See this article in the December 2001 issue of Optimize, a CMP publication.

By Jon Boroshok

Just a year ago, IT employees such as experienced Java developers were in critically short supply and high demand. Now, many of those same workers see their positions treated like disposable equipment that can be kept-or not-to help achieve financial ratios that please Wall Street.

From programmers to senior managers, we have betrayed, burnt out, and used up our tech workers. We're bombarded daily with stories of a tech recession and downsizings at companies including EMC, Sun, Lucent, Motorola, and countless dot-coms. While some companies, such as Motorola and others in the telecom industry, are facing huge losses and must downsize as a matter of survival, the reason at many others is tied to the stock price. The emphasis on immediate shareholder value leaves businesses with no long-term employment strategy and no concern for workers and their families. We cut personnel not because we are losing money, but because a Wall Street analyst - not even a company board member - expected a higher quarterly profit.

The cuts are not limited to high tech. Fifty-eight percent of 1,631 businesses surveyed in the American Management Association's annual mid-year survey on staffing and structure said they eliminated jobs in the 12 months ending June 30, 2001-the highest percentage in the survey's 15-year history. Only one-fourth of those companies cut jobs because of less demand for their products and/or services. Most layoffs were the result of structural changes or productivity gains. The AMA reports that during the 1990-91 recession 75% of those that cut jobs blamed lower demand.

Perhaps the productivity increases were the fruits of the "free overtime" salaried workers put in. How does this work? Since the late 1930s, the 40-hour workweek has been the standard. A salary buys 40 weekly hours of an employee's labor. Exempt employees often work longer, but if they miss work, we use that 40-hour figure to prorate pay, so someone regularly working a 60-hour week for the same pay "gives away" 50% extra time. Annually, it's like working for six months free!

According to "Key Indicators of the Labour Market 2001-2002" a study by economist Lawrence Jeff Johnson, U.S. workers put in more hours than their counterparts in other countries, and still don't have the highest productivity levels. Johnson's study shows the US could learn even more from France, which by lowering the workweek, sharing the vanishing work, has become the most recession-resistant economy in Europe, and tops the world in productivity per manhour. It seems that there's a law of diminishing returns that advocates working less to increase productivity. Are Americans working more instead of working smart? Workers in the U.K. and Brazil put in 250 fewer hours (roughly six weeks @ 40 hours), Germans work 500 fewer hours, and Australian, Canadian, Japanese and Mexican workers devote about 100 hours a year - or 2.5 weeks - fewer to their job.

I'm not suggesting that salaried IT workers should unionize, and 21st century cubicle farms don't really compare to sweatshops of the early 20th century, but there is no-give-and-take between employers and employees anymore. Our disrespect for employees' own time, erosion of the 40-hour/5-day workweek that previous generations fought so hard for, and the strain on families all mimic conditions that led to the proliferation of labor unions. Perhaps the American overwork ethic is leading us back to a sweatshop economy, but this time it's our white-collar workers and lower/middle management feeling the pain in the name of shareholder value.

Some argue that the sole function of business is to create wealth. They greedily extol the virtues of a free market, preach that competition is always a good thing, and demand instant, often unrealistic growth. But living quarter-to-quarter is a shortsighted financial strategy that will lead to less wealth and profitability in the long run. This policy has already created a free-agent economy where loyalty is an antiquated notion. Real wages have dropped, while chief executive compensation has gone through the roof.

According to "Raise The Floor: Wages And Policies That Work For All Of Us" by Holly Sklar, Laryssa Mykyta and Susan Wefald [Ms. Foundation for Women, 2001]," Today's minimum wage of $5.15 an hour would need to be raised to $8 to match the minimum wage of 1968 when adjusted for inflation. Their research shows that a couple with two children have to work a combined 3.3 full-time minimum-wage jobs to make ends meet. While tech workers may earn considerably more than minimum wage, their "real wages" have shown comparable decreases.

Top management regularly collects huge bonuses for cutting costs, and the fastest way to do this is to cut employees. While Wall Street rewards downsized companies with an immediate spike in stock price, worker morale plummets, and top talent begins to update their resumes fearing that it will be their turn to go next quarter. Salaried workers feel no job security, anger toward senior management, and less motivation. How costly will it be to replace good employees who leave on their own?

Conservatives whine that retraining is too costly, and not the responsibility of the corporation. The AMA study argues that those who follow this school of thought are shooting themselves in the foot, as there's a strong correlation between increased training and improved worker productivity, profitability, and shareholder value. The study discovered that companies with increased training were 66% more likely to report productivity improvements, twice as likely to reduce turnover rates, and 150% more likely to improve the quality of their products and services.

Businesses try not to admit it, but they use layoffs as a way to weed out less productive, non-traditional, and higher-salaried employees. Some may even try to use a performance ranking system, but this would surely favor those who have given up any semblance of a work-life balance, and do even more to erode the 40-hour workweek and quality time with families. It's also a way to drive down salaries, as evidenced by the H-1B visa issue. As the economy tumbles and unemployment rises, the labor shortage of the past few years has disappeared. We begged for foreign workers to be allowed into this country on H-1B visas and successfully used them to create a supply of tech drones willing to trade work/life balance for steady work--even for less money. But now that times are tough, H-1B workers aren't the first to be downsized proving that it was their long hours and lower salaries that made them attractive.

Companies talk a good game about concern for employees, but the bottom line remains the bottom line. Where's corporate loyalty to employees? Some new tech companies still insist on overpriced downtown office space in places like Cambridge's Kendall Square and New York's Silicon Alley instead of locating themselves closer to employees' homes. But an hour-plus (each way) commute won't increase productivity, and a view of the city skyline won't contain costs and avoid layoffs. This real estate doesn't show you've arrived, it shows you're mismanaging money!

Laid off tech workers often find that new jobs pay less than their previous positions. They're also finding that family-friendly and progressive policies such as flex time, job sharing, comp time, and extended part time work are being replaced by mandatory overtime and squeezing as much as possible from fewer people in the name of belt-tightening.

Our actions tell working parents to put their jobs ahead of the family or they're not a desirable worker. Layoffs based on performance rankings? Forget about putting in a good day's work and going home! The office is everyplace - workers are expected to check voice mail and e-mail while on vacation. In the past, that was considered working off site. Telecommuting? Sure, call in to the office on the cell phone on the way to/from work, or during the kids' weekend soccer games. Flex time? Absolutely -- work any 50-60 hours from Monday through Friday, as long as 9-5 is included. Casual attire? Feel free to wear sweats to the office on Saturday. Where's the balance and quality of life?

We own workers before, during and after business hours, and you can bet that someone putting in a 60-hour week -- even if the extra 20 is non-productive face time -- will be ranked higher, especially by a manager who is unqualified to do performance evaluation in the first place. If performance ranking must be used, shouldn't they be based on how productive an employee is during the "normal" 40-hour week only?

Some will argue that employees have a choice. The office door isn't chained shut, and workers are free to leave and find something better. I would argue that long hours aren't really a "choice" today nor were they in the tech gold rush of 1999 and 2000. The "choice" was really to do the same, quit or get fired/downsized. There will be less of a choice as arbitrary performance rankings are used as a measure of who survives layoffs by creating an atmosphere that disregards an employee's entitlement to a life outside of work. We demanded 50-, 60-, even 70-hour weeks under the guise of "being competitive." Competitive with what - everyone else that thought they had to be competitive? Many IT workers who sacrificed nights and weekends wound up with worthless stock options, broken marriages, and still lost jobs when companies decided to "right size" (while top executives received bonuses for putting people out of work). Not the stuff that inspires employee loyalty.

According to the AMA study, more than 80% of companies that have cut jobs over the past five years reported that the work once done by departing workers was transferred to other employees. Many of these "survivors" now fearful that they'll be sacrificed for Wall Street next quarter - would accept less pay in exchange for more time for life outside of work.

Will we ever return to some sort of productive balance in our lives or was that just hollow corporate PR? Companies can't continue to live and die on a quarterly basis because some analyst or corporate executive has certain expectations of performance. We elect officials who clearly value profits over people, offering lip service to family values while siding with business that demands that all our waking hours be spent at work. Employees shouldn't be sitting in cubicles, fearfully thankful that they still have a job and nervously reading this, thinking their performance ranking will be lowered because they are "not being a team player." Of course IT workers aren't loyal anymore - they're waking up and smelling the (no longer free) coffee!