Monday, April 17, 2017

Thoughts on Uber and Its Psychological "Tricks"

Earlier this month, a New York Times article “How Uber Uses Psychological Tricks to Push Its Drivers’ Buttons” received a lot of publicity for revealing how Uber is using “behavioral science to manipulate [drivers] in the service of its corporate growth.” A company trying to get workers to act in the interests of the organization? Shocking.

The point of managing workers is to get them to do things that benefit the organization that is issuing their paychecks (or not even issuing paychecks as with diverse forms of slavery and unfree labor throughout history). I can’t be the only one tired of an “everything in the sharing economy is new” mindset. Sure, some of the specific tools might be different in the sharing economy, but the tools for managing workers have always been changing. In the industrial revolution, workers were organized together into factories to be watched more effectively. The famous Hawthorne experiments in the 1920s uncovered the importance of social factors in shaping worker productivity. I’m sure there are examples of various workplaces with real-time information on production goals displayed on a chalkboard for all to see long before there were LED or smartphone displays.

But back to the New York Times article: Good news for industrial relations, bad news for human resources. Why good news for industrial relations? “Underlying the tension was the fact that Uber’s interests and those of drivers are at odds on some level.” There you have it, a central industrial relations premise that employers and workers have some conflicting goals. And when employers have the upper hand (“Uber is continuing apace in its struggle to wield the upper hand with drivers”), we need to take seriously the need for various mechanisms for looking out for workers' interests and well-being, whether through unionization, laws, or other supports. More on this in a minute.

And why bad news for human resources? An MIT Technology Review article followed up the New York Times story with its own headline: “Uber Is Engaged in Psychological Warfare with Its Drivers.” Here is part of what's labeled as psychological warfare: “To stem that tide [of many new drivers leaving before completing 25 rides], Uber officials in some cities began experimenting with simple encouragement: You’re almost halfway there, congratulations!” That’s right, Uber is “exploiting” that well-known human “weakness” of responding to encouragement toward a concrete goal. When encouragement is seen as manipulation, that can’t be good for human resources.

This begs the question as to what people think human resources should be doing. Do we want human resources to simply be an administrative function that hires and pays people? Human resources can and should be doing more. For at least a century, the leading edge of human resources has been trying to take what we know about human behavior (at that time) to find hopefully win-win ways to benefit employees and employers. Can ethical lines be crossed? Certainly. But the principle of using the science of human behavior--rooted in economics, psychology, sociology, and beyond--to design human resources policies that create mutual gain is longstanding and worthy. 

I’m not intending to be an apologist for Uber. The rise of Uber and other sharing economy arrangements raise serious issues—too many to address here. As just one example, an academic paper “The Taking Economy: Uber, Information, and Power” by Ryan Calo and Alex Rosenblat discusses a number of ways in which Uber could potentially exploit its drivers. My interpretation of many of these is that they boil down to intentional or unintentional wage theft. For example, a driver may think they accepted 100% of ride requests, but bugs or manipulation may lead Uber to report a lower number, leading to negative consequences for the driver. Or a driver may wait the required 5 minutes to get a cancellation fee, but Uber doesn’t pay because its data shows a lower waiting time, again either due to intentional programming features or unintentional problems with connectivity and the like.

So how to address serious issues that arise out of the gig economy? Meaningful debates over the role of behavioral science in shaping managerial practices should be welcomed. Though rhetoric around "psychological warfare" probably isn't very helpful. Additionally, everyone can probably agree that Uber drivers should be truly free to sign off when they want, though there are different perceptions of what "truly free" means in this context. 

And is this freedom enough? Certainly not for issues like wage theft that truly reflect unequal power and asymmetric information (what did you expect an industrial relations scholar to say??). Calo and Rosenblat argue for updating consumer protection laws for the digital age. That might be a good idea, but from an industrial relations perspective, we also should be talking about updating labor law. Rather than relying on government regulation to specify standards, identify violations, and remedy them, let’s figure out ways to empower workers—broadly defined to include Uber drivers and many others in the gig and contracting economy. Then they can act collectively with adequate power to give a meaningful voice to the material, psychological, social, and other concerns they identify as the most pressing in their own particular work arrangements.

Thursday, March 16, 2017

Why Study Labor Relations?

It’s always interesting getting a new book, but it’s particularly exciting and rewarding when it’s the product of your own work! So I was thrilled when earlier this month I received a copy of the fifth edition of my textbook, Labor Relations: Striking a Balance, that is published by McGraw-Hill. But some might be thinking…labor relations?...people still study that?

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Some dismiss labor unions as relics from a bygone era and therefore consider studying labor relations unimportant for business careers in the 21st century. Yes, unions represent a small percentage of the U.S. workforce, but this is still a large number of workers (> 16 million) in many of the country’s leading companies and in a broad range of occupations, including doctors, nurses, lawyers, writers, professional athletes, and even graduate students. Some local businesses—a Starbucks, a Target or Walmart, or a local hotel, for example—might have some employees who are thinking about unionizing, or at least some managers who are worrying about this possibility. Labor relations are therefore a relevant and dynamic area of study and practice.

All managers and business professionals can benefit from learning about labor relations, whether or not they plan to work in companies where unions are present. Studying labor relations reveals the consequences of poorly managing a workforce. Also, U.S. labor law is very relevant for all workplaces, including nonunion ones. This is because a union does not have to be a large, formal, bureaucratic organization; a union is simply a group of workers acting together to influence their working conditions. So as just one example, it’s illegal to prohibit workers from discussing their wages and benefits with other employers, because this is a basic form of worker self-protection.
Studying labor relations can also help one appreciate the broader historical, social, and political influences on business and thereby help people better deal with the realities of managing a business in a complex world. Organizations are embedded in a complex environment, and at various points in my textbook, market forces, individual emotions, managerial strategies, forms of work organization, constitutional and legal issues, history, questions of human rights, negotiation and conflict resolution strategies, debates over globalization, pressures of financialization, ethical challenges, and other things are all shown to affect work and employee relations. For others who are interested in work and workers, labor relations offer an engaging subject for thinking about the world of work—what we want to gain from work, defining societal objectives for the employment relationship (striving for employment with a human face through balancing efficiency, equity, and voice--of course!), how to measure worker well-being, how work should be structured, the rights of labor, how to define and create public value(s), and other questions that greatly affect the type of society we live in.

On an intellectual level, stylized economic models conveniently assume a tidy world of rational agents interacting in perfectly competitive economic markets; most business courses consider only the objectives of businesses and consumers. In contrast, the study of labor relations considers the goals of workers and society, and it does not shy away from the conflicts that can arise between competing groups, especially in a real world characterized by imperfect competition. Labor relations can therefore help everyone understand and resolve conflict—in the workplace, in business relationships, and in everyday personal interactions. Moreover, an emphasis in my approach to labor relations is on understanding alternative intellectual perspectives rooted in different assumptions about the nature of the employment relationship. This is typically the only place in a human resource management curriculum that students consider alternative models of the employment relationship, such as unitarism and pluralism. In this way, studying labor relations remains essential for understanding HRM.

Lastly, studying labor relations should be intellectually stimulating and even fun. Labor relations have been influenced by everything from violent strikes to religious writings, from libertarians to Marxists, from radical union leaders to great industrialists. Studying labor relations draws on scholarship in industrial relations, management, economics, history, psychology, sociology, political science, law, working class and women’s studies, and philosophy. In my textbook, students encounter two characters named Big Bill, the brazen yet grandmotherly Mother Jones, and the still-missing Jimmy Hoffa—not to mention the colorful language of labor relations, which includes yellow dog contracts, the blue flu, hot cargo, whipsawing, and a narcotic effect. You can even read my book while listening to union folk songs or other songs about the working class. And then take a break by watching movies such as Norma Rae, On the Waterfront, Matewan, Billy Elliot, and Pride. Who says labor relations has nothing left to offer? Far from it.

Sunday, February 26, 2017

Fawning for Favors: Tipping, Harassment, and the Need for One Minimum Wage

Controversies around tipping are seemingly everywhere these days. Tip jars seem to be proliferating at the same time as some restaurants are experimenting with banning tips. It’s always hard knowing who to tip and how much, and even more so when traveling abroad. Even the New York Times ran a story on “To Tip or Not to Tip Your Uber Driver” last year, and class action lawsuits prompted Uber to allow drivers to put up signs indicating that tips are appreciated.

But have you ever stopped to think about the origins of tipping and the continued implications for workers who primarily rely on tips for most of their income? As someone who studies work, I’m embarrassed to admit that I had not. Until last week. It was then that the University of Minnesota’s Center for Human Resources and Labor Studies sponsored a provocative presentation by Saru Jayaraman (co-founder and co-director of the Restaurant Opportunities Centers United, Director of the Food Labor Research Center at the University of California, Berkeley, and as the author of Behind the Kitchen Door, a fellow Cornell University Press author), a visit that was facilitated by the Minneapolis worker center CTUL.

The precise origins of tipping are unknown but a key early step seems to be the expectation dating back to at least the 17th century that visitors to private English homes give money to the host’s servants because of the extra work they’ve had to do. These aristocratic origins made tipping seem un-American and un-democratic in the 1800s and early 1900s as those who received tips were seen as servile rather than equals. Indeed, starting in 1909 several states outlawed tipping, though these laws didn’t survive for more than a decade.

What did survive were the racist and sexist foundations of beliefs on who was lowly enough to be exploited by tipping, such as African-American porters and immigrant maids. As nicely summarized by Kerry Segrave in Tipping: An American Social History of Gratuities,

Tipping seems to have started with the traveling aristocracy and spread downward class by class. With the rise of wage labor in industrial capitalism, the number and position of servants declined. That same rise in industrial capitalism brought with it an increase in commercial eating and drinking establishments, hotels, and mass transportation wherein those who received tips—maids, valets, waiters, and so forth were found in large numbers. As a greater proportion of people dined out, stayed in hotels, traveled on trains, and so on, they found themselves in tipping situations. All of those who received tips in the past were regarded as social inferiors at a time when such distinctions were felt to be normal and natural—God’s will. All the services for which tips were given—serving meals, carrying luggage, making beds, drawing drinks, and so forth—were regarded as menial labor. Those legacies of who was tipped for what services remain with us today. (p. 5)

In addition to views on servility, another important legacy of the history of tipping is an enduring debate over whether tips should be included in the calculation of earnings when determining if workers reach at least some level of minimum earnings, . For several decades, the side favoring the inclusion of tips has been winning. Since 1966, U.S. federal law allows a lower sub-minimum wage for tipped workers. Currently, the federal minimum wage for workers who earn at least $30 per month in tips is a measly $2.13. And this has not increased since 1991! If workers do not earn sufficient tips, the employer needs to pay at least the standard (non-tipped) minimum wage, but this entails significant record-keeping and there are high rates of non-compliance.

Many states have their own minimum wage laws that exceed federal standards, but only seven states, including Minnesota, require that tipped workers earn the same minimum wage as others.  An eighth state (Maine) recently enacted minimum wage changes that will lead to tipped workers earning the full minimum wage, though there is already a movement to undo this change. And Minneapolis is considering excluding tipped workers from a possible increase in a city minimum wage.

Which brings me back to Jayaraman’s provocative talk passionately arguing that this change being considered by Minneapolis would be a significant step backwards. You might be thinking, why is this a problem? Don’t tipped workers bring home more than the minimum wage? Well…not as much as you might think. Even including tips, tipped occupations are routinely among the lowest-paying jobs in the economy. And according to the Bureau of Labor Statistics, the median hourly earnings for waiters and waitresses in 2015 was $9.25 including tips; the 75th percentile was only $11.65.

But the more fundamental and eye-opening issue revealed by Jayaraman is the pervasive power differential created by a subminimum wage that leads to endemic sexual harassment. Most restaurant servers are women. And when their living depends on earning tips, they are exceptionally vulnerable to unwanted sexualization and sexual behavior because they are beholden to the customer. Indeed, the report "The Glass Floor: Sexual Harassment in the Restaurant Industry" by the Restaurant Opportunities Centers United revealed that 60 percent of women restaurant workers experience sexual harassment, and over 50 percent report that they experience harassment on at least a weekly basis. These rates of harassment are highest in states with the $2.13 minimum wage for tipped employees. As Jayaraman noted, this is a pretty disgusting way to introduce millions of young women to the working world. Consequently, the One Fair Wage campaign is pushing for an end to the subminimum wage for tipped workers—not an end to tipping, but an end to the subminimum wage. I recommend their video "The Time Is Now."

In 1896, Gunton’s Magazine wrote that rather than working for wages, tipped workers are “fawning for favors” and thus, tipping undermines the personal freedom and dignity of tipped workers (July, p. 16). More than 100 years later, this continues to be particularly true for tipped workers who lack the protections of the full minimum wage.