5 ms·

>Focus on core competence and outsource the rest. The approach has made companies more nimble and more productive, and delivered huge profits for shareholders.

>Focus on core competence and outsource the rest. The approach has made companies more nimble and more productive, and delivered huge profits for shareholders. It has also fueled inequality and helps explain why many working-class Americans are struggling even in an ostensibly healthy economy. That is the outsourced companies causing inequality. They are the ones paying people terribly, not the company contracting with the outsourcing companies. This article wants to blame major companies for inequality while conveniently ignoring the existence of the outsourcing companies which are the ones setting the pay for these employees. Stop doing that, raise the minimum wage and benefits that outsourcing companies must pay their employees/contractors, and fix the bloody problem at its source.

anovikov 9y ago
I think in both cases, it's just the market. There is a demand for engineers which is more than for janitors, and with more limited supply. Everything else is just moving money from one pocket into another, it doesn't have economic significance.
- 1_2__4 9y ago
  "It's just the market" is such a lazy reply. Did entrepreneurs not like making money back then? Or did they realize that a healthy society was just as important as healthy companies?
  - eof 9y ago
    It was definitely closer to the former than the latter. Things that are obviously profitable now were not hip or obvious, nor was the infrastructure to commoditize everything available.
    - cmiles74 9y ago
      I think this idea that it's okay to have most of the employees at a large plant working for smaller outsourcing companies (instead of, say, Apple or Kodak) wasn't acceptable. I wonder if there was some tangible benefit that was derived from having many full time workers that has either evaporated or has been overshadowed since the 70s.
      - ghaff 9y ago
        There are probably some specific factors--like the rise in healthcare benefit costs. But, overall, there's just an increase in specialization throughout the economy. As you go back in time, you just generally had fewer services companies that were available to fill every need that was tangential to the main focus of a given company. To give one example that goes back a little further, companies used to handle the whole payroll process themselves. Now they use ADP or whoever. There's also been a lot of automation/self-service of mundane tasks. You don't really have the stereotypical "starting the mailroom" job any longer nor do you have the steno pool.
  - Decade 9y ago
    There were tax implications. Paying the top executives a gazillion dollars wasn’t attractive because that was also a gazillion dollars given to Uncle Sam. https://news.ycombinator.com/item?id=15161755 https://news.ycombinator.com/item?id=15161755 Another change since then was the rise of the corporate raider. Used to be that you could run a public company without profit as the primary motive. Parable of the Mexican fisherman, and such. (https://bemorewithless.com/the-story-of-the-mexican-fisherman/ https://bemorewithless.com/the-story-of-the-mexican-fisherma...) But now people like Carl Icahn (and Mitt Romney in his private sector days) actually hunt for companies that are not maximizing return to investors, and remake them into companies that do. Apple actually had to fend off Carl Icahn recently. (http://www.marketwatch.com/story/carl-icahns-2-billion-apple-stake-was-a-prime-example-of-investment-inequality-2016-06-07 http://www.marketwatch.com/story/carl-icahns-2-billion-apple...)
  - anovikov 9y ago
    No, it is just that demand for janitors and engineers have shifted. You need fewer janitors now because modern chemicals allow cleaning same space quicker (and probably tools also changed a bit, while maybe in the U.S. in 1980s, modern ones have already been in place). You need more engineers. And they impact work more because development and marketing (which also became a branch of engineering, see: growth hackers) is more important now than production. You can always train enough janitors, not so easy with engineers. Same thing about nearly all low-skilled workers. They are easy to train and their supply is nearly infinite, demand isn't, and demand for high-skilled is high plus they make so much profit you can actually afford paying them a ton of money, which wasn't possible back in 1980s. It is that proverbial bifurcation of workforce. Outsourcing has nothing to do with it. It is just technological change. There is no way out of it (at least no way which won't cripple economic growth - which is already not so good).
- khitchdee 9y ago
  Agree. In a capitalist society, this is par for the course. If you try to build systems to remove this inequality, you have to move towards communism since you will then need far more complex control mechanisms.
  - notalawyer 9y ago
    Um we already have those, they're called _laws_, and strengthening them doesn't mean a slippery slide into communism (whether or not that itself would be a bad thing is another discussion entirely). But thank you for McCarthying this so quickly.
  - cantstop99 9y ago
    Um we already have those, they're called _laws_, and strengthening them doesn't mean a slippery slide into communism (whether or not that itself would be a bad thing is another discussion entirely). But thank you for McCarthying this so quickly.
    - khitchdee 9y ago
      Having a mimimum wage law is one thing, but going further than that and mandating how much who gets paid beyond what the market decides is venturing into the wild west of law making -- you never know what you're going to end up with.
eof 9y ago
Eh.. that's like saying "Can't blame me for cruelty to animals, the people I buy the meat from treat the animals cruelly; not me."
- FLUX-YOU 9y ago
  You can hold multiple people accountable, but I'm pretty sure Google should be less accountable than the outsourcing companies. If you want to hold major companies accountable for the outsourcing companies they hire, fine, make a regulatory push for that, but you have to fix the outsourcing companies first before you can seriously argue for that or you're just making major companies pay for the problems of outsourcing companies. Would you seriously argue for taxing people for buying from animal-cruel farms without actually doing anything to those animal-cruel farms? That's the problem. Outsourcing companies are not FIRST in line to be fixed according to this article.
  - chronid 9y ago
    Well, the major companies are the one pushing to pay less and less the outsourcing companies, aren't they? I really want to know what BigCorp will chose the first between a company paying janitors above minimum wage and a company offering them to cut their cost on janitors by 30% (but janitors gets only enough to scrape by). My experience is that they will jump on the cheaper offer (so someone can get a bonus), and the janitors can go fuck themselves - and so can the quality of their work. It happens all the time, and not only with janitors. Arguing that the fault rests (only) with the outsourcing companies is the same thing as arguing the fault of people getting low salaries rests (only) on those people. It may be technically true, but it seems pretty naive to me.
  - andrewksl 9y ago
    I think they're both equally culpable; the customer for making pricing a race to the bottom and the service provider for choosing to play said game. The customer could choose to consider the treatment of the workers a priority in selecting service providers, and the service provider could choose to refuse to exploit their workers just to secure deals, but neither of them have any real incentive to do so. It's not illegal to shop primarily by price. It's not illegal to hire PT workers even when FT would be viable. I do agree, though, that the problem is a lack of regulation; unfettered capitalism really does have a evil end game.
untog 9y ago
[deleted]
- FLUX-YOU 9y ago
  >Citing "the market" is yet another way of avoiding responsibility. I didn't cite "the market" at all because I actually suggested regulation which is contrary to "the market" argument often thrown around. But socially, no, I would blame the outsourcing companies way before I would blame major companies for hiring those outsourcing companies. This is all very convenient because janitors and security guards have to be physically present. Jumping across sovereign borders is when a "market" argument works better because the US cannot tell China to treat Foxconn employees better with any real teeth.
  - deleted 9y ago
    [deleted]
LoSboccacc 9y ago
you see, part of outsourcing is a sleight of hand where the worker is twice removed from the work giver. it kills the worker negotiating power. if you consider a janitor hired to a company that works for a megacorp, he's bargaining against the wall "this is what megacorp can pay, so there's no way we can raise your salary" - and works both way: megacorp cannot rate, engage and more importantly retain the individuals that are sent in to work there irregardless to their skill/merits, so everyone is fungible and a career is impossible.
- fatjokes 9y ago
  That just means the worker is not as valuable to the company and easier to replace, so they have no incentive to "rate, engage and more importantly retain" the individuals. Why would a business want to pay the premiums (longer vacation, high pay) associated with long-tenure, non-essential personnel? More experience, institutional knowledge, etc. all make an employee more valuable. But how much of that do you need for janitorial duties?
  - JetSpiegel 9y ago
    If janitors don't matter, why have them in the first place? Why is Apple wasting shareholders' money on non-essential personnel? If they had no janitors the productivity for other workers would be 0 (think of the smell), so I would argue janitors are essential personnel.
    - fatjokes 9y ago
      Reductio ad absurdum. I'm not arguing for zero or even few janitors. Just that they're more interchangeable and thus have less negotiating power.
cmiles74 9y ago
I disagree. Large wealthy companies are working hard to directly employ as few people as possible. Part of what they gain from this is the ability to pretend that the companies they hire to perform this "non-core" work are entirely separate black boxes. It would be embarassing to Apple to be treating their employees this way so they hire an outsourcing firm to do it for them. As large companies, like Apple, race to shuffle employees to these companies in order to save money, everyone gets hurt but Apple. The money gets locked away from the middle class and Apple pretends that they don't have any full time positions that lack advancement opportunities and decent pay.
- FLUX-YOU 9y ago
  But if the outsourcing companies were providing opportunities on their own, their employees could afford classes, living expenses and work on skills to eventually work at Apple. Apple gets quality janitors and security guards while paying the outsourcing company more. The outsourcing companies are the actual ones running the race to the bottom. Stop that, and Apple will have to reconsider (at which point, we get to argue all over again if their new solution is morally acceptable)
  - BeetleB 9y ago
    >Apple gets quality janitors and security guards while paying the outsourcing company more. I suspect Apple will then go and find another contracting company.
    - FLUX-YOU 9y ago
      All of them would have to obey minimum pay regulation. If Apple knowingly hires a company violating that law, then absolutely go after them. If loopholes come from that regulation, then that has to be fixed too.
      - stevenwoo 9y ago
        For someone who works on site at Apple in Cupertino, the minimum wage is not a liveable wage, even with four or eight to an apartment. We could try a per zip code minimum wage, that would even raise teachers' salaries, then we'd need a per zip code tax for public employees. Or some other solution. http://www.mercurynews.com/2017/04/22/in-costly-bay-area-even-six-figure-salaries-are-considered-low-income/ http://www.mercurynews.com/2017/04/22/in-costly-bay-area-eve...
flattone 9y ago
1) Company contracting the outsourcing company can dictate what is paid to the contractors. 2) Company contracting the outsourcing company does not usually pay outsourcing company unmeasured rates where OSC then keeps large margin from contractors.
- FLUX-YOU 9y ago
  >Company contracting the outsourcing company can dictate what is paid to the contractors. That should still have a floor through labor laws. If it doesn't, that too needs to change. >Company contracting the outsourcing company does not usually pay outsourcing company unmeasured rates where OSC then keeps large margin from contractors. Higher minimum takes from that margin. OSC can then choose to charge the client more or pay themselves less.
zuminator 9y ago
The issue that the article is highlighting isn't so much the low pay of janitorial staff (in fact it states that Ramos makes about the same that Evans did). The issue is that there's little or no possibility for upward mobility for Ramos as being part of an outsourced labor staff. I'm not sure if I unreservedly accept this premise; judging from where I work, at least, the outsourced staff have a little bit of a better opportunity to for entry level in-house employment simply by exposure to word of mouth.

anovikov 9y ago

I think in both cases, it's just the market. There is a demand for engineers which is more than for janitors, and with more limited supply. Everything else is just moving money from one pocket into another, it doesn't have economic significance.

1_2__4 9y ago
"It's just the market" is such a lazy reply. Did entrepreneurs not like making money back then? Or did they realize that a healthy society was just as important as healthy companies?
- eof 9y ago
  It was definitely closer to the former than the latter. Things that are obviously profitable now were not hip or obvious, nor was the infrastructure to commoditize everything available.
  - cmiles74 9y ago
    I think this idea that it's okay to have most of the employees at a large plant working for smaller outsourcing companies (instead of, say, Apple or Kodak) wasn't acceptable. I wonder if there was some tangible benefit that was derived from having many full time workers that has either evaporated or has been overshadowed since the 70s.
    - ghaff 9y ago
      There are probably some specific factors--like the rise in healthcare benefit costs. But, overall, there's just an increase in specialization throughout the economy. As you go back in time, you just generally had fewer services companies that were available to fill every need that was tangential to the main focus of a given company. To give one example that goes back a little further, companies used to handle the whole payroll process themselves. Now they use ADP or whoever. There's also been a lot of automation/self-service of mundane tasks. You don't really have the stereotypical "starting the mailroom" job any longer nor do you have the steno pool.
- Decade 9y ago
  There were tax implications. Paying the top executives a gazillion dollars wasn’t attractive because that was also a gazillion dollars given to Uncle Sam. https://news.ycombinator.com/item?id=15161755 https://news.ycombinator.com/item?id=15161755 Another change since then was the rise of the corporate raider. Used to be that you could run a public company without profit as the primary motive. Parable of the Mexican fisherman, and such. (https://bemorewithless.com/the-story-of-the-mexican-fisherman/ https://bemorewithless.com/the-story-of-the-mexican-fisherma...) But now people like Carl Icahn (and Mitt Romney in his private sector days) actually hunt for companies that are not maximizing return to investors, and remake them into companies that do. Apple actually had to fend off Carl Icahn recently. (http://www.marketwatch.com/story/carl-icahns-2-billion-apple-stake-was-a-prime-example-of-investment-inequality-2016-06-07 http://www.marketwatch.com/story/carl-icahns-2-billion-apple...)
- anovikov 9y ago
  No, it is just that demand for janitors and engineers have shifted. You need fewer janitors now because modern chemicals allow cleaning same space quicker (and probably tools also changed a bit, while maybe in the U.S. in 1980s, modern ones have already been in place). You need more engineers. And they impact work more because development and marketing (which also became a branch of engineering, see: growth hackers) is more important now than production. You can always train enough janitors, not so easy with engineers. Same thing about nearly all low-skilled workers. They are easy to train and their supply is nearly infinite, demand isn't, and demand for high-skilled is high plus they make so much profit you can actually afford paying them a ton of money, which wasn't possible back in 1980s. It is that proverbial bifurcation of workforce. Outsourcing has nothing to do with it. It is just technological change. There is no way out of it (at least no way which won't cripple economic growth - which is already not so good).
khitchdee 9y ago
Agree. In a capitalist society, this is par for the course. If you try to build systems to remove this inequality, you have to move towards communism since you will then need far more complex control mechanisms.
- notalawyer 9y ago
  Um we already have those, they're called _laws_, and strengthening them doesn't mean a slippery slide into communism (whether or not that itself would be a bad thing is another discussion entirely). But thank you for McCarthying this so quickly.
- cantstop99 9y ago
  Um we already have those, they're called _laws_, and strengthening them doesn't mean a slippery slide into communism (whether or not that itself would be a bad thing is another discussion entirely). But thank you for McCarthying this so quickly.
  - khitchdee 9y ago
    Having a mimimum wage law is one thing, but going further than that and mandating how much who gets paid beyond what the market decides is venturing into the wild west of law making -- you never know what you're going to end up with.

eof 9y ago

Eh.. that's like saying "Can't blame me for cruelty to animals, the people I buy the meat from treat the animals cruelly; not me."

FLUX-YOU 9y ago
You can hold multiple people accountable, but I'm pretty sure Google should be less accountable than the outsourcing companies. If you want to hold major companies accountable for the outsourcing companies they hire, fine, make a regulatory push for that, but you have to fix the outsourcing companies first before you can seriously argue for that or you're just making major companies pay for the problems of outsourcing companies. Would you seriously argue for taxing people for buying from animal-cruel farms without actually doing anything to those animal-cruel farms? That's the problem. Outsourcing companies are not FIRST in line to be fixed according to this article.
- chronid 9y ago
  Well, the major companies are the one pushing to pay less and less the outsourcing companies, aren't they? I really want to know what BigCorp will chose the first between a company paying janitors above minimum wage and a company offering them to cut their cost on janitors by 30% (but janitors gets only enough to scrape by). My experience is that they will jump on the cheaper offer (so someone can get a bonus), and the janitors can go fuck themselves - and so can the quality of their work. It happens all the time, and not only with janitors. Arguing that the fault rests (only) with the outsourcing companies is the same thing as arguing the fault of people getting low salaries rests (only) on those people. It may be technically true, but it seems pretty naive to me.
- andrewksl 9y ago
  I think they're both equally culpable; the customer for making pricing a race to the bottom and the service provider for choosing to play said game. The customer could choose to consider the treatment of the workers a priority in selecting service providers, and the service provider could choose to refuse to exploit their workers just to secure deals, but neither of them have any real incentive to do so. It's not illegal to shop primarily by price. It's not illegal to hire PT workers even when FT would be viable. I do agree, though, that the problem is a lack of regulation; unfettered capitalism really does have a evil end game.

untog 9y ago

[deleted]

FLUX-YOU 9y ago
>Citing "the market" is yet another way of avoiding responsibility. I didn't cite "the market" at all because I actually suggested regulation which is contrary to "the market" argument often thrown around. But socially, no, I would blame the outsourcing companies way before I would blame major companies for hiring those outsourcing companies. This is all very convenient because janitors and security guards have to be physically present. Jumping across sovereign borders is when a "market" argument works better because the US cannot tell China to treat Foxconn employees better with any real teeth.
- deleted 9y ago
  [deleted]

LoSboccacc 9y ago

you see, part of outsourcing is a sleight of hand where the worker is twice removed from the work giver. it kills the worker negotiating power. if you consider a janitor hired to a company that works for a megacorp, he's bargaining against the wall "this is what megacorp can pay, so there's no way we can raise your salary" - and works both way: megacorp cannot rate, engage and more importantly retain the individuals that are sent in to work there irregardless to their skill/merits, so everyone is fungible and a career is impossible.

fatjokes 9y ago
That just means the worker is not as valuable to the company and easier to replace, so they have no incentive to "rate, engage and more importantly retain" the individuals. Why would a business want to pay the premiums (longer vacation, high pay) associated with long-tenure, non-essential personnel? More experience, institutional knowledge, etc. all make an employee more valuable. But how much of that do you need for janitorial duties?
- JetSpiegel 9y ago
  If janitors don't matter, why have them in the first place? Why is Apple wasting shareholders' money on non-essential personnel? If they had no janitors the productivity for other workers would be 0 (think of the smell), so I would argue janitors are essential personnel.
  - fatjokes 9y ago
    Reductio ad absurdum. I'm not arguing for zero or even few janitors. Just that they're more interchangeable and thus have less negotiating power.

cmiles74 9y ago

I disagree. Large wealthy companies are working hard to directly employ as few people as possible. Part of what they gain from this is the ability to pretend that the companies they hire to perform this "non-core" work are entirely separate black boxes. It would be embarassing to Apple to be treating their employees this way so they hire an outsourcing firm to do it for them. As large companies, like Apple, race to shuffle employees to these companies in order to save money, everyone gets hurt but Apple. The money gets locked away from the middle class and Apple pretends that they don't have any full time positions that lack advancement opportunities and decent pay.

FLUX-YOU 9y ago
But if the outsourcing companies were providing opportunities on their own, their employees could afford classes, living expenses and work on skills to eventually work at Apple. Apple gets quality janitors and security guards while paying the outsourcing company more. The outsourcing companies are the actual ones running the race to the bottom. Stop that, and Apple will have to reconsider (at which point, we get to argue all over again if their new solution is morally acceptable)
- BeetleB 9y ago
  >Apple gets quality janitors and security guards while paying the outsourcing company more. I suspect Apple will then go and find another contracting company.
  - FLUX-YOU 9y ago
    All of them would have to obey minimum pay regulation. If Apple knowingly hires a company violating that law, then absolutely go after them. If loopholes come from that regulation, then that has to be fixed too.
    - stevenwoo 9y ago
      For someone who works on site at Apple in Cupertino, the minimum wage is not a liveable wage, even with four or eight to an apartment. We could try a per zip code minimum wage, that would even raise teachers' salaries, then we'd need a per zip code tax for public employees. Or some other solution. http://www.mercurynews.com/2017/04/22/in-costly-bay-area-even-six-figure-salaries-are-considered-low-income/ http://www.mercurynews.com/2017/04/22/in-costly-bay-area-eve...

flattone 9y ago

1) Company contracting the outsourcing company can dictate what is paid to the contractors. 2) Company contracting the outsourcing company does not usually pay outsourcing company unmeasured rates where OSC then keeps large margin from contractors.

FLUX-YOU 9y ago
>Company contracting the outsourcing company can dictate what is paid to the contractors. That should still have a floor through labor laws. If it doesn't, that too needs to change. >Company contracting the outsourcing company does not usually pay outsourcing company unmeasured rates where OSC then keeps large margin from contractors. Higher minimum takes from that margin. OSC can then choose to charge the client more or pay themselves less.

zuminator 9y ago

The issue that the article is highlighting isn't so much the low pay of janitorial staff (in fact it states that Ramos makes about the same that Evans did). The issue is that there's little or no possibility for upward mobility for Ramos as being part of an outsourced labor staff. I'm not sure if I unreservedly accept this premise; judging from where I work, at least, the outsourced staff have a little bit of a better opportunity to for entry level in-house employment simply by exposure to word of mouth.