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Discussion: Labor Issues Chaired by John L. Zalusky (AFL-CTO). Other participants in- clude Greg Geisler (G Geisler Group), Dennis Chamot (AFL-CIO), Arthur P. Brief (New York University), Donald Elisburg (Conner- ton, Bernstein & Katz), and members of the audience. HOURS AND WAGES Q: What impact do wages have on employees who work at home? GEISLER: Let me cite the case of Ann Blackwell, a Blue Cross home- worker. She works an average of 34 hours a week, is paid 20 cents a claim, and her average hourly take-home after deducting her cost for the terminal is $12.18 an hour.* Her in-house counter- part works an average of 37.5 hours a week and has a take-home, after adding her additional benefits, of $7.59 an hour. Ann Black- well, along with the other cottage keyers, is quite content with her situation. In fact, the average cottage keyer works 29 hours a week and makes a take-home wage of $11.20 an hour after the deduction for the terminal. We were having difficulty analyzing why our keyers at home were more productive than those working in-house and why the homeworkers had a lower rate of error. Perhaps this higher pay is the motivator. *These figures are valid for November 1983. 85

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86 ISSUES AND PROBLEMS ZALUSKY: Mr. Geisler, most production or piecework standards are based on some concept of a "fair day's work" normal perfor- mance. What performance level was used to establish the rate of 20 cents per claim? And, how does that compare to the standard used for in-house employees? Put another way, how many claims per hour do you expect of them? Traditionally, the problem with piece-rate standards has been that production must be divided by hours worked to yield per- cent performance and earnings. Workers have too often been pushed to work themselves to death or cheat on the hours they report on standard to show an acceptable level of performance. Workers now fudge reported hours on production standards for income or job security reasons, ~nc3 I believe it is virtually the rule rather than the exception at home. Hours worked are better controlled in an office or factory; the result is an apparent in- creased productivity for homeworkers relative to those in the more controlled environment. How is one to know that the home- workers you clescribed are not working many more hours than reported and that is what is causing the high productivity you have reported for them? GEISLER: At Blue Cross/Blue Shield, we have an easy way of mea- suring. A claim is either keyed or it is not. Keyers cannot falsify the number of claims they have processed per hour per day. We may have an advantage over the U.S. Army ALMSA program, since it is very easy for us to quantify work done. The standard is 65 claims per hour. We expected our cottage keyers to meet 85 percent of that standard because of the archaic equipment they have; the opposite occurred. They are producing at a much higher rate, although even at the 85 percent standard, they would still be well above our minimum-wage guideline. ZALUSKY: But, at 65 claims per hour being 100 percent performance for those inside the office, and they earn $7 per hour, then to pro- duce $12 per hour the homeworker must be working at a pace far beyond the normal range statistically expected. Is there a differ- ent production standard translated into a piece rate for homeworkers? GEISLER: We do not pay the piece rate to in-house employees- I do not think it is standard for any company to pay full-time employ- ees on a piece rate. Our salaried employees make an average wage of $11,250 whether they do 50 claims a week or 5,000. ZALUSKY: HOW 60 YOU measure hours of work? Is it the time on the terminal?

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DISCUSSION: LABOR ISSUES 87 GEISLER: We are not concerned about hours of work at the cottage level, although they are reported. We were concerned that keyers could be working 80 to 90 hours a week. The opposite is true. Homeworkers work less per workweek, and produce more than their in-house counterparts. This very satisfactory situation may change in time, but at the moment we are very optimistic. ZALUSKY: When industrial engineering standards are set, they in- clude an allowance for personal time, delays, coffee breaks, etc., which usually amounts to 9 to 15 percent. So the original expec- tation of 85 percent for keyers might be based on similar figures. If you measure based on the time actually on terminal anal not the prep-time that goes into getting ready to go on terminal, that might make the difference. PROTECTING THE WORKER Q: Mr. Zalusky, if the ban your union endorses is not a radical ap- proach, since it may cut employment opportunities for some peo- ple, how do you see the future of homework? From the union's point of view. ZALUSKY: The labor movement supports a ban on electronic home- work because we see in place today all the economic conditions that led to the exploitation of homeworkers in the past. Home- work has often evolved from an opportunity to work at home to no alternative but homework for many and On abusive situation for most workers. By 1932 homework conditions were so poor that when the Na- tional Recovery Act was passed it prohibited homework in many industries. The Department of Labor surveyed 171 families that had worked at home. This study found that 86 percent of those that had lost their homework employment because of the ban were pleased and liked their factory jobs better than homework. The ban on homework caused jobs to open up in factories where there were none before. Labor sees a potential for abuse of homeworkers and job losses in customary workplaces. With this country's history with homework the burden of proof lies with those who wish to encour- age it for electronic office work. Employers who want to use it should be able to prove that workers and the public will not be injured kind of an environmental impact statement. The bur- den of proof should not be on those who oppose it because evi- dence of worker injury will not be available until it is a massive

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88 ISSUES AND PROBLEMS problem as it was in the past. We do not want to wait for the injustices to reappear. CHAMOT: One of the problems in looking at electronic homework to- day and the historical evidence for abuse of industrial homework is that today we are dealing with more than one kind of worker. The abuses of the past were suffered primarily by people who were powerless, unorganized, with no bargaining power, and at the lower rungs of the economic ladder. You have people like that today and you also have today people at the very top of the eco- nomic ladder. There are professional employees and managers who have offices somewhere and who want to use a computer terminal at home out of convenience. This poses a very different situation from the cottage workers who were so abused a century ago. The call for a ban on homework is based upon the historical background of abuse and the difficulty of enforcing standards in the home. If you do not have a ban, there must be some mecha- nism available for protecting against abuses. Equity is an important concept, and involves the potential eco- nomic abuse of homeworkers. That's really the bottom line. Some unscrupulous employer will recognize, as some may have al- ready, that they can pay lower wages and they don't have to pay benefits. Based upon American industrial history, one does not look with a great deal of confidence that this is going to be ignored. BRIEF: We have a tremendous body of social legislation available to us today that we didn't have in the early part of the twentieth century, so I think we're comparing apples and oranges because of that social legislation. I also question the argument that there is economic motivation to create inequity. Rather, I see an economic motivation to main- tain equity between the two work forces homeworkers and in- house workers. Over a period of time it is not sound management practice to treat those work forces differently. That is bad man- agement, and bad economics. There may be a short-run gain in exploiting a work force, but in the long run, it is a poor way to tackle the problem. ELISBURG: There are clearly some groups of people who have no other employment alternatives, including the disabled, the el- derly, and homebound parents. Homework does offer these peo- ple work opportunities that they simply could not consider before. On the other hand, the past abuses of homework seem ready to

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DISCUSSION: LABOR ISSUES 89 be repeated right now. We were all shocked to find a couple of years ago, when everybody thought homework had disappeared, enormous numbers of illegal aliens in urban areas who were in sweatshop situations. Everyone thought sweatshops had disap- peared. The idea that a sewing machine is different from a termi- nal is false. Q: What happens to office workers being displaced through office technology even at the office? CHAMOT: The general thrust of a lot of modern technology, not just office technology, is affecting the paraprofessional level, the en- gineering assistants, the laboratory technicians, etc. The effect is to automate the jobs out of existence, or to shift the functions to professionals or managers. People have argued whether or not clerical jobs are being enhanced or climinished. Managers will use more of the advanced technology and they can do more clerical chores themselves: type their own reports, and draw their own graphics. As optical character reader equipment comes into more wide- spread uses, the need for bulk typing will be reduced, affecting clericals and data entry people. We're really only at the begin- ning of these trends. Q: Isn't the call for a ban on homework simply saying that the sta- tus quo is what we want to preserve? That anything else has a potential for exploitation? CHAMOT: Calling for a ban is an expression of extreme concern, based upon 150 to 200 years of economic history, based upon reports of a few abusive situations today, and based upon a strong belief that you don't replace one form of exploitation with another. The history of this country argues strongly that abuses will occur. If nothing is done to prevent them, abuses will occur as a result of the current regulatory climate, lack of sufficient enforce- ment personnel in the Department of Labor, and the lack of money on the part of the state and municipal authorities. ZALUSKY: Calling for a ban is saying to management, "Come for- ward with some idea of what your protections are going to be." We know that some employers are not going to volunteer protec- tions, and others in very competitive situations are not going to want any protections for workers. Professor Brief makes the good point that managers who want to manage well and keep their work force are going to treat people at home as they do those in the office. The problem stems from the assumption that employers want

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Do ISSUES AND PROBLEMS to keep their employees. This management philosophy runs on a continuumsome employers desire or are indifferent to high em- ployee turnover while at the other extreme there are employers that promote from within, seek to provide employment for life homework, and try to retain employees through sound benefit plans. The recent growth in employee leasing by employers marks the one extreme on this continuum. Additionally, this point also assumes that the user of homework will be the em- ployer. That has not generally been the case in the past there have been brokers that locate homeworkers and users' products for them to work on. This occurs today in a small way in stuffing and addressing envelopes. As the work is deskiBed and workers can be replaced easily, wages and benefits will be pushed down to the lowest possible level. Worker productivity is not really as important in this discus- sion as many would like to make it seem. The employer is con- cerned with cost per unit of production. That can be achieved either by improved productivity or lower wage and benefit costs. With homework the evidence to date is that the latter will be the case even Blue Cross is not providing fringe benefits to its homeworkers. Finally, there is the profit motive there will be profit in find- ing the homeworkers willing to work for the least in wages and there will be agents and employers willing to do this just as there are now firms using and providing employee leasing, temporary help, and farm labor. Then there's profit. And if there's profit, you're going to find employers who are ready to exploit it. Q (from the floor): Over the past 30 years, the Federation of the Handicapped in New York City, with over 200 homebound, se- verely disabled people, working at home as its employees, has pioneered the homework concept. Some 15 years ago, legislation was approved by the President, and the Fair Labor Stanclards Act was amended so that an apartment, a residence, or a home was allowed as an extension of an organization like the federa- tion. Five of the maj or unions responded at that time because the legislation had to appear in the Federal Register to become law. The unions were violently opposed. In the 15 years since then, the federation has been successfully monitored by the Department of Labor. Considering the union support of a ban on homework, has there been any change of view regarding the severely dis- abled who are home-based and homebound, working for closely

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DISCUSSION: LABOR ISSUES 91 monitored organizations like the Federation of the Handi- capped? ZALUSKY: The employment of the handicapped in a home setting is not a mainstream issue. It has normally been exempted through sheltered workshops and there have been efforts to make employ- ment opportunities available to them. Q: In other words, you view this on a positive level? ZALUSKY: I WOUND see it as positive. Q: What constitutes part-time work? At what point do the Fair La- bor Standards Act's wage and hour rules apply? ELISBURG: Part-time work is a concept not contained in the Fair La- bor Standards Act. There is no de mir~imus rule under that stat- ute. If an employee works half an hour or a quarter of an hour, he or she better be paid at one-half or one-quarter of the minimum wage. The concept of part time has been built up in the industrial setting principally as a way of avoiding certain kinds of fringe benefits; for example, medical plans and, formerly, pension plans. In terms of the basic labor protections pertaining to Social Security, minimum wage, overtime, occupational safety, and health protection, there is no differentiation between a full-time worker and a part-time worker. The hour is just as valid wherever you are. From the standpoint of the Fair Labor Standards Act, whether full time or part time, you are required to be paid the same mini- mum wage, same overtime, have the same recor~keeping, same everything. The part-time concept appears to be a way of limiting things like fringe benefits that are not covered under the other labor protective statutes. Q: Some experts here have made uncomplimentary comments about trying to do business cheaply. What is the future of busi- ness if it does not figure out ways to operate a little more cheaply? For example, an American man may wear a suit made in Hong Kong, a shirt from Taiwan, shoes from Romania. These countries have learned how to make things cheaply. Clearly, somebody somewhere may be exploited so a company can save money. But somebody right here in this country is unemployed and on welfare. ZALUSKY: Our nation's problem with employment and unemploy- ment is such a broad political issue that whether people work at home at lower wages or not is not going to have much of an im- pact. For example, the balance of trade and overseas competition

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92 ISSUES AND PROBLEMS problems are not going to be solved by such self-help solutions as wage cuts or homework. The value of the dollar against the cur- rencies of our major trading partners has increased 45 percent over the last two years. Wage costs are about 50 percent of total costs, so to be back in the same competitive position we were in two years ago workers will have to increase productivity or re- duce wages by more than 80 percent. Whether these workers are in offices, factories, or at home makes little difference if one is trying to live on Hong Kong wages. Overseas competition has been used in part as justification for doing away with or modifying many of this country's social stan- dards, for example, the increased use of convict labor, more re- laxed safety standards, environmental protections, minimum wage laws, and a variety of coalitions that affect our quality of life. This country has serious problems with overseas competition, but I don't see homework as even a small means of addressing the problem. CHAMOT: There is more involved in international competition than the question of wages. Other factors help determine cost, includ- ing the abilities of management, sales people, product design, the cost of money, the cost of energy, or the cost of materials. These factors have little or nothing to do with the issue of electronic homework. ELISBURG: I think that there is a perception that American workers are pampered compared to workers elsewhere, anal that we have got to do away with such treatment. No one argues about im- proving productivity, installing better business operations that can make people more competitive. But the issues we are talking about here concern sweatshops. If most of you who are wearing or using certain types of foreign goods from certain countries looked in the factories where those items are made you would never touch them. There is documentation in the International Labor Organization in Geneva every year showing abusive labor practices. There is reason for concern, and I am not an advocate of ban- ning homework. I can tell you from experience, as an administra- tor, of going into places in this country 3 and 4 years ago and finding 5 and 10 people to a room running a sewing machine in 1978 not 1888. That is the kind of exploitation that is occurring and that is why the unions and others are concerned. It's the company that may be grossing $10 million a year by paying workers effectively 50 cents an hour because they just arrived

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DISCUSSION: LABOR ISSUES 93 from Colombia, can't speak English, and are afraid of immigra- tion officials. That is the potential exploitation. Not identified: We seem to be focused here for some reason or other on the very narrow aspect of salary. My personal experience with programmers working at home is that the salaries we are paying are approximately double what we pay the people working in- house. But that is beside the point. There is a whole level of cost control involved in not taking 8,000 people from the far ends of Long Island, Westchester County, New Jersey, and Connecticut, moving them 40 to 60 miles into the city of New York where space costs x dollars per cubic foot; where electricity costs are so high now that it is necessary to take out a mortgage to pay your bill. The current work environment is an artificial one, created only because we did not have the communications capability to oper- ate a large-scale company, with the exception of working with equipment, hardware, big machinery. That was the only reason to bring people together, other than the fact that we could not communicate over distance. Now that we con, we should elimi- nate that limiting environment. Q: There seems to be a dichotomy of attitudes toward work in this country. If you are an employee, the unions try to protect you from working too hard. If you are a manager, you are lauded for being a workaholic. Work at home covers a wide spectrum of jobs, ranging from perhaps a sweatshop organization to the gen- eral manager who takes extra work home on the weekend. How are the unions approaching this? Are unions attacking the whole trend, or just isolating the group that they have traditionally defencled? And if so, do unions plan to isolate them from this new, ill-defined emerging area, and then defend that particular group? CHAMOT: In general, unions address the needs of nonmanagerial workers. This includes professional-level employees as wed as clericals and production workers. Some professional employees have a great deal of negotiating ability and, in a sense, autonomy, some freedom of choice, which clerical employees lack. Many workers from each of these groups have joined unions to seek a greater measure of control over their work lives. We will continue to represent all of them. We favor a ban on homework because proper oversight to prevent abuse would be virtually impossible. Q: In a very large number of cases, homework arrangements are voluntary arrangements and are to the benefit of the employee. The unions themselves ought to take initiatives to look at op- portunities to include these people and ensure that these workers

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94 ISSUES AND PROBLEMS are not exploited rather than calling for an outright ban on homework. Part-time work carries similar problems. Since part-time work is not just a matter of exploitation, but a great benefit to a great many people, would a ban really be in the best interest of labor? While there are certainly those employers who might use part- time work to exploit workers, perhaps the union ought to work for fair compensation, fair benefits, and everything else in all these cases, rather than a ban. There ought to be much more of an effort on the part of unions to explore more fully the kind of situa- tions in which homework can be beneficial, and to work out ways to guard against disacivantages. ZALUSKY: Unions strive to work out reasonable safeguards for work- ers against exploitation of any worker. If the issue comes down to some workers finding homework convenient or even cost- effective at the expense of others losing their jobs, working with- out health care, or without a living wage, then I expect unions to come to the aid of those not able to help themselves. In that con- text we are going to continue to pursue a ban on homework be- cause we see it in its historical context homework has not meant work freedom, but freedom to exploit. Market forces have driven the outcome in that direction in the past and are certain to do so again.