate into better welfare and standard of living for all. Some will win and many will lose– there is nothing automatic about the magic loop between technology and welfare. They merely follow from the social choices made by those who have had the power to decide who gets what. chi ling chan keynes labor Occupy Switzerland Technology 2013-10-16 Chi Ling Chan October 16, 2013 2 Comments Share tweet Subscribe Click here to subscribe to our daily newsletter of top headlines.