Hope you had a super Labor Day weekend! Wonderful to be with family and friends. It’s amazing how jobs have changed over the years. The NYT over the weekend illustrated how life is so much different for workers by comparing two janitors working for two top companies then and now.
Gail Evans was a janitor for Eastman Kodak in Rochester, NY almost forty years ago. She was a full-time employee, received 4 weeks paid vacation, reimbursement for some tuition costs to go to college and bonuses. And, when the Kodak facility was temporarily closed, the company kept paying her and had her perform other work. Ms. Evans took computer classes at night, got her college degree in 1987 and ultimately became chief technology officer for Kodak.
Marta Ramos cleans floors for Apple in Cupertino, CA. She isn’t on Apple’s payroll. She works for one of Apple’s contractors. Ms. Ramos hasn’t had a vacation in years-she can’t afford the lost wages. Going back to school is out of the question. There are no bonuses and no opportunities for some other role at Apple. Ms. Ramos earns $16.60 per hour, about the same as Ms. Evans did in inflation-adjusted terms. But her only hope for advancement is to become a “team leader”, which pays an extra $.50 per hour.
Over the last 35 years, American corporations have increasingly focused on improving their bottom line by focusing on their core competency and outsourcing the rest. Part of the success of the Silicon Valley giants of today has come from their ability to attain huge revenues and profits with relatively few workers. It’s led to huge profits for shareholders, helped grow the U.S. economy, but also has fueled inequality.
In 1993, three of the then tech giants - Kodak, IBM and AT&T - employed 675,000 employees to produce $243 billion of revenue in inflation-adjusted dollars. Today, Apple, Alphabet and Google produce $333 billion in annual revenue with less than 1/3 of that number, employing only 205,000 employees.
Apple is quick to point out that its products generate many jobs beyond those who receive an Apple paycheck. It estimates that 1.5 million people work in the “app economy.” However, research shows that the shift to a contracting economy has put downward pressure on compensation. Many corporations hire full-time employees only for the most important jobs and outsource the rest; obtaining contractors at the time and place needed for the lowest price possible. It’s not just janitors and security guards that are outsourced. There are also people who test operating systems, review social media posts and screen job applicants, for example. It’s understandable: companies face really tough competition and if they don’t keep their work force lean, they risk losing out to a competitor that does.
In addition, outsourcing often results in a culture of transience. Contracted workers are often changing jobs every 12 to 18 months, which obviously can be stressful to them and their family. Contractors generally don’t receive stock options nor robust health insurance. Also, retirement plans, even for full-time employees, have changed considerably in the last 35 years. In 1979, 28% of workers were covered by a company paid pension program and 7% had a 401(k). In 2014, only 2% of workers were covered by a pension plan and 34% had a 401(k) plan, which of course, means that most of the funding now is coming from the worker.
Here’s what’s really amazing. With all these changes, job satisfaction has gone up. For the first time since 2005, more than half of U.S. workers say they’re satisfied with their jobs. This optimism has led to consumer spending increasing every month this year and a strong economy. Apparently, after a decade of job cuts, minimal raises and reduced benefits, workers have lowered their expectations. Rick Wartzman, author of “The End of Loyalty: The Rise and Fall of Good Jobs in America,” feels that young workers today “don’t even know what they are missing.”
On Monday, we celebrated Labor Day, honoring working people. That’s particularly important these days as many workers don’t have it nearly good as it was 30-40 years ago. Even so, American values, spirit and resiliency continue to be very evident in these ever-changing times. Perhaps we need another holiday, “Resilience Day.” Time to get the grill heated up again!