Business school

In my current role, I occupy the awkward space between employee and management. On the one hand, I am obviously a manager. I have a few people who report to me, and I meet with them regularly, try to help them grow their technical skills, select projects for them that align with their career interests, and so on. On the other hand, I am not at a high enough rank, nor do I ever want to be, to have control over any major decisions. I do not propose the budget for my team. I am not involved in any salary discussions. If my report asks me for a raise, I redirect them to my boss. (Until relatively recently, I didn’t even know the salary of my direct reports, and I had to ask until it was, sullenly, given to me.)

I similarly lack influence over many aspects of the job that are currently causes for consternation. Whether our post-pandemic work will be remote, in-person, or a hybrid arrangement is out of my hands. When we will make that decision is, again, also not in my control. Whether employees who move out of New York will have their salaries adjusted downwards for “cost of living” effects; whether we will try to unify our employees’ salaries or benefits with those of our new parent company; whether we will make changes to our work culture to prevent employee burnout: each of these is a topic on which I can express (and have expressed) my opinion, but there is little guarantee that it will be taken seriously. Such decisions are debated and made only in the highest echelon of our company. Judging from the experiences of my friends who are in similar positions, my situation is not uncommon.

But because I am a manager, and not an ordinary employee, I am often peripherally involved in the decision-making process, and I often receive secondhand information — dribs and drabs of gossip — that others might not be privy to. What they reveal about management is quite interesting.

Many employees ask for salary increases, and only a few of these requests are granted. (Slightly unusually for a tech company, we do not automatically grant raises based on inflation or cost-of-living for employees in good standing. The effect is to erode the purchasing power of one’s salary over time, which means that, unless you’re being promoted, you’re losing money.) The process involves the somewhat bizarre exercise of placing each employee on a two-axis chart. One of the axes, relatively unobjectionable, is “performance”. Positive numbers indicate that the employee is exceeding expectations; negative numbers indicate the opposite. (Of course, measuring performance is a fraught topic, and the assessments of the people who matter, such as my boss, often differ from my own.) The other axis is “likelihood to leave”. In other words, if you are an employee who has outperformed expectations and is deemed likely to search for, and find, another job, we will toss you some money so that you stay. But, by contrast, if you are the same high-performing employee who is, or at least appears to be, relatively content with your situation, no raise will be forthcoming. What this implies about the notion of “meritocracy” in business or capitalism is so obvious I’ll leave it unstated. But what it implies about the importance of labor power is even more interesting.

When I was helping my boss place my direct reports on this chart, the American citizens were treated very differently from the workers on H-1B or other types of visas. In fact, my boss was so convinced that our H-1B employee would never leave that he gave her the lowest possible score on this dimension. This is actually the third separate time that I’ve heard this sentiment expressed by upper management about H-1B workers. The H-1B program is not intended to work in this way. For any H-1B worker, an employer must attest the following:

• That “the employer pays H-1B non-immigrants the same wage level paid to all other individuals with similar experience and qualifications for that specific employment, or the prevailing wage for the occupation in the area of employment, whichever is higher.”
• That “the employment of H-1B non-immigrants does not adversely affect working conditions of workers similarly employed.”

If the decision to adjust compensation for a particular individual is based on a judgment about their likelihood to leave, and their likelihood to leave is strongly tied to their immigration/work authorization status, then it is clear that these conditions are not being met! Imagine how the salary adjustment process might unfold if most of our workers were highly mobile: if management were concerned that 50 or 75% of its workforce were at risk of leaving instead of 10 or 25%. Treating H-1B workers differently, along with relying on contractors or offshore labor, are tools used by capitalists to maintain a captive labor force and thereby depress the growth of wages, especially of American citizens. (This should not be construed, of course, to criticize or impugn H-1B workers, who are simply trying to make a living.)

There are other examples I can share of “capitalists capitalist-ing”, my favorite being when our CEO pointed out that, back in his day, interns didn’t have to be paid wages, but now things are, to his dismay, different. (I’m sure the $15/hour is burning a hole in his pocket.)

Such politically incorrect statements might be excused as the brayings of homo economicus. A purely rational CEO does not want to pay in labor costs any more than he has to, and therefore regulations like the minimum wage or those pertaining to H-1B workers simply constitute roadblocks. In the case of the latter, they can be circumvented without anyone finding out; in the case of the former, they must be grudgingly accepted (at least, until the Republicans get their wish).

But there is an entire swath of upper management philosophy that appears, at least to me, to be only marginally rational, and, more likely, to be largely irrational. Here are some recent statements about remote work by the luminaries of our business class:

The CEO of WeWork thinks there is an easy way for companies to spot their most engaged employees: They’re the ones who want to come back to the office.

“Those who are uberly engaged with the company want to go to the office two-thirds of the time, at least,” Sandeep Mathrani said Wednesday at The Wall Street Journal’s Future of Everything Festival. “Those who are least engaged are very comfortable working from home.”

Mr. Mathrani said that while many employees were hoping for a hybrid future post-pandemic that would afford them to work from home a few days a week, time at the office was essential for collaboration and efficiency.
“People are happier when they come to work,” said Mr. Mathrani, a veteran of the commercial real-estate industry.

“The bigger issue is do you come to work five days a week or do you come to work three days a week? That’s the bigger issue. There’s no issue of not coming to a common place.”

“WeWork CEO Says Least Engaged Employees Enjoy Working From Home”, The Wall Street Journal

Like many of my fellow small-business owners, I am excited about the prospect of returning to in-person work but am struggling with when and how to safely reopen our office — how many days a week, vaccination requirements, mask mandates and so on. But also like my peers, I am concerned about the unfortunately common office worker who wants to continue working at home and just go into the office on occasion.

In several group calls with chief executives, I’ve found a great sense of pride in how well our teams have done during the past year. However, we all started at a place where we and our employees knew one another, which made remote work considerably easier and more productive. We also could rely on office cultures — established practices, unspoken rules and shared values, established over years in large part by people interacting in person. Now, we face re-creating a workplace where a good culture of trust will be harder to build.

…

While some employees might like to continue to work from home and pop in only when necessary, that presents executives with a tempting economic option the employees might not like. I estimate that about 20 percent of every office job is outside one’s core responsibilities — “extra.” It involves helping a colleague, mentoring more junior people, celebrating someone’s birthday — things that drive office culture. If the employee is rarely around to participate in those extras, management has a strong incentive to change their status to “contractor.” Instead of receiving a set salary, contractors are paid only for the work they do, either hourly or by appropriate output metrics. That would also mean not having to pay for health care, a 401(k) match and our share of FICA and Medicare taxes — benefits that in my company’s case add up roughly to an extra 15 percent of compensation. Not to mention the potential savings of reduced office space and extras such as bonuses and parking fees.

“As a CEO, I Want My Employees to Understand the Risks of Not Returning to the Office”, Washington Post Editorial by Cathy Merrill, Chief Executive of Washingtonian Media

Jamie Dimon is no fan of the new remote work structure that has taken hold during the coronavirus pandemic.

“We want people back to work, and my view is that sometime in September, October it will look just like it did before,” Dimon said at The Wall Street Journal CEO Council. “And everyone is going to be happy with it, and yes, the commute, you know people don’t like commuting, but so what.”

As an illustration, Dimon said he was “brimming with ideas” after a trip to California last year that he wouldn’t get from Zoom meetings.

He also said clients have told him that in cases where JPMorgan lost business to rivals, it was because “bankers from the other guys visited, and ours didn’t. Well, that’s a lesson.”

The shift to part-time remote work is “not going to change everything so dramatically,” he said. “It accelerated a trend, but it does not work for younger people. It doesn’t work for those who want to hustle, it doesn’t work in terms of spontaneous idea generation.”

“Jamie Dimon, fed up with Zoom calls and remote work, says commuting to offices will make a comeback”, CNBC

There are a number of funny bits contained in these passages, like the notion that in-person work is needed because, without schmoozing over $100 drinks, the sales bros who work at JP Morgan wouldn’t be able to close a deal, or the idea that the guy who runs a company that requires in-office work in order to be profitable, or at least less unprofitable, is a disinterested voice on the subject. But set that aside for now. The economic case against remote work is remarkably thin. There is little to no evidence that the productivity of white-collar work has been affected by office closures. There is, likewise, little to no evidence that corporate profits or company valuations have been harmed; indeed, the stock market is at its highest level in history, driven largely by the tech sector. And even if we grant that certain types of workers, such as junior employees, or those new to a company, might struggle under a remote work regime, that is no reason to mandate in-office work for everyone. Employees, particularly younger ones, overwhelmingly oppose returning to the office full-time, with a majority saying they prefer an arrangement in which they can work from home “most or all of the time.” Does it make sense then, from the perspective of running a business, to mandate the opposite? Already there are reports that job-hopping is on the rise; as one article notes, “Workers who want to quit overwhelmingly say they’re looking for a new job with more flexibility. Indeed, even among those who aren’t considering changing jobs, half of people currently working remotely say if their current company doesn’t continue to offer remote-work options long-term, they’ll look for a job at a company that does.”

If there is no purely dollars-and-cents rationale for mandating full-time, in-person work — if it will fail to increase productivity or profits, and if it will exacerbate employee attrition — then why do so many employers continue to tout its virtues? The answer, I believe, is connected to the thesis of one of my favorite blog posts, a review of David Frum’s book, “Dead Right,” written by John Holbo. I would encourage you to read the entire thing, but here’s the key section:

[Quoting Frum] “The great, overwhelming fact of a capitalist economy is risk. Everyone is at constant risk of the loss of his job, or of the destruction of his business by a competitor, or of the crash of his investment portfolio. Risk makes people circumspect. It disciplines them and teaches them self-control. Without a safety net, people won’t try to vault across the big top. Social security, student loans, and other government programs make it far less catastrophic than it used to be for middle-class people to dissolve their families. Without welfare and food stamps, poor people would cling harder to working-class respectability than they do now.”

The thing that makes capitalism good, apparently, is not that it generates wealth more efficiently than other known economic engines. No, the thing that makes capitalism good is that, by forcing people to live precarious lives, it causes them to live in fear of losing everything and therefore to adopt – as fearful people will – a cowed and subservient posture: in a word, they behave ‘conservatively’. Of course, crouching to protect themselves and their loved ones from the eternal lash of risk precisely won’t preserve these workers from risk. But the point isn’t to induce a society-wide conformist crouch by way of making the workers safe and happy. The point is to induce a society-wide conformist crouch. Period. A solid foundation is hereby laid for a desirable social order.

Let’s call this position (what would be an evocative name?) ‘dark satanic millian liberalism’: the ethico-political theory that says laissez faire capitalism is good if and only if under capitalism the masses are forced to work in environments that break their will to want to ‘jump across the big top’, i.e. behave in a self-assertive, celebratorily individualist manner. Ergo, a dark satanic millian liberal will tend to oppose capitalism to the degree that, say, Virginia Postrel turns out to be right about capitalism ushering in a bright new age of individual liberty, in which people try new things for the sheer joy of realizing themselves, etc., etc.

“Dark satanic millian liberalism” is the common thread that runs through all of the examples I’ve cited. Why do CEOs want H-1B workers? Why are they so eager to offshore and outsource work? Why would they like to bring back unpaid internships? Why do they require workers back in the office? The answer has nothing to do with “economic efficiency” or any of those other high-minded concepts you might have read about in textbooks. The answer, instead, has to do with control, with inducing a “cowed and subservient posture” in their lessers. A labor force that is made docile, that is surveilled, that is un-organized and de-unionized, is one that serves the interests of business owners. A workforce that is compelled to do something against its explicit wishes exemplifies the supremacy of capital over labor. Mandating in-person work is a way, as Frum might say, of “disciplining [workers] and teaching them self-control”.

If remote work is bad, it is not because of its economic effects but because of its psychological ones. What business leaders fear more than anything is that the pandemic has permanently changed the balance of power between labor and capital, at least in this rarefied, white-collar segment — which, I freely concede, is not representative of the economy as a whole. These workers might become increasingly “self-assertive” and even “celebratorily individualist”. They might realize that with remote work comes immense freedom: the freedom to spend quality time with one’s spouse while earning a paycheck, or to travel the world and log in to work from the beach. They might also reckon that many of work’s strictures are arbitrary and unnecessary. If they can accomplish in 5 hours from home what used to require 8 in the office, then they might, as one Forbes article hilariously laments, spend the remainder “having sex, dating, taking naps, and doing side hustles on company time.”

(Even that sentence alone is remarkably revealing. According to economic theory, a profit-maximizing capitalist should care only about the total work output, not how many hours it takes to produce. But there is a strong sense, among capitalists, that by allowing remote work, they are permitting theft: that there is a “company time” that is owned by them and thus being stolen by the worker.)

When employers lash out against remote work, it is precisely that freedom, that assertiveness, that individualism, that they are targeting. In doing so, “A solid foundation is hereby laid for a desirable social order.”

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