DISQUS

Matthew Yglesias · 3 years ago

If outsourcing work has a net positive impact on a firm's workforce because the reduction in wages is compensated for by the positive impact on workers' stock options, then there's no reason for a unionized workforce to object to outsourcing. Insofar as unions do object to wage-reducing measures, that's precisely because their members don't, in practice, have a sufficient equity stake to make this a good deal. In principle there's no reason workers couldn't get enough equity to make that arrangement benefical, but a union would be a big help in getting that contract.

Tim · 3 years ago

Matt,

I think the problem is that different workers have different stakes in a given company. Unions thrive when you have a relatively homogenous work force--like workers on an assembly line--who are all roughly interchangeable. They're divided into clearly-defined job categories and paid according to a standard union scale. Since the workers all have roughly the same stake in the company, they can offer a united front when dealing with the employer.

In a modern technology company, you have a lot more variety. You have some workers who got in on the ground floor and have lots of equity. You have others who arrived fairly recently and have little equity but have rare skills that commanded a considerable salary premium. Still others might be lower-skilled and not have a lot of other job prospects.

A standard union negotiating process can't work in a firm like that, because the workers themselves aren't going to agree on what's best. The collective bargaining process will break down into infighting among workers.

Equity stakes accumulate over time. So even in a firm with generous stock options, the newer workers won't have as large of a stake in the company's fate as long-time workers. That, it seems to me, is as it should be. If I worked at a company for 10 years, I'd be annoyed if my union focused its energy on getting more equity for the guy down the hall that joined the company 6 months ago.

Matt Cline · 3 years ago

It seems like Matt Y.'s comment argues that a union "would be a big help" in getting workers equity in their companies. (Matt, correct me if I'm wrong.)

But is this a problem that needs solving? Do workers not have enough equity? More generally, do they not have as much equity as they would like? And if not, why not? I hear more tech workers complaining that their compensation is too much equity than too little equity. (Yes, that's totally anecdotal, so I'm not too hung up on it.)

I think that Jim is totally right: the power balance between management and (say) programmers is totally different from the power balance between management and assembly-line workers. (For one thing, programmers are not fungible.) The labor union was not designed to address the balance of power that exists now in the technology industry, and it shows in the archaic language and perspective used by union advocates.

(Oh, and by the way, I say all of this as a "worker bee" programmer. A union won't do me any good; I don't want one for me, and I definitely don't want one for programmers as a whole.)

Cog · 3 years ago

Good grief, Tim, how big do you think the median technology employee's equity stake is, anyway?

Ask around. Superstars and people at startups get big equity, but I'd guess that the median technology worker's equity is worth about as much as a nice annual bonus. A couple hundred stock units at a large technology company grants the holder virtually no shareholder power and negligible dividend payouts (because most tech companies don't pay much in dividends). For some sectors (e.g., game development), a mixture of reduced working hours, saner work/life balance, and greater job security would benefit workers much more than a sprinkling of equity.

Note that Matt Cline's point about "too much" equity-based compensation is further evidence for my point. You can bet that if Matt's friends were receiving truly valuable cuts of equity, they wouldn't be complaining. Their problem is that their equity's not worth as much as, say, cash on the table (for one thing, it's less liquid, because it usually comes with a vesting period) or other benefits.

Now, I suppose it's possible that the returns to technology employees from equity could, on average, outweigh wage stagnation from outsourcing and other economic losses. However, that's a claim that requires empirical backing, and I'm pretty skeptical. Equity does not magically erase the line between management and labor. The returns from cost savings are still controlled by management, and may or may not trickle down to small shareholders. Managers may well eat up the savings from outsourcing by increasing their own compensation or plowing the money into foolish investments that don't increase the stock price. (And, as I said above, most technology companies don't pay out much in dividends.) Basically, Joe from TechDirt's saying: "Trust management and you'll get yours." Workers throughout history have been told exactly this shortly before getting shafted.

Really talented programmers may not need unions, but the median technology worker isn't a very talented programmer and doesn't need to be. It's not quite the same as an assembly line worker, but not as dissimilar as you'd think.

All that said, I'm planning to start at an industry job in the fall, and I don't want a union. But the position I've accepted is much sweeter than the median programming job.