Bitter Harvest for Productive Labor Force
Output is up but workers see little increase in wages and jobs. 'White- collar assembly line' is ailing.
By Simon Head

December 28, 2003

For the last 2 1/2 years the economy's Achilles' heel has been its failure to create a strong flow of new jobs. There is, however, another negative characteristic of the labor markets that affects not just the 6% of Americans who do not have jobs but also most of the 94% who do.

During the last eight years an enormous gap has opened between the growth of employee productivity — measured by the value of employee output per hour — and the growth of employee compensation, measured by the value of hourly wages and benefits.

Economists like increases in productivity because the gains can improve the earnings and living standards of working Americans. But an economy that fails to distribute the fruits of rising productivity to those who have helped create it is as flawed as an economy that delivers little or no productivity increases at all. Yet this is exactly what has been happening in the United States.Even in the technology-driven boom of 1995 to 2000, the average annual growth of employee compensation was a dismal 0.7%, while worker productivity grew more than three times faster at 2.48%. The latest data show no narrowing of the gap.

Why is this happening? In visiting factories and offices over the last 10 years, I've found that information technology is being used to renew the old industrial culture of mass production. Computers and computer software, with their prodigious powers of measurement, monitoring and control, are turning the service economy into new, white-collar assembly lines.

The origins of the earnings/productivity gap can be found in the way people are working in these latter-day white-collar factories. Mostly lower-income employees such as fast-food workers, retail clerks, truckers, airline reservation agents and customer service reps were among the first to join the new assembly lines. But a key feature of this dubious digital revolution is its upward mobility. So the assembly line also extends to production, warehouse and personnel managers; to salesmen, accountants, bank officers, insurance underwriters; and even to physicians.

The call-center industry, which employs up to 6 million Americans, provides a compelling example of the new type of assembly line at work. Anyone who is a habitual user of 800 numbers knows the importance of call centers for a service company. In the industry's heartland of Arizona, Iowa, Nebraska and South Dakota, there are thousands of workplaces where managers peer into employees' computers with their own, govern their every utterance with prepackaged digital scripts, listen in on their telephone conversations, and time every facet of their work to the nearest second: time spent per call, time spent between calls, time spent going to lunch and the toilet.

But undoubtedly the most significant and controversial example of the white-collar assembly line is "managed care," which is essentially the application of mass production methods to the treatment of the sick. Patients are "processed" through hospitals, clinics and doctors' offices as fast and as cheaply as possible.

As part of this speeded-up, assembly-line medicine, health maintenance organizations have introduced what they call "utilization review," whereby medically untrained case managers, relying on automated expert systems, pass judgment on the decisions of practicing physicians. Neither the medical profession nor the patient population has been prepared to accept this automated medicine.

For too many Americans the white-collar assembly line has become a harsh, unstable workplace where their skills are devalued, where they have little or no job security, no say in the restructuring constantly going on around them and no refuge from the electronic monitor's relentless gaze. They are not therefore well placed to press the boss for a raise, particularly since fewer and fewer of them enjoy the backing of labor unions. Nor are they enjoying the fruits of the increased productivity that they helped create. They are victims of what I call the new ruthless economy.

Simon Head, author of "The New Ruthless Economy: Work and Power in the Digital Age" (Oxford University Press, 2003), is director of the Project on Technology and the Workplace at the Century Foundation in New York.