Management Wants Precarity: A California Ideology for Employment Law

LaborShareThe reader of Talent Wants to be Free effectively gets two books for the price of one. As one of the top legal scholars on the intersection of employment and intellectual property law, Prof. Lobel skillfully describes key concepts and disputes in both areas. Lobel has distilled years of rigorous, careful legal analysis into a series of narratives, theories, and key concepts. Lobel brings legal ideas to life, dramatizing the workplace tensions between loyalty and commitment, control and creativity, better than any work I’ve encountered over the past decade. Her enthusiasm for the subject matter animates the work throughout, making the book a joy to read. Most of the other participants in this symposium have already commented on how successful this aspect of the book is, so I won’t belabor their points.

Talent Want to Be Free also functions as a second kind of book: a management guide. The ending of the first chapter sets up this project, proposing to advise corporate leaders on how to “meet the challenge” of keeping the best performers from leaving, and how “to react when, inevitably, some of these most talented people become competitors” (26). This is a work not only destined for law schools, but also for business schools: for captains of industry eager for new strategies to deploy in the great game of luring and keeping “talent.” Reversing Machiavelli’s famous prescription, Lobel advises the Princes of modern business that it is better to be loved than feared. They should celebrate mobile workers, and should not seek to bind their top employees with burdensome noncompete clauses. Drawing on the work of social scientists like AnnaLee Saxenian (68), Lobel argues that an ecology of innovation depends on workers’ ability to freely move to where their talents are best appreciated.

For Lobel, many restrictions on the free flow of human capital are becoming just as much of a threat to economic prosperity as excess copyright, patent, and trademark protection. Both sets of laws waste resources combating the free flow of information. A firm that trains its workers may want to require them to stay for several years, to recoup its investment (28-29). But Lobel exposes the costs of such a strategy: human capital controls “restrict careers and connections that are born between people” (32). They can also hurt the development of a local talent pool that could, in all likelihood, redound to the benefit of the would-be controlling firm. Trapped in their firms by rigid Massachusetts’ custom and law, Route 128’s talent tended to stagnate. California refused to enforce noncompete clauses, encouraging its knowledge workers to find the firms best able to use their skills.

I have little doubt that Lobel’s book will be assigned in B-schools from Stanford to Wharton. She tells a consistently positive, upbeat story about management techniques to fraternize the incompatibles of personal fulfillment, profit maximization, and regional advantage. But for every normative term that animates her analysis (labor mobility, freedom of contract, innovation, creative or constructive destruction) there is a shadow term (precarity, exploitation, disruption, waste) that goes unexplored. I want to surface a few of these terms, and explore the degree to which they limit the scope or force of Lobel’s message. My worry is that managers will be receptive to the book not because they want talent to be free in the sense of “free speech,” but rather, in the sense of “free beer:” interchangeable cog(nitive unit)s desperately pitching themselves on MTurk and TaskRabbit.

Precarity as the Shadow Side of Mobility

Lobel draws a stylized contrast between the 1950s style “organization man” and today’s hustling, innovative, flexible talent pool (18). She sees collapsing boundaries between insiders and outsiders, as the top leaders in firms insist on rapidly hiring and firing workers to adapt to new market demands, and workers themselves constantly network for better opportunities.

There is a comforting symmetry in this description, a picture of a universal “scramble” among both workers and elite managers. But I suspect, beneath the surface similarities, class divides make the lived experience of such scrambles divergent. Numbers matter in two ways. First, with respect to net worth, the manager sitting on top of an 8-figure fortune has a good deal more power in a negotiation than the “scrappy, passionate” newcomers with intermittent access to parents’ or spouses’ savings. The former doesn’t really need to make much of anything “work out” to continue living comfortably; the latter can feel like they are quite literally living on borrowed funds. They don’t need “freedom and mobility” so much as they need some rudimentary security of position. Consider, for instance, this story about unstable prospects in the video game industry:

[W]hen you read interviews or watch industry trade shows like E3, “passion” is used as a word to describe the ideal employee. Translated, “passion” means someone willing to buy into the dream of becoming a video game developer so much that sane hours and adequate compensation are willingly turned away. Constant harping on video game workers’ passion becomes the means by which management implicitly justifies extreme worker abuse.

Already subject to lower wages when compared to the broader tech sector, video game studios’ management maintain the status quo by consciously manipulating the desires of writers, artists, and coders hoping to break into a creative field. The profit vacuumed up goes to ever more bloated management salaries and the unremittingly glitzy, tacky spectacles churned out by gaming’s PR departments.

Consider now the strategy of the maximally exploitative video game company manager. Would he want to operate in an industry where firms and employees basically agreed to 1, 2, or 5-year contracts? Or would he prefer something more like the “freedom” and “mobility” at the core of Lobel’s vision, where dozens of applications would show up in his inbox each week, each offering to lowball the current person in the job? I’m reminded of the second episode of the series “Girls” where Hannah demands pay in her intern position and her boss replies that he gets dozens of applicants per week willing to work for free.

What looks like exciting mobility for, say, the “senior marketing executive” Lobel mentions, can be experienced quite differently by the average worker. Social critic Rob Horning has acknowledged “the ‘positive’ components of precarity — the sense that it provides for the freedom of flexibility, rewards certain kinds of creativity and opportunism, promotes a kind of absolute individualism that can be taken for dignity, and accommodates or even requires a degree of social and geographic mobility.” But those desirable aspects of our market order have a price:

The state tries to offload as much of the responsibility for maintaining a minimum standard of well-being for its citizens, while corporations simultaneously shift . . . economic risk to their workers, offering little in the way of benefits, pensions, and security. Individuals are expected to bear the burdens imposed by recession and fend for themselves as much as possible in the economy, even as the destructured work sphere that results from post-Fordist reforms demands an intensified cooperation among workers. The stress of having to constantly cooperate and compete with co-workers at the same time is just another of the emotional burdens that constitute precarity.

Freedom is more than just another word for nothing left to lose—but for many workers, not much more than that. Lobel deserves to be commended for advising corporate bureaucrats that we’d all be better off if they spared employees the burdensome noncompetes and invasive measures to guard trade secrets. Perhaps her work can be seen as a way of toughening up workers, who should see themselves as owing less and less to the firms that commit less and less to them. Nevertheless, there is at least as much to condemn as to praise in the Silicon Valley ecosystems that Lobel often seems to take as her model conditions for innovation.

One also wonders about the status of data points from that ecosystem. Lobel praises Google’s “20% time” for employees (giving them time to spend on projects of their own choosing) (190), but after her book went to press the company “effectively killed” the practice. Was Google’s decision an indication that 20% time was not a good idea, since it often figures in Lobel’s work as an innovative, insightfully run firm? Or did Google make a mistake? Do we look to the practices of model firms to ascertain the proper balance of freedom and constraint in the workplace? Or are there more general principles that should guide all firms?

Who’s the Talent?

When I was thinking about the workers who would most benefit from Lobel’s proposals, I was reminded of Tyler Cowen’s recent promotion of unexpected opportunities for domestic labor. Citing the “boom” in household staff, Cowen notes that “A lady’s maid can make $75,000 a year,” and a butler up to $200,000. Those at the top end of the new domestic economy (and the household managers employing them) probably would all get along better if, say, the estate owner didn’t try to indenture them into long term contracts.

On the other hand, “freedom to leave” seems less of a concern among the maids for whom we actually have good data. Many domestic workers are frustrated by an “informal approach to the employer-employee relationship–usually due to the “she’s part of the family” mentality–that results in irregular paychecks and inconsistent wages.”

The divergent fates of “superbutlers” and ordinary “domestic help” lead me to another question about Lobel’s work: who is the “talent” it is focused on? Might companies be spending excessively to keep some “talent” by stinting on others? Kate Losse, author of The Boy Kings, certainly felt that way at Facebook:

I worked at Facebook from 2005 to 2010 in a series of roles culminating in a position as Zuckerberg’s speechwriter. . . . [M]ost women who work in tech startups do not have seats in the front of the rocket ship. Women in tech are much more likely to be hired in support functions where they are paid a bare minimum, given tiny equity grants compared to engineers and executives, and given raises on the order of fifty cents an hour rather than thousands of dollars. . . .

[In] late 2008, after working my way up from the support team to product management in the engineering sector, I was promoted to a more demanding managerial position. But there would be no raise. “You’ve already doubled your salary in a year and it wouldn’t be fair to the engineers who haven’t had that raise” (never mind that a year earlier engineers had been earning anywhere from $70,000 to $140,000, as opposed to $38,000 like I had). Far from being equitable, the concept of fairness was being deployed to explain why I needed to work for less so men wouldn’t feel resentful, as if my rapid career rise posed a threat to them, which it didn’t. At Facebook of all places, there was plenty of money and career growth to go around. If this kind of salary containment was happening to women there, I can only imagine what justifications are used in less cash-flush companies to level women’s salaries downward.

Companies may seize on certain proposals to “liberate” and “enrich” talent, but we should critically examine exactly how they define that term. Whenever banker pay regulation comes up, or CEO comp, a chorus of voices laments that “we’ll lose our best talent if we can’t pay more!” Brute power dynamics explain that curious focus on top management talent, as opposed to, say, other parts of the firm. And for more millionaires to become billionaires, new frontiers of extraction must emerge. As Lobel observes, the profit drive here can lead to grotesque absurdities, such as the “no suicide” pledges foisted onto Apple contractor Foxconn’s workers (126).

For the most part, though, Lobel’s book is concerned with very well-educated, well-connected workers in the west. On one level, they can share with the Foxconn employees a bare desire not to avoid restrictive contracts. But we have to acknowledge that there are some zero sum transactions in business, and some ways in which the top employees’ ability to constantly bargain for better terms for themselves will divert resources that could have gone to those at the bottom of the heap. Consider, for instance, the transfer proposed below:

Now imagine Tim Cook, after an Ebenezer Scrooge-like encounter, awakening on December 25 and exclaiming “let’s transfer 1/13th of this quarter’s profit to the Foxconn workers as a Chinese New Year bonus!” Could he make such an executive decision more easily in Lobel’s ideal innovation environment, or, say, in a stuffier, more rigid one, where his key engineers and designers basically settled into (or were contractually bound) to longer term contracts and weren’t constantly threatening to decamp to Twitter, Instagram, or Mutual Mobile? Kazys Varnelis once observed that the economic growth of Silicon Valley and California were made possible in part thanks to the “exploitation of the immigrant poor.” One might think that after a company builds up a $140 billion cash pile, such exploitation might become less intense. But distribution remains something of a zero-sum game, as investors and workers all along the supply chain press claims in whatever way they think most effective.

The question of “who gets the Apple cash pile” illuminates some tragic choices that undermine even the best-intentioned, developed-world-centric visions of social justice. I offered a similar critique of the normative presuppositions behind the great law review fashion debate a few years ago, pointing out that otherwise commendable efforts to improve conditions for US designers could just lead companies to recoup those costs by shifting production from, say, Cambodia to Bangladesh. I also worry that whatever leverage Lobel’s proposals would grant to “innovators” in the developed world might just end up getting taken out of the already meager shares in productivity gains enjoyed by line workers.

Valuing Stability

It is hard to critique Lobel’s work, because a sense of optimism and hope pervades Talent. Perhaps the holistic view of labor relations and wage distribution I’ve suggested above is beyond the ambition of the book. Nevertheless, more emphasis on the dark side of the labor mobility and flexibility might have resulted in a richer normative rationale for many policies the book proposes—and may well have swayed Lobel to be slightly more sympathetic to those worried about free-riding (ranging from Gary Becker to, say, the majority of justices in Leegin).

In 1995, Barbrook & Cameron identified a “Californian Ideology” that offers a “vision of the natural and inevitable triumph of the hi-tech free market.” As they observed,

[C]ore personnel in the media, computing and telecoms industries experience the rewards and insecurities of the marketplace . . . . Lacking the free time of the hippies, work itself has become the main route to self-fulfillment for much of the ‘virtual class’. Because these core workers are both a privileged part of the labour force and heirs of the radical ideas of the community media activists, the Californian Ideology simultaneously reflects the disciplines of market economics and the freedoms of hippie artisanship.

While Barbrook & Cameron believed such an ideology a “bizarre hybrid” that is “only made possible through a nearly universal belief in technological determinism,” Lobel offers a streamlined, more palatable version of the Californian Ideology. Her ideal labor policies envision a skilled, well-educated, well-connected workforce nimbly networking for higher and better uses of an ever-expanding repertoire of skills.

I agree that there is a (relatively narrow and lucky) class of people who live to work, but most people tend to work in order to live. The point of life is in non-work—time to spend with family and friends, enjoy culture (low, high, and in between), to re-connect with the ultimate sources of value and meaning, and to communicate about all of this. This balance of work and leisure, or instrumentally rational action and value-driven action, is a theme of political economy. In a field preoccupied with the fair allocation of rewards from work(s) of various kinds, labor policy should also emphasize free time and the freedom not to worry that failure to maximize one’s chances to exploit one’s freedom to contract won’t leave oneself in the dust in the midst of others who are. Leisure and play aren’t just things that happen on the edges of a life well lived. They’re often the point.

By contrast, as Evgeny Morozov observes,

The data-centric model of Silicon Valley capitalism seeks to convert every aspect of our everyday existence – what used to be our only respite from the vagaries of work and the anxieties of the marketplace – into a productive asset. This is done not just by blurring the distinction between work and nonwork but also by making us tacitly accept the idea that our reputation is a work-in-progress – something that we could and should be honing 24/7. Therefore, everything is turned into a productive asset: our relationships, our family life, our vacations, our sleep (you are now invited to “hack” it so that you can get most of your sleep in the shortest amount of time).

Talent may want to be free—but free to do what? Rakesh Khurana has observed that, at least for top managers at many firms, the answer is simple: to become as rich as possible. It is at least an open question whether that summum bonum serves society as a whole:

Unforeseen by the intellectual architects of the revolution in economics and finance was that by delegitimating the old managerialist order . . . they had cut managers loose from any moorings not just to the organizations they led or the communities in which those organizations were embedded but even, in the end, to shareholders themselves. The resulting corporate oligarchy had no role-defined obligation other than to self-interest. The unintended consequences . . . include the string of corporate scandals involving misstated earnings, backdated stock options, and various exotic variations on these themes that have as their common thread the enrichment of individual executives at the expense of shareholders, employees, and the public trust in the essential integrity of the system on which democratic capitalism itself depends.

Lobel’s vision emphasizes the thrill of the chase for the upwardly mobile professional, but there’s a darker side to that freedom that Talent is loathe to acknowledge. I hope that in future projects Lobel will turn her own exceptional abilities to advising policymakers on how to address the inequality and precarity that the Californian Ideology does more to entrench than abate.

Comments? Questions? Email me at [].

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