In my post last week I described the controversial new book The Global Auction, where Brown, Lauder and Ashton argue that the Western middle-class are subject to increasing competition from an army of highly-qualified workers in India, China and other countries. Not only can the workers undercut the pay of the Western middle-classes, but companies can increasingly integrate these people into a global workforce – leading to a global ‘war for talent’, and increasing pressures on most middle-class jobs.
This isn’t the whole story though. It’s not just that there will be an impending fall for some mystical and homogeneous ‘middle-class’. Instead, the middle-class is fracturing into those that are increasingly prized in the war for talent, and the rest of the struggling middle-classes – a divide that depends on ‘Digital Taylorism’, and with sharp consequences for intra-national inequality, as I describe in this post.
The most disturbing argument in The Global Auction is the idea of ‘Digital Taylorism’ – that companies are cutting up knowledge work into standardised pieces, in much the same way that craft production was turned into the assembly line along Frederick Taylor’s principles from the late 19th century. Employers are therefore trying to turn ‘knowledge work into working knowledge’ (p66), codifying what their best employers know and then using this to structure the work of less-skilled employees. Brown et al cite a wonderful quote from Taylor here (p70):
“The managers assume…the burden of gathering together all of the traditional knowledge which in the past has been possessed by the workmen and then of classifying, tabulating, and reducing this knowledge to rules, laws and formulae which are immensely helpful to the workmen in doing their daily work”
Taylorism went out-of-fashion in the 1980s with talk of ‘high-performance work practices’ and the need to trust workers to perform knowledge work effectively. Brown et al argue that Taylorism is now back with a vengeance, as the same principles that were applied to the production of goods are now applied to the production of knowledge and other services (p71-2), following “a well-established trend where the gale of creative destruction is followed by the destruction of the creative” (p66).
Instrumental in the new Digital Taylorism is the role of IT. Brown et al give the example of call centres, where automated phone systems channel our queries into precise categories, which are then allocated to (often outsourced) workers with structured scripts (p73). Consultancy firms have been pivotal in applying the same approach to a variety of business processes such as invoicing, accounting, distribution, or receiving orders. The scope in fact extends much further though – to take another example from the book, bank workers previously had discretion over whether to lend to a person or business, but such decisions are increasingly taken out of their hands and instead governed by sophisticated, externally-imposed software packages (p75).
The divided middle-class
Some work simply can’t be Taylorised – for a start, someone needs to design these systems, and beyond this some work resists being standardised. Knowledge work is therefore being split apart, with routinised, scripted tasks being separated from highly-rewarded creative work. Brown et al describe one software company they spoke to, where “permission to think is restricted to a relatively small group of knowledge workers currently still in Britain, and the more routine work (that is, customizing products to different markets and customers, also referred to as the grunt work), is offshored to their offices in Bulgaria and India, where college graduates can be hired at a third of the cost” (p75).
Work is now turning into the dystopic vision of Harold Wilensky several decades ago, with Taylorism moving further-and-further up the occupational hierarchy. Brown et al argue that there now three types of knowledge workers (p81) – ‘developers’ (the top performers given ‘permission to think’), ‘demonstrators’ (with a focus on effective communication with others), and ‘drones’ (who are ‘not expected to engage their brains’, such as in call centres). The developers – the prototypical knowledge workers in the public imagination – are, they argue, no more than 10-15% of an organization’s workforce, while the drones are particularly susceptible to offshoring.
The war for talent
Many knowledge workers, then, are highly-qualified but seeing their work progressively deskilled and opened up to global competition – leading to losses in both pay (p55,111) and ‘the mass degradation of middle-class jobs’ (p110). But if this wasn’t bad enough, there is a further force at play: firms increasingly believe that their profitability depends on the very top talent, rather than the talent in the rest of their workforce. In McKinsey’s words, “the differential value created by the most talented knowledge workers is enormous”, or in the reported words of the CEO of Cisco, “a world-class engineer with five peers can out-produce 200 regular engineers” (p85).
Instead of rewarding workers based on their credentials, employers are increasingly rewarding workers based on their actual performance – and often their performance compared to other highly-credentialed peers (p85). Employers are engaged in a global ‘war for talent’ to get hold of the highest-flyers among the ever-greater numbers of global graduates (see the previous post), particularly in India where the level of English makes it easier to integrate them into global teams (p88).
Previous posts on the site have discussed the rising US (and UK) pay inequality, and as Brown et al note (p126-7), the current consensus is that this is a matter of ‘skill-biased technological change’ (with recent contributions emphasising the role of politics). Yet while technology has probably increased the pay-off to education, it struggles to explain the rising pay inequality among graduates. Incredibly, “only [graduates] in the higher earner category (90th percentile) enjoyed any significant growth in real income since 1973” (p117), as the chart below shows – no other graduates saw a rise in incomes. The rising gap between the best and the rest (among workers of all qualifications) can also in a variety of specific occupations, including computer scientists, lawyers, clinical lab workers, financial managers, accountants and teachers (p120), and also in the UK (p118).
The Global Auction is a fabulous evidence-based polemic, that deserves attention – attention it has already been receiving in the short space of time since its publication, both in the public media and academic press (see the authors’ updated list, plus this interview), and following-on from an earlier piece of work for the UK’s Commission on Education and Skills. But it left me with my three questions:
- Is it true? The book is designed to convince us that the Panglossian, optimistic view is wrong, but their evidence is sometimes sketchy, and relies on informants prone to believing their own hype.
- Does it matter? In the grand scheme of things, a more equitable world will mean that the Western middle-class sacrifices some of its relative affluence – but this is part-and-parcel of reducing global inequality.
- What can we do about it? Brown et al do discuss the implications for policy (see p150-), but this is perhaps utopian in both its aspirations for policy and its hopes for what effects this policy would have.
Having briefly spoken to Phil Brown earlier in 2011, I’m hopeful that he’ll agree to discuss these questions through email in the coming weeks – at which point, I’ll edit them into a further post that covers some of the issues on politics and global inequality I haven’t so far discussed.
In the meantime, though, the book deserves to stimulate a wide (and global) debate, challenging as it does the assumptions underlying the future of the Western middle-classes, and drawing attention to the diverging fortunes of the elite from the rest of the middle-class.