Workplace Autocracy in an Era of Fissuring

This post is part of a symposium on Elizabeth Anderson’s Private Government: How Employers Rule Our Lives (and Why We Don’t Talk about It). Read the complete symposium here.

Cynthia Estlund

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Elizabeth Anderson’s deeply thoughtful book, Private Government, aims to bring the problem of workplace hierarchy and “the pervasiveness of authoritarian governance in our work and off-hours lives” back onto the front burner of political and philosophical discourse, where it resided a century ago. She reframes the problem as one of “private government” – that is, a government “under which its subjects are unfree,” and which “has arbitrary, unaccountable power over those it governs.” “It is high time,” says Anderson, “that political theorists turned their attention to the private governments of the workplace.”

The problem of employer domination has long occupied legions of labor and employment law scholars. Unfortunately, Anderson’s welcome effort to reignite stalled debates (which I review at greater length here) might come too late, given decades-long trends in the organization of work that are transforming the landscape of work and destabilizing the very concept of workplace governance.

Anderson is entirely on the mark in critiquing employers’ hierarchical control over employees on and potentially off the job, backed by the power to terminate them without cause. US employees have too few rights in formal law against their employers, and fewer still on the ground, and most lack effective mechanisms of collective voice. Ironically, however, employers are increasingly choosing to forego hierarchical control over employees – they are “buying” the inputs they need from outside contractors rather than “making” them internally through their own employees. The “fissuring” of work, to use David Weil’s influential term, includes McDonalds’ franchise model, Uber’s “we’re just the platform” model, and Apple’s outsourcing of manufacturing to firms in China. But those salient examples are only the tip of the iceberg.

To labor cognoscenti, it is jarring to realize how assiduously firms seek to avoid employing people. As one investment banker put it, CEOs increasingly ask: “‘Can I automate it? If not, can I outsource it? If not, can I give it to an independent contractor?’ Hiring an employee is the last resort.” Hence the resort to fissuring, as well as machines and software that can replace human labor altogether for a growing range of tasks.

Technology is an enabling force behind both automation and fissuring. Innovations in transportation and tracking of goods, services, and information have sharply diminished the transaction costs associated with outside contracting and thus the operational advantages of direct hierarchical control over employees. Crucially, labor is often much cheaper in the low-wage labor markets where many suppliers operate – both foreign and domestic – than it is within major firms’ internal labor markets. Some suppliers, like independent contractors or overseas companies, are not subject to US labor laws; others evade them with little risk of legal or reputational sanctions. Through fissuring, lead firms avoid many of the costs, risks, and liabilities associated with direct employment of people.

Fissuring hardly eliminates the problem of employer domination. Indeed, supplier firms often exercise harsher forms of control over their workers in their own desperate effort to drive down labor costs. But the shape of the problem has changed as firms trade off dictatorial power over workers for the advantages of outsourcing.

The growth of independent contracting (though modest so far) threatens to leave a growing number of workers outside of the protections of employment law and without the employment-based benefits – mandatory and voluntary – on which US workers heavily rely for their economic security. Those workers might worry less about the problem of employer domination and more about the insecurity of having no employer at all, as they struggle to patch together a living from short-term gigs. Many would gladly trade the vaunted flexibility and freedom of freelancing for the comparative security of a decent, regular job.

Fissuring also complicates the project of amplifying worker voice within workplace governance, for it erases the very notion of a workplace for some workers, and separates others from the firms with real economic power. Labor law scholars have long urged policymakers to address the representation gap left by the collapse of collective bargaining. But fissuring has opened up another gap between workers and the powerful firms that actually determine their wages and working conditions. That development poses a challenge to any enterprise-based form of voice.

Consider, for example, the German-style works councils that Anderson, like others, suggests as a possible model for “public government” in the workplace. Works councils can offer workers a less adversarial (if less powerful) channel of engagement with employers than unions and collective bargaining. But many supplier firms are caught in a squeeze between a lead firm’s performance standards and intense cost-based competition among suppliers. The suppliers have little to no room to negotiate contract terms; it’s hard to imagine how their employees could do so, whether through works councils or unions.

In short, Anderson’s wake-up call about “private government” in the workplace might be coming too late – just as the problem of hierarchy within the workplace is being overshadowed by the problem of fissured supply chains and firms’ flight from direct employment.

What is needed is a serious rethinking of what kind of power workers actually need, and whom their voices need to reach. At a minimum, workers’ voices need to reach the firms that call the economic shots. Hence the logic of holding lead firms responsible as “joint employers” of their contractors’ employees – jointly responsible for compliance with labor standards, and jointly obligated to bargain with a union representing the contractor’s employees. The expansion of “joint employer” responsibilities in the Obama era met strong political headwinds, and faces reversals under Trump. But something along these lines will be needed to enable workers not just to speak, but to speak to actors with the power to address their concerns.

Those actors might not be employers at all. The problems that many workers face today stem less from particular autocratic employers, and more from the highly stratified and polarized labor market that fissuring has produced (and that automation is bound to exacerbate.) To confront those problems, workers need a stronger voice within the polity. Only through political action at multiple levels of government can workers press for higher universal or sector-wide labor standards and for a reconfigured system of social provision that is more secure and less tied to employment than the one we have.

As firms increasingly opt for high-tech, low-cost supply chain solutions (or robots) instead of hierarchical employment relationships, workers and their organizations might have to shift their focus from employee rights and voice within the workplace toward the construction of a stronger social safety net, public job creation, better training programs, and transitional support. As I write elsewhere, “the problem of ‘private government’ at work persists, but solutions to that problem must take into account the centrifugal forces that are pushing workers further away from powerful and resourceful firms,” and must reach “workers who are spun off, no longer tethered to the relatively secure and regulated domain of employment even if they remain in the orbit of those same powerful firms.”

Cynthia Estlund is Catherine A. Rein Professor of Law at NYU School of Law.