There have been some interesting studies of work of late, and I took a read of some of these because the general picture I am getting is that the world of work has been steadily getting more and more horrible since I quit the workforce in 2012. A gem of a book that explains a lot of what is happening to work and what happened to my job is this book, which I discovered while web-ratholing via George Monbiot’s recent column. I was always going to be a sucker for his lede
It’s untenable to let salaried work define us.
although perhaps not so much for his line on volunteering 😉
The book is called The Global Auction: the broken promises of education, jobs and incomes, and as I started reading it I immediately thought of a couple I am vaguely acquainted with who have two children. They’re not rich enough to support their desired lifestyle and send both children to public school, so they send just one. This puzzled me as it seems an obvious way to fund an army of therapists in the troubled adult future of the child who is deemed unworthy, but I suspect that it’s a terrible misallocation of capital even in the case of the Most Favoured Child. It’s not particularly that the Most Favoured one is particularly clever or the Most Unfavoured particularly dimwitted. They’re both probably slightly to the right of the bell curve, for all I know they may well be sharper than I am, but the problem is in the conventional assumptions of their parents, that learning is earning.
The prognosis in the book for Most Favoured Child1 is horrific –
We believe that everyone has a right to know that the opportunity bargain based on better education, better jobs, and better incomes can no longer deliver the American Dream.
interchange the American Dream for middle class couple expecting similar airs and graces for the fruit of their loins and it’s not looking good. Now if you’re rich enough to buy into Eton and the like and are well-connected enough maybe there’s a case, but these aren’t. I’ve thought for the last few years that there’s no point in second-tier public schooling – save the capital and use it to get your offspring on the side of Capital, not Labour from an early age, as well as teaching them the ways of the world and the value of the f**k you fund. It costs £20k a year for a public school, so if that’s from 11 to 18 that’s £140k. This is not loose change for these guys, and pumping it into the black hole of that failing opportunity bargain looks like a serious misallocation of funds if the aim is to buy this child a better life in the Britain they will grow up in.
learning is earning – just not in the West
The Global Auction deconstructs of the problem flagged by Monevator that university has become an unaffordable luxury. There used to be a promise, which held up until about 2000, that better education was a route to better jobs and better incomes. What on earth went wrong?
Globalisation, in a word. The world I grew up in and worked in up until about 2003 was a segmented world – there were ‘head nations’ – what we know as the West, or the First World, which was where thinking went on. In the early part of my career, before the fall of the Berlin Wall, there was manufacturing in some select ‘body nations’. The story we told ourselves was this
Within this scenario of a free market, knowledge-driven world, the economic crash was never supposed to happen. We were often told by politicians and business leaders that rising prosperity was not debt driven but a result of smart people using smart technologies in smart ways, creating unprecedented prosperity for the most talented employees and enterprising companies in a burgeoning global economy. It was learning that was earning as the head nations supplied the ideas, technologies, and know-how, while the body nations manufactured a future for themselves. And we could all share in this prosperity if we invested in ourselves by gaining marketable qualifications, skills, and knowledge.
It was a great story, but it was a lie, because our companies have loyalty to their shareholders2 and the executive class, not to nations. The world I grew up and mostly worked had political barriers between nations which were also trade barriers. Made in China was not something I saw until I was nearly halfway through my career.
These barriers slowed technical progress, but they favoured the First World, which had got there first. They favoured me, because of when and where I was born, and I made most of my wealth in this cocooned world. For this I am grateful.
When the barriers fell away, transnational corporations could pursue a Dutch auction for skills, shifting the work to the lowest bidder. That has raised a lot of the world out of poverty and massively increased the global middle classes, but a middle class lifestyle is a lot cheaper in India or China than it is here. The water of wage levels will seek to flow downhill until it finds a balance. In a lot of Asia, learning is earning, particularly in China and India, although the business leaders interviewed in the book say that Indian graduates are easier to apply to global teams because they can speak fluent English, which is important in global teamworking.
There will be serious implications of this global auction for work. One of the ways companies respond is to be come more modular, turning knowledge work into working knowledge, and compartmentalising it more – the analogue of what the assembly line did to artisanal manufacturing. It made it more reproducible and improved productivity.
Same for knowledge work. We may ask why productivity in the UK is stagnating, and that is probably because a lot of knowledge work is being dumbed down or outsourced to where it can be done cheaper.
What’s left is about the top 10% doing well, the middle hollowed out and more low-level work being done manually. In the 1970s car washes were machines. I haven’t seen an automatic car wash for years, but hand car washes are spring up everywhere. We have graduate baristas and call-centre workers. We have more people working lower down the value chain, as middle-level work is automated or outsourced. The RSA will pick up the narrative later.
I was fortunate enough to be able to run out of the workplace just as this wave was breaking over me. I saw a lot of the processes described in the book in the last few years at the Firm. The global Auction even calls some of the methods Digital Taylorism. I got there first (the book was published by the OUP in 2011). Not only was there rampant outsourcing of some of the more interesting parts of the job to cheaper areas, but a command and control approach was introduced to permitted innovation and thinking, with a bunch of senior managers called the Star Chamber whose job was to scour projects and skim ideas, preferably outsourcing them and shutting down the rest. For a place that I joined as one of the premier industrial research labs this was a long slide down the value chain, and I hated the regimented approach, particularly as I had known decades of a much greater freedom to think and innovate. This book explains why this happened and the thought processes of the business leaders. It is easier to look at it dispassionately when I am out of the maelstrom 😉
The problem with university education is twofold now. When I graduated, about 11% of school leavers went to university.
This has gone up to nearly half of school leavers. To find the money to expand this so massively, students had to front the money or borrow it, which is obviously a cost on the students. A common and understandable gripe is that previous generations paid nothing, which is true – but far fewer of those previous generations cleared the bar to get in. Three out of four current students wouln’t have made the grade.
It does seem tough that people are being made to pay to devalue the product by increasing the supply of graduates in the UK beyond the demand. At the same time the world supply of graduates is skyrocketing:
China and India are walloping the US and leaving the UK in the dust with the number of graduates hitting the global market. They are not the only ones.
Poland has nearly as many suitable engineers as does much more populous Russia. The Czech Republic, Hungary, Poland, and Russia together have as many suitable generalists as does India, which has 5 times their total population, and nearly as many suitable engineers. As a result, many countries besides China and India will play a role in the emerging global market for high skilled workers.”
Sizing the Emerging Global Labor Market, The McKinsey Quarterly (August 2005)
Faced with global competiiton from lower cost countries, it is indeed questionable whether many UK school-leavers will see any graduate premium as a return on the £27,000 worth of debt they will incur from the unaffordable luxury. There is also a sheer scale problem
It is pretty clear that the West will not be a leading centre of science and engineering in the years to come, simply from the numbers of people involved. I had no idea of the scale of this, and these figures are from before the financial crash.
Learning is earning outside the West. In the UK, it is probably true that to be in the top 10% of earners you need to have a tertiary qualification. However, the odds are very tough, if we guess that 50% of school leavers go to university and a degree is necessary but not sufficient to get into the top 10%3, the odds are 4:1 against you. While everybody thinks they are special and will be among the winners4, four will lose the fight. The polarisation of work is such that if you aren’t in the top 10%, you will be one of the losers, and the gale of creative destruction is increasing.
The RSA looks at the same problem from a different angle
The RSA has produced a report called seven portraits of modern work, it is good in that is takes a step back from the obvious issue of how much you get paid and conditions, to look at the individual’s setting in wider society, which in ours in particular means whether the individual is in a family with other working adults and/or dependent children5.
What should you do to have a better experience of work, according to the RSA?
You don’t have to do all of these, but without any you are probably stuffed in 21st century Britain. Having some of these is necessary, but not sufficient to haev a better experience of work –
1) Be clever, preferably in an academic way, in which case go to university and get skilled in something not too susceptible to automation. Note that this ≠ “going to uni” as it is nowadays. Some 44% of school leavers go to university now. It was ~ 11% when I went to Imperial. We haven’t all become cleverer in the intervening 30 years. Before some blighter charges me with being elitist, I suspect I am not personally clever enough to jump over this bar6, I’d guess you have a good chance of following this route if you are in the brightest 5% and happen to be bright in the way Google or high finance finds useful. If younger, these are often RSA’s High Flyers.
2) Have savings. This gets you out of the precariat – you can work flexibly but only if you have enough to smooth things out. These are RSA’s Flexi-workers –
Flexi-workers are among those with the lowest incomes, but they are fairly economically secure with decent savings.[…]
Many flexi-workers (61 percent) are able to depend on others in their household. They are the least likely of all workers to have children to support (79 percent do not have any children under the age of 18). They are nearly twice as likely to own their home outright (47 percent vs 24 percent).
These guys tend to be older. They could be Ermines, or people of my age and older. But there is another way to get ito this group, one that it as old as the hills. It is called inheritance – become a member of the new Aristocracy, if Mummy and Daddy are loaded. Think Petra Ecclestone. Think the Most Favoured Child of the couple mentioned earlier if they hadn’t blown the money on second rate public schooling. If they are younger, they tend to be the RSA’s Strivers, young people with decent savings and hefty earnings but working in hellholes like London, so limited in the housing and kidding aspects of life.
3) Work for the government as a civil servant or in the private sector in manufacturing. These are RSA’s Steady Staters, who seem content with their lot, though the RSA seems to have some pretty horrific prognoses for what will happen to these people’s jobs with automation. They include many office workers. If you are younger, you may be in RSA’s Idealists, working in education or health.
4) Earn shitloads of money. RSA’s high Flyers earn loads, often have a lot of autonomy and often own the business. I suspect these are the guys who are making working life hell for all the rest 😉
Pretty much anybody else is hosed. You can pick out some Do Not’s from the RSA’s groupings:
5) Do not carry loads of Debt – the Acutely Precarious are stuffed. Debt is both a symptom and a cause of financial distress – you get into debt if you don’t have enough coming in relative to your outgoings, but if you carry a lot of debt then that is part of the reason why your outgoings exceed your income.
6) do not be Young.
The acutely precarious are a young segment; 46 percent are under the age of 35. A considerable number are highly educated – 45 percent hold university degrees. Nearly half have dependent children, who are typically younger than 10 years old. They are more likely to rent than the other segments (44 percent vs 33 percent) and few own their homes outright (13 percent). The acutely precarious are the most likely to be black and minority ethic (BAME).
7) do not have young dependent children
because you’re more likely to be young, in the acutely precarious and chronically precarious segments.
This is not going to a good place
The RSA’s report from the front line and the Global Auction book on the thinking behind transnational companies’ Dutch Auction for ~90% of global talent aren’t showing a lot of love for the dictum
It was learning that was earning as the head nations supplied the ideas, technologies, and know-how, while the body nations manufactured a future for themselves. And we could all share in this prosperity if we invested in ourselves by gaining marketable qualifications, skills, and knowledge.
I believed this right until I exited the workplace, and arguably it worked for me, although the backwash would have taken me down if I hadn’t exited the workplace early. I’m not clever enough to have jumped ship and gone to work for Google.
I didn’t really read that widely about the state of affairs until I left work, you need time and headspace to do that. The scale of Chindia’s progress and the numbers stagger me. There was always a certain arrogance in the doctrine of the head nations and body nations assumption. The West has primarily got first-mover advantage, but there’s no particular difference in smarts, it seems that both India and China ‘s leaderships were up to the task of bringing their workforces close enough to head nation standards of scientific endeavour, the numbers will probably do the rest.
The Global Auction also described the reasoning behind some of the loathsome performance management practices – these are all part of trying to modularise companies and turn knowledge work into working knowledge that is owned by the company not the employee. Modularity makes it easier to set up flash teams drawn from global workers to react quickly to changing customer requirements. But all the digital Taylorism, metrics and monitoring makes for a vile and inhuman workplace for most people.
Living standards in the west are going to go down, although the sum total of living standards across the world will probably go up. That reversal of fortunes makes people angry, people have grown to like the idea their children will be better off than they were. This has not held for most of human history, but the myth of continual progress is deeply embedded in Western culture. It’s the reason so many people are yelling they are mad as hell and are not going to take it any more, see Brexit and Trump
The tragedy is that they are going to take more, until wage levels equalise… The game has changed, and things that used to be ladders have turned into snakes. The world will likely be better off as a whole. In the mean time, get on the winning side, and that is capital at the moment.
The changes won’t happen overnight, but they are well underway. I am pretty sure that in 30 years’ time some common myths will have been laid to rest. Work is the way out of poverty and education is the key to a good job will be two of them. They carried a grain of truth once, but they aren’t true now for an increasing number of people in the West.
- The Most Unfavoured Child has the advantage here of knowing that they are unfavoured, their expectations will be lower. The Most Favoured Child will have high expectations because they were MFC, so the gap will be greater as wage levels equalize with the rest of the world. ↩
- I know. That includes anyone on the FI/RE track ;) ↩
- You need to be earning a post-tax household income of > 40k to be in that top 10%. ↩
- This is due to a combination of the Dunning-Kruger effect and the cognitive bias this Nature paper “Why people prefer unequal societies” summarises “when fairness and equality clash, people prefer fair inequality over unfair equality” ↩
- I started work and established myself (working, buying a house, starting to save for a pension) as a single man, and it hacked me off no end that governments taxed me shitless to favour couples (MIRAS on both earnings, FFS meant I was competing with people richer than my peer group for housing) and then threw money at people to have children when they couldn’t afford it. As the BBC said about the noughties baby boom, Tony Blair was the daddy. I applaud the RSA for widening the search to the household. Since the presence of dependent children and fewer working adults appears to be behind a lot of the misery associated with modern work, it would be good to raise the issue much higher in people’s minds that they may well not be able to afford to have children and achieve a certain lifestyle. ↩
- I was fortunate in that 30 years ago I was bright enough to get into electronics design and then industrial research. A commenter observed that in the 1960’s and 1970’s industry required an unusually high number of people at this level, and I was probably surfing the backwash of this boost. Many of the great industrial research labs of that time have gone. The place at The Firm where I worked is but a pale shadow of its former glory, places like Marconi, GEC, Plessey, Ferranti, EMI Hayes CRL have gone. Britain does have a lot of high-tech industry and research facilities, but these functions are done much more in smaller companies and often as industry/university partnerships. I am temperamentally less suited to these kinds of environments. ↩