Temp Work: The Waste Product of the Service Economy?

The New Normal: Disposable Workers, Disposable Jobs?

working for peanuts
Working for peanuts in the gig economy. Photo credit: Adapted by WhoWhatWhy from Melies The Bunny / Flickr (CC BY-NC 2.0) and U.S. Department of Agriculture / Flickr.
Reading Time: 17 minutes

The financial insecurity facing so many Americans in today’s gig economy is not the result of startups and their new apps, or even of technology in general. Temp work is the result of four decades of deliberate decisions by executives in corporate America — decisions that changed the nature of work and of capitalism itself. So explains Louis Hyman — a professor of economic history at Cornell, and Jeff Schechtman’s guest on this week’s WhoWhatWhy podcast.

Hyman takes us back to the 1960s and 70s, when the rise of conglomerates and management consultants brought about a reorganization of the American corporation and a profound change in the relationship of employees to their workplace.  

Hyman shows how corporate America traded stability for short-term profits. At the same time, he challenges the myth of the idyllic post–World War II workplace, arguing that it was only “idyllic” for successful white men and basically repressive for everyone else.  

He reminds Schechtman that the office and factory of that time offered stable paychecks, but not much self-determination. Today’s economy may be volatile, but it offers the possibility of a new kind of individual freedom and a new kind of individualized capitalism. In fact, Hyman says, the corporation may no longer even be necessary to capitalism.

According to Hyman, over the last ten years, 94 percent of net new jobs have appeared outside of traditional employment, and approximately one-third of the workforce now depends on this alternative world of work, either as a primary or supplementary source of income.  

He also points out that today’s corporations, like Starbucks and Walmart, are really the drivers of the gig economy, as a direct result of their failure to meet employees’ need for a “living wage.”

He refers to Uber and other gig economy players as the “waste product of the service economy,” because people drive for ride-hailing services or take temp jobs to provide the income that their full-time jobs don’t.

Despite the downside of the gig economy, Hyman argues that the burgeoning expansion of temporary work holds the promise of a complete reinvention of capitalism and economic freedom. If we can get it right, he says, it can be an exciting new world.

Louis Hyman is the author of Temp: How American Work, American Business, and the American Dream Became Temporary (Viking, August 21, 2018).


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Jeff Schechtman: Welcome to Radio WhoWhatWhy. I’m Jeff Schechtman.

The word “work” is one of the most powerful in our lexicon. Just think how often the “What do you do?” question is part of our social interaction. Yet while the question has remained the same, the nature of work itself has changed dramatically. The relationship between worker and employer has been changing not just since the 1980s, as many believe, but since the 1950s, as the organization man saw a better and more efficient way to organize labor. Today’s gig economy is simply the natural evolution of those changes, and it might actually be a new and fruitful way of looking at work, if we had not also evolved a system where so much of our social fabric and social safety net were not still tied to the traditional notions and institutions of work.

Jeff Schechtman: True work has evolved, but everything else connected to it has not, and for that, we’re paying a price in the public square. We’re going to talk about that today with my guest, Louis Hyman. Louis Hyman is an associate professor of Economic History at the Industrial Labor Relations School of Cornell University. He’s a former Fulbright Scholar and McKinsey Consultant. He received his Ph.D in American History from Harvard, and his writing has appeared in the New York Times, the Atlantic, Bloomberg, Slate, and many other publications. It is my pleasure to welcome Louis Hyman here to talk about his book Temp: How American Work, American Business, and the American Dream Became Temporary. Louis, thanks so much for joining us here on Radio WhoWhatWhy.
Louis Hyman: Oh, such a pleasure. I wish you could always introduce me. That was so kind.
Jeff Schechtman: Well, thank you. Appreciate it. One of the things that you point out is that when we look at the temp economy, the gig economy today, this isn’t something that came about as a result of technology or apps or anything. Those things may have perfected it right now, but this is something that has been the result of changes that have been happening for 50, 60 years. Talk about that in a general sense first.
Louis Hyman: It’s interesting. When you talk with people, they often talk about how Uber is causing work to be insecure, and it’s driven by apps, and it’s clear that that is not the case, that Uber is the waste product of the service economy. People drive for Uber or these other kinds of not very lucrative kinds of gig work because of the alternatives in their lives. If you want to understand Uber, you have to look at Starbucks. You have to look at Walmart, the places where working people are not getting paid that much, and they are not getting all the hours they need, and the shifts to make ends meet. As you think about that, it’s important that you begin to realize, oh, that’s right.
Louis Hyman: There was downsizing. There was de-industrialization, and in fact, work has become more insecure since the 1970s. Wage inequality, income volatility, all the rest of it, has this longer history, and it’s not actually tied to technology. It is tied to the reorganization of the corporation, and the relationship between employers and employees. In this book, I want to set out that history, both how we made secure work after World War II, and then also, the kinds of decisions and choices that brought about its end after 1970 by business leaders and policy makers, and union leaders too. All that.
Jeff Schechtman: In many ways, it’s ironic, I suppose, that if we look at the role of technology and the way we think about the gig economy today, that all of this technology and apps and even things like Uber have, in a way, democratized temporary work, and have actually been of help to people that have suffered as a result of all these changes that have taken place since the ’70s.
Louis Hyman: Absolutely. One of the interesting studies I read when doing the research for this book was by JP Morgan Chase, which, as you know, is a bank, but they also have a research arm. One of the things I found was that people who had access to these jobs actually borrowed less. They took on less personal debt because they just needed a few extra bucks. They got it. Then they didn’t borrow. Incomes swing wildly. For the average family in America, a little over half of those families, there’s a month-to-month fluctuation of about 30% of their income, which is almost inconceivable for someone who has a salary income and gets the same check every two weeks. Imagine planning for your car payment or your mortgage. The choice these people have is they don’t have much money in the bank, usually. Life’s expensive, and so they put it on their card, or they can drive for Uber or pick up some side work. Yeah, it’s shoring up that space.
Jeff Schechtman: One of the things that you talk about is the way in which the nature, not just of work, but of corporations really went through a dramatic change as we went from the ’60s into the ’70s. Talk about that.
Louis Hyman: It’s so easy to think that corporations have always been thus, and there’s only one way for corporations to work. The market is what the market’s always been. It’s sort of the same way we think about technology, that it’s always marching on in progress, or it’s something static like the corporation. One of the things I read about in the book was the reorganization of something called the conglomerate in the 1950s and ’60s. In the ’60s, there were a bunch of wunderkind management experts who told everyone that they were really good at managing, and they used a new kind of financial practices, like the leverage buyout, to buy out their competition and grow, and so these companies grew very quickly, and all the rest of our corporations caught the bug.
Louis Hyman: About 90% of the Fortune 500 was diversifying and becoming a conglomerate by the end of the 1960s. And it turned out that in fact, these conglomerates couldn’t actually deliver the goods. They didn’t actually become more profitable, and this all fell apart around 1969. In the aftermath, there was this real crisis of confidence among business leaders, and into this gap came management consultants and business gurus who began to explain another vision of the corporation that threw out not just the conglomerate excesses, but actually the good way in which post-war corporations were run, the way they invested in the long term, they invested in their work forces. Around 1970, workplace security became a problem to be solved rather than a virtue to be embraced, and this is where you begin to see the lean corporation, the flexible workforces, and all the other things that have come to define our working lives today.
Jeff Schechtman: I mean, it’s really also the story of individuals that were the leaders in this. If you lined up the covers of Fortune magazine for that period, you would really get a very clear picture of the individuals and images that changed corporate America, whether it was people like Geneen or Bluhdorn, or so many of the others, and then the consultants that came later.
Louis Hyman: Absolutely. I mean, there’s definitely faces for the story, and in Temp, I write a lot about the stories of these business leaders, like James Ling, who was an electrician from Dallas, who managed to convert his small business into the 25th largest corporation in America in about 10 years, buying up aerospace companies and basketball companies and the like. But behind them, there is also a whole cadre of business intellectuals that are spreading ideas about how to run your business, how to run your business, and then actually make it happen. These are why I think management consultants are so important to the story, because they are being paid for their advice. They’re being paid to implement their advice. You see them everywhere in this transition, converting companies like General Electric into the world that Jack Welsh then takes credit for in the 1980s. All these things have precursors, and you can see these ideas spread through how to run businesses, and because they are highly paid consultants, it’s a way for those in leadership to push the blame onto somebody else if something goes wrong. It’s through this mechanism that you begin to see a spreading of new ways of organizing work.
Jeff Schechtman: Certainly, as these changes took place, and these experiments took place, and some worked, and as you say, a lot of them didn’t, especially the whole idea of conglomerates and what grew out of that, there was nothing inherently wrong with the continued kind of bold, persistent experimentation of American business. What happened is the way workers got left behind in that process.
Louis Hyman: Yeah, you see almost no change in the growth in the economic output. With all of this change, GDP continues to steadily grow. The difference is that the money that is being created begins to flow to people at the top. It becomes a more unequal society, and a more insecure society for the rest of Americans. It’s blamed on foreign competition. It’s blamed on all kinds of things, but in the end, it’s about how we’re organizing our corporations, and the way we want our American capitalism to run. It ran very differently during this post-war period that we’re all nostalgic for. There was a top marginal tax rate of 93%. There was long-term investment, and it seems that both people on the left and the right are nostalgic for that period. I think we should think about what worked and what didn’t work as we move forward.
Jeff Schechtman: Talk about that nostalgia, and the mistakes that we make in longing for that period, because there were an awful lot of things that didn’t work, as evidenced by the fact that there was the need for this constant experimentation to deal with the inherent problems of that system.
Louis Hyman: The post-war economy really delivered security. It delivered paychecks for industrial workers, which had never really happened before. It enabled a whole swath of America society to become middle class, but it also had incredible problems. The most glaring, obvious problem is that it was pretty much built around white men, so this is still the era of Jim Crow, so it’s the era of male breadwinner wages, so that if you’re a woman, or a person of color, or a migrant, you’re not given the same kind of job guarantees as white men. It also, even for those white men who had steady work, a union job at a factory, or a white collar job in an office, it was tedious. It was the bureaucracy. It was, as you said, the organization man. It was the gray flannel suit. It was hyper-conformity, a boss, and giving up freedom.
Louis Hyman: We traded autonomy for security, and to my mind, that really goes against what the American Dream is really about. The American Dream is not just a house. It’s not a shallow, consumerist thing. It’s about freedom and independence, and I think that, in this moment, as we are seeing the emergence of a new way to work, a way to work outside the corporation, outside of a boss, there is incredible opportunity to reclaim that American Dream, if we can, at the same time, de-couple the benefits, the health care, the retirement, from an employer, and figure out a way to deliver that to the independent work force. In the book, I lay out both a conservative and a liberal way to do that, because I think it’s important that both the left and the right understand that this is the future of the economy.
Jeff Schechtman: One of the things that that’s predicated on is accepting the premise that the genie is not going back in the bottle, that this is where we are, and certainly, it may change for a whole host of reasons, including an expansion of the gig economy, the impact of artificial intelligence, the impact of more technology, but certainly, we’re not going back to that nostalgic time.
Louis Hyman: Yeah, I don’t think we are. All the job growth for the last decade and a half has come out of these, what economists call alternative work relations, I call temp work, independent contractors, and temps, and consultants, and all the like. I think that this is where our new organizations are going. There will always be corporations that are sort of legacy institutions, but you can do things as an individual or a small group of people that you could never do before because of the internet. You’re able to work and sell and consume and shop and think and socialize globally and digitally anywhere in the world now, and you used to need a corporation to access a manufacturing facility. You don’t need that anymore. You can figure out something and have it produced in Guangzhou, or printed on your desk. There’s all kinds of ways in which the corporation may no longer be necessary for capitalism, and for me, that’s a bigger change than artificial intelligence, in a lot of ways.
Jeff Schechtman: The one thing that it really pushes to the back burner, and you talked about this, particularly in the post-war economy, is that it eliminates stability entirely.
Louis Hyman: It is definitely a different world. We want to know where our next meal is coming from. We want to know that there is money coming in, and so to unleash this kind of autonomy and freedom, we’re going to need to create a baseline of understanding how people are going to get their health care, get their retirement. Certainly on the left, there’s talk of a basic income, but I think that that is worth it. That kind of self-reliance is good for our souls in a way that having a boss is not good for our souls, being told what to do all day. You can’t be un-free for eight hours a day and then be free the rest of your life, and I think that something that a lot of people feel in their bones, and this is where we see people trying to make it work no matter what, because they want that experience.
Jeff Schechtman: What has been the impact in all of this, as you see it, of global markets and globalization?
Louis Hyman: I think globalization is an important part of this story. It’s not a coincidence that as America began to stagnate, China began to grow, and India began to grow, their economies. We think of the ’70s as a bad time in the economy. Well, it’s a great time if you’re in Latin America or East Asia or South Asia. I think that everybody counts. I think that we want a world where all humans get to have healthy work. Now, the tricky thing there is, there is global competition, so how do we, as Americans, differentiate ourselves? We have a lot of advantages. We speak English. We know how Americans think. We are still the largest market in the world, so we are a place that everybody else wants to sell to. I think it’s about really supporting the American population in this transition. We talk a lot about creativity and curiosity and caring as keys to this new economy, but that’s not how we educate our students. We tell them to obey. We tell them to sit in a desk and be quiet. We stifle curiosity and creativity at every turn. I think that it’s easy to pass policies. It’s probably harder to shift our culture, and for me, that’s going to be the great challenge of the 21st century, as we seek to build a more inclusive, independent capitalism in America.
Jeff Schechtman: The problem is, I suppose, that all of this is changing and continuing to change at a more and more rapid pace as we’re trying to solve these problems. It’s a little bit like the proverbial sewing the parachute on the way down.
Louis Hyman: It can feel like that, yes. I think that’s why we need to all work on this together, and have people with different perspectives come back together. The crisis for me is that we are so split politically in this country that it’s sometimes hard to keep track of the things we have in common, and I think that we need to encourage our leaders, regardless of party, to come together and really acknowledge the shift that’s happening, and not just play for political points, because we do need to make choices. Otherwise, it’s going to end up spiraling into a race to the bottom, which is not what any of us want to have happen.
Jeff Schechtman: What is the responsibility or the role, as you see it, of leaders of corporate America in this. If, in fact, public policy is not going to take the lead in addressing some of these problems and adapting to this new reality, what has to happen in terms of C-suites of these major companies today?
Louis Hyman: It’s really hard, because they are under constant pressure to reduce the number of workers that they have as formal employees. When they are valued in the market, that’s one of the things they look at is full-time employees, and the more you have, the less you’re worth. I think we need to have a shift in the way we value companies. We value them in the short-term rather than the long-term. We need to have a shift in what’s in our business schools about educating business students about how we can manage in a high-road economy, an economy that takes care of people, whether they are “our employees” or we’re contracting with them in the independent workforce. I think we need to acknowledge that right now, politics is kind of in a log jam, and try to fashion alternatives. It’s hard, and you see people trying to do this. I think it’s just going to take a few years to work it out, and unfortunately, in the meantime, it’s going to be hard for a lot of people.
Jeff Schechtman: Do we need to have a larger conversation in terms of the role or the nature of capitalism today?
Louis Hyman: Yeah. I mean, I’m a historian. I study the history of capitalism, and I think too often, we talk about capitalism as if it is static, as if it had not changed. I’m always struck by its ability to adapt. If you look at the 19th century, in 1850, a little over half of the GDP in America came from either the trade of enslaved people or the things that are made by enslaved people, or the products made from cotton, so textiles and cotton, that are rooted in slavery, and yet, after the Civil War, the Civil War ended, we had emancipation, and capitalism persisted. It got rooted in an entirely new way, and so I’m really inspired by that, to think that, “Wow, if half the economy is dependent on slavery and we end slavery, yet the economy persists, we can pretty much do anything.”
Louis Hyman: We can solve problems with oil. We can solve problems in many aspects of our capitalism to find new opportunities for investment. And right now capitalism is not working. I say that in the sense that we have $2.5 trillion in excess capital in our banking system that’s not invested. We have workers whose lives are insecure, and we have people with lots of talent who are tied to desks by chains of benefits. They can’t leave. We need to figure out a way to liberate all that capital and all that worker potential to really make capitalism grow again. We’ve been stuck in the doldrums for a few decades now, and I’m really excited about what’s going to come next down the pipe if we make the right choices.
Jeff Schechtman: Do we make a mistake, and is there a danger, to sort of bring it back to what we started talking about, in blaming technology, in looking at the Ubers and the task rabbits of the world and trying to blame them, and to constrain them in ways that are counterproductive?
Louis Hyman: I think that technology creates possibilities, but it doesn’t determine the course that we take. At the end of my book, in Temp, I write about what labor can learn from Uber. One of the things I noticed is that Uber clearly flouts the law. They do what they can do, and we’ve seen how they’ve been very successful in doing that. That’s what power is, who gets to write the rules, but this is what labor unions did in the industrial economy in the 1930s. So in the middle of the Great Depression, when you would think it wouldn’t be possible to organize workers, unskilled workers at General Motors stood together and formed the United Auto Workers.
Louis Hyman: They shut down the largest corporation in the world through a sit-down strike, which was clearly illegal. They seized property, and yet they made it legal by their power. As we debate these things, it’s very easy to get caught up in the laws, which Uber didn’t, in the last 10 years, and the CIO didn’t in the 1930s. We need to figure out ways that really redress this imbalance of power between this management investment class and workers in America, and it may not always look legal. This is what’s important to realize, that it’s not about the technology. It’s about the organization, whether you’re labor or capital.
Jeff Schechtman: Finally, talk a little bit about artificial intelligence and automation, and what we’re going to be seeing in the next 10, 15 years, not only in terms of industrial automation, self-driving vehicles, self-driving trucks, et cetera, and how that plays into this broader conversation.
Louis Hyman: Yeah, I think that it’s a very exciting time. I mean, I think fundamentally, I don’t think that any human should do the work of a machine. We don’t have to take in the harvest. That’s why we have mechanical threshers. I think in the next few years, we’re going to see this expansion of so-called narrow AI that is not self-aware machines like on Westworld or The Terminator, but machines that can recognize patterns and carry out actions, whether that’s driving or towel folding or the like. It is going to be a source of tremendous productivity. There’s going to be less work to do, and as always, this is a political and business choice over what happens with all those people. Where do we put them to use? How do they find a new path forward? This is a big source of debate. Historically, there’s always been something else for these people to do. We used to all be farmers. Now less than 2% of us are farmers. I think that this is, again, an opportunity for us to find more human work, more creative, caring, curious work, and that’s, again, a cultural problem. It’s a political problem. It’s not a technological problem. Technology creates the possibility for this liberation, and if we want to be liberated, the choice is ours.
Jeff Schechtman: Does this history that you write about in Temp give us a road map for what not to do as we make those adjustments?
Louis Hyman: Well, I think it tells us what are the levers that matter. It’s very easy to say, “It’s the market,” or, “It’s the technology,” and really, it’s about how we organize our corporations. It’s about the various parts of that, the workers, the managers, the investors, the politicians, the regulators. It’s not a simple answer. It’s a complicated situation, and a lot of different people will need to come together to make sure that this economy works. The positive message here is that we’ve done it before. In the Great Depression, in the 1940s and ’50s, we had groups of labor leaders and business leaders and politicians and citizens’ groups all come together and really make sure that capitalism worked for everybody, and I think that we can do that again.
Jeff Schechtman: Louis Hyman. Temp: How American Work, American Business, and the American Dream Became Temporary. Louis, I thank you so much for spending time with us here on Radio WhoWhatWhy.
Louis Hyman: My pleasure. Thank you so much.
Jeff Schechtman: Thank you. And thank you for listening and for joining us here on Radio WhoWhatWhy. I hope you join us next week for another Radio WhoWhatWhy podcast. I’m Jeff Schechtman. If you liked this podcast, please feel free to share and help others find it by rating and reviewing it on iTunes. You can also support this podcast and all the work we do by going to WhoWhatWhy.org/donate.

Related front page panorama photo credit: Adapted by WhoWhatWhy from Temp cover (Viking) and sign (Rachel Lovinger / Flickr – CC BY-NC 2.0).

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