Category: Labor Economics

Some Tasks Are Done Better in Private Offices

QuietBK2012-05-03.jpg

Source of book image: http://timeopinions.files.wordpress.com/2012/01/quiet-final-jacket.jpg

(p. 4) When the R.C. Hedreen Company, a real estate development firm based in Seattle, commissioned a renovation of a 10,800-square-foot floor in an old downtown office building five years ago, it specified a perimeter of private offices. Collaborative spaces are provided for creative teamwork, but the traditional offices remain the executives’ home ports.

”Individually, a lot of our workday is taken up with tasks that are better served by working alone in private offices,” says David Thyer, Hedreen’s president.
Susan Cain, author of ”Quiet: The Power of Introverts in a World That Can’t Stop Talking,” is skeptical of open-office environments — for introverts and extroverts alike, though she says the first group suffers much more amid noise and bustle.
Introverts are naturally more comfortable toiling alone, she says, so they will cope by negotiating time to work at home, or by isolating themselves with noise-canceling headphones — ”which is kind of an insane requirement for an office environment, when you think about it,” she says.
Ms. Cain also says humans have a fundamental need to claim and personalize space. ”It’s the room of one’s own,” she says. ”Your photographs are on the wall. It’s the same reason we have houses. These are emotional safety zones.”

For the full story, see:
LAWRENCE W. CHEEK. “Please, Just Give Me Some Space: In New Office Designs, Room to Roam and to Think.” The New York Times, SundayBusiness Section (Sun., March 18, 2012): 1 & 4.

The book mentioned is:
Cain, Susan. Quiet: The Power of Introverts in a World That Can’t Stop Talking. New York: Crown, 2012.

The One Percent’s Quick History: “We Worked Hard, We Went to College, We Tried to Better Our Lives”

(p. F1) SOON after the Occupy Wall Street encampment was set up at Zuccotti Park in Manhattan last fall, 26-year-old Ryan Quick told his father, Leslie C. Quick III, a financier, that he might drop by the site.

“Don’t you even let me see you over there,” the father replied.
The senior Mr. Quick later said that he and his son were both “half-kidding” each other. But he need not have worried about any class rebellion. According to Mr. Quick, his son came back from his visit and said: “It just looks like a Phish concert. It’s difficult to get engaged by something that doesn’t really have a purpose.”
As scions of a family that co-founded Quick & Reilly, a pioneering discount brokerage firm acquired for $1.6 billion by another company in 1997, the Quicks are undoubtedly among the “1 percent” — the wealthiest 1 percent of Americans targeted by the Occupy Wall Street movement. Indeed, having made their fortune in finance, the Quicks might be particular targets.
. . .
(p. F5) “Almost all my clients are self-made,” said Christopher J. Cordaro, chief executive of RegentAtlantic Capital, a wealth management firm based in Morristown, N.J., whose clients have at least $2 million in investable assets. “They’re saying, ‘We worked hard, we went to college, we tried to better our lives. Isn’t that what I’m supposed to do?’ ”
That is also the Quick family’s history. When he joined the year-old family firm after graduating from college in 1975, Leslie Quick recalled, “we didn’t know if my father was going to declare bankruptcy or this discount brokerage thing was going to work.”

For the full story, see:
FRAN HAWTHORNE. “Color the 1 Percent 99 Percent Conflicted.” The New York Times (Thurs., February 9, 2012): F1 & F5.
(Note: ellipsis added.)
(Note: the online version of the article is dated February 8, 2012.)

Workers Want to See Compensation Related to Contribution

This is a great example contra (or at least qualifying) Daniel Pink’s claim that all you need do for knowledge workers is provide them enough money so that they can provide for the basic needs of themselves and their family.

(p. 145) The public offering process brought details of the intended allocation of Pixar stock options into view. A registration statement and other documents with financial data had to be prepared for the Securities and Exchange Commission and a prospectus needed to be made ready for potential investors. These documents had to be reviewed and edited, and it was here that the word apparently leaked: A small number of people were to receive low-cost options on enormous blocks of stock. Catmull, Levy, and Lasseter were to get options on 1.6 million shares apiece; Guggenheim and Reeves were to get 1 million and 840,000, respectively. If the company’s shares sold at the then-planned price of fourteen dollars, the men would be instant multimillionaires.

The revelation was galling. Apart from the money, there was the symbolism: The options seemed to denigrate the years of work everyone else had put into the company. They gave a hollow feel to Pixar’s labor-of-love camaraderie, its spirit that everyone was there to do cool work together. Also, it was hard not to notice that Levy, one of the top recipients, had just walked in the door.
“There was a big scene about all that because some people got (p. 146) huge amounts more than other people who had come at the same time period and who had made pretty significant contributions to the development of Pixar and the ability to make Toy Story,” Kerwin said. “People like Tom Porter and Eben Ostby and Loren Carpenter–guys that had been there since the beginning and were part of the brain trust.”
Garden-variety employees would also get some options, but besides being far fewer, those options would vest over a four-year period. Even employees who had been with the organization since its Lucasfilm days a decade earlier–employees who had lost all their Pixar stock in the 1991 reorganization–would be starting their vesting clock at zero. In contrast, most of the options of Catmull, Lasseter, Guggenheim, and Reeves vested immediately–they could be turned into stock right away.
“I decided, ‘Well, gee, I’ve been at this company eight years, and I’ll have been here twelve years before I’m fully vested,’ ” one former employee remembered. ” ‘It doesn’t sound like these guys are interested in my well-being.’ A lot of this piled up and made me say, ‘What am I doing? I’m sitting around here trying to make Steve Jobs richer in ways he doesn’t even appreciate.’ ”

Source:
Price, David A. The Pixar Touch: The Making of a Company. New York: Alfred A. Knopf, 2008.
(Note: italics in original.)
(Note: my strong impression is that the pagination is the same for the 2008 hardback and the 2009 paperback editions, except for part of the epilogue, which is revised and expanded in the paperback. I believe the passage above has the same page number in both editions.)

For Daniel Pink’s views, see:
Pink, Daniel H. Drive: The Surprising Truth About What Motivates Us. New York: Riverhead Books, 2009.

Stevenson and Wolfers Find People in Rich Countries Are Happier

StevensonWolfersMaltilda2012-04-04.jpg “Betsey Stevenson and Justin Wolfers are the go-to pair on what some might call “lovenomics,” having produced much research on marriage, divorce and child-rearing. They are shown at home with their daughter, Matilda, and family dog, Max.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) . . . when Ms. Stevenson, 40, and Mr. Wolfers, 39, start talking about say, diapers or nursing, the conversation takes an odd turn. Suddenly, words like “inputs” and “outputs” — the economic kind — creep in. Mention loading the dishwasher and he tosses out “fungibility.” The low cost of two big teddy bears they bought for Matilda gets Ms. Stevenson ruminating on productivity gains.

If they don’t quite sound like the rest of us, that’s because these two Harvard Ph.D.’s form a sort of power couple in the world of the dismal science, or at least a certain corner of it. Faculty members at the Wharton School of the University of Pennsylvania, and currently visiting fellows at Princeton, Ms. Stevenson and Mr. Wolfers have become the go-to pair on the economics of marriage, divorce and child-rearing. That they are themselves a couple — unmarried, for tax reasons they regularly cite — adds to the allure.
. . .
Their research shows that men have grown happier as women have become unhappier. (Why? They don’t really know.) Are people in rich countries happier than people in poor countries? (Yes.) And contrary to popular belief, they show that the divorce rate in America has been falling, not rising, for decades. They cite a number of possible reasons, including more balanced expectations between men and women about how a marriage will actually work, as well as the fact that fewer people are marrying in the first place.
. . .
(p. 4) LAST month, Ms. Stevenson and Mr. Wolfers presented new research into what is known as the Easterlin Paradox. First documented by the economist Richard Easterlin in the 1970s, this concept involves the link between economic growth and happiness. The idea is that, within a given country, people with higher incomes are more likely to be happy, and yet, for the most part, the average level of happiness doesn’t vary much from rich countries and poor countries. What’s more, as countries become richer, their populations don’t become happier.
Using a red laser pointer to highlight PowerPoint graphs, Ms. Stevenson told a group of economists, psychologists and other experts gathered at the Russell Sage Foundation on the Upper East Side of Manhattan that earlier research had failed to take into account that as people and countries grow richer, it takes a much bigger amount of absolute dollars to raise incomes, and thus happiness.
So while it could appear that increases in happiness flattened out after incomes reached a certain point, “the richer you are, the more dollars it takes to give you the same increase in well-being,” Ms. Stevenson said. “To get a 10 percent increase in income, you need more dollars than when you are poor.”

For the full story, see:
MOTOKO RICH. “It’s the Economy, Honey.” The New York Times, SundayBusiness Section (Sun., February 11, 2012): 1 & 4.
(Note: ellipses added.)
(Note: the online version of the review is dated February 11, 2012.)

“Being Able to Work on a Great Project”

(p. 133) Recruiting was brisk; the magnet for talent was not the pay, generally mediocre, but rather the allure of taking part in the first fully computer-animated feature film. “Disney gave us a very modest budget [$17.5 million] for Toy Story,” Guggenheim said. “Although that budget went up progressively over time, it didn’t afford for very high salaries, unfortunately. We tried to make the other working conditions better. Just the enthusiasm of being able to work on a great project is as often as not what attracts artists and animators.”

Source:
Price, David A. The Pixar Touch: The Making of a Company. New York: Alfred A. Knopf, 2008.
(Note: italics and brackets in original.)
(Note: my strong impression is that the pagination is the same for the 2008 hardback and the 2009 paperback editions, except for part of the epilogue, which is revised and expanded in the paperback. I believe the passage above has the same page number in both editions.)

Innovative Entrepreneurs Need to Be Able to Fire People

(p. 116) Jobs met with the remaining employees soon after the layoffs and brought his reality distortion field with him. “You’re seeing your friends packing their stuff up and pushing it out to their cars,” Phillips remembered, “and yet somehow he had convinced you that that was the greatest possible thing that could happen.”
Within the Silicon Valley community, the talk was not of the way Jobs had handled his former employees at Pixar, but of his having kept Pixar going at all. It seemed to make little sense from a business point of view. For all his bravado about RenderMan, his motivation was likely a matter of status as much as economics. After his rise and fall at Apple, the onus was on him either to create another success story or to leave his peers to conclude that the first one had been a quirk of fate.
“It wasn’t really working,” Smith said of Pixar’s early years. “In fact, that’s being kind of gentle. We should have failed. But it seemed to me that Steve just would not suffer a defeat. He couldn’t sustain it.”

Source:
Price, David A. The Pixar Touch: The Making of a Company. New York: Alfred A. Knopf, 2008.
(Note: italics in original.)
(Note: my strong impression is that the pagination is the same for the 2008 hardback and the 2009 paperback editions, except for part of the epilogue, which is revised and expanded in the paperback. I believe the passage above has the same page number in both editions.)

Married Batters Paid More than Equally Good Bachelor Batters

(p. C4) Many studies have found that married men earn more than their single peers, but whether they’re actually more productive is harder to answer. To settle the question, researchers looked to baseball.
They took a random sample of nearly 3,500 pro hitters, from 1871 through 2007, comparing their batting averages and other statistics with their salaries (as revealed in MLB archives and other sources). Until 1975, when the market for players became freer, there was no link between marriage, productivity and earnings. After 1975, there was some evidence that hitters who begin their careers in the bottom third of the ability spectrum gained a handful of points in batting average when they married, and a bit of salary, but the evidence was statistically weak.

For the full summary, see:
Christopher Shea. “Marriage Moneyball.” The Wall Street Journal (Sat., NOVEMBER 5, 2011): C4.

The paper summarized is:
Cornaglia, Francesca, and Naomi E. Feldman. “Productivity, Wages, and Marriage: The Case of Major League Baseball.” CEP Discussion Paper # 1081, September 2011.

Jobless Rate Appears Lower as Aging Population Leaves Labor Force

(p. A4) As more baby boomers leave the job market, the participation rate should continue to decline–a group of economists at the Federal Reserve projected in 2006 that it would fall to 62.5% by 2015. While that suggests the economy won’t need to create as many jobs to bring down the unemployment rate, said Barclays Capital economist Dean Maki, the downside is that it won’t have as large a work force to power it along and pay for the needs of an aging population.
“If you have a greater fraction of the population not working, that will make it harder to pay for costs that will be ballooning,” he said.

For the full story, see:
JUSTIN LAHART. “Aging Population Eases Jobless Rate.” The Wall Street Journal (Sat., November 5, 2011): A4.

Study Finds Lack of Control at Office Is Deadly for Men

(p. C12) . . . Israeli scientists found that the factor most closely linked to health was the support of co-workers: Less-kind colleagues were associated with a higher risk of dying. While this correlation might not be surprising, the magnitude of the effect is unsettling. According to the data, middle-age workers with little or no “peer social support” in the workplace were 2.4 times more likely to die during the study.
But that wasn’t the only noteworthy finding. The researchers also complicated longstanding ideas about the relationship between the amount of control experienced by employees and their long-term health. Numerous studies have found that the worst kind of workplace stress occurs when people have little say over their day. These employees can’t choose their own projects or even decide which tasks to focus on first. Instead, they must always follow the orders of someone else. They feel like tiny cogs in a vast corporate machine.
Sure enough, this new study found that a lack of control at the office was deadly–but only for men. While male workers consistently fared better when they had some autonomy, female workers actually fared worse. Their risk of mortality was increased when they were put in positions with more control.
While it remains unclear what’s driving this unexpected effect, one possibility is that motherhood transforms control at the office–normally, a stress reducer–into a cause of anxiety. After all, having a modicum of control means that women must constantly navigate the tensions between work and family. Should they stay late at their job? Or go home and help take care of the kids? This choice is so stressful that it appears to increase the risk of death.

For the full summary, see:
JONAH LEHRER. “HEAD CASE; Your Co-Workers Might Be Killing You; Hours don’t affect health much–but unsupportive colleagues do.” The Wall Street Journal (Sat., August 20, 2011): C12.
(Note: ellipsis added.)

The paper referred to in the quote from Lehrer’s summary is:
Shirom, Arie, Sharon Toker, Yasmin Alkaly, Orit Jacobson, and Ran Balicer. “Work-Based Predictors of Mortality: A 20-Year Follow-up of Healthy Employees.” Health Psychology 30, no. 3 (May 2011): 268-75.

Creative Destruction Creates as Many New Jobs as It Destroys

(p. 113) It was Joseph Schumpeter who pointed out that the competition which keeps a businessman awake at night is not that from his rivals cutting prices, but that of entrepreneurs making (p. 114) his product obsolete. As Kodak and Fuji slugged it out for dominance in the 35mm film industry in the 1990s, digital photography began to extinguish the entire market for analogue film – as analogue records and analogue video cassettes had gone before. Creative destruction, Schumpeter called it. His point was that there is just as much creation going on as destruction – that the growth of digital photography would create as many jobs in the long run as were lost in analogue, or that the savings pocketed by a Wal-Mart customer are soon spent on other things, leading to the opening of new stores to service those new demands. In America, roughly 15 per cent of jobs are destroyed every year; and roughly 15 per cent created.

Source:
Ridley, Matt. The Rational Optimist: How Prosperity Evolves. New York: Harper, 2010.

You Have More Servants than the Sun King

(p. 36) The Sun King had dinner each night alone. He chose from forty dishes, served on gold and silver plate. It took a staggering 498 people to prepare each meal. He was rich because he consumed the work of other people, mainly in the form of their services. He was rich because other people did things for him. At that time, the average French family would have prepared and consumed its own meals as well as paid tax to support his servants in the palace. So it is not hard to conclude that Louis XIV was rich because others were poor.
But what about today? Consider that you are an average person, say a woman of 35, living in, for the sake of argument, Paris and earning the median wage, with a working husband and two children. You are far from poor, but in relative terms, you are immeasurably poorer than Louis was. Where he was the richest of the rich in the world’s richest city, you have no servants, no palace, no carriage, no kingdom. As you toil home from work on the crowded Metro, stopping at the shop on the way to buy a ready meal for four, you might be thinking that Louis XIV’s dining arrangements were way beyond your reach. And yet consider this. The cornucopia that greets you as you enter the supermarket dwarfs anything that Louis XIV ever experienced (and it is probably less likely to contain salmonella). You can buy a fresh, frozen, tinned, smoked or pre-prepared meal made with beef, chicken, pork, lamb, fish, prawns, scallops, eggs, potatoes, beans, carrots, cabbage, aubergine, kumquats, celeriac, okra, seven kinds of lettuce, cooked in olive, walnut, sunflower or peanut oil and flavoured with cilantro, turmeric, basil or rosemary . . . You may have no chefs, but you can decide (p. 37) on a whim to choose between scores of nearby bistros, or Italian, Chinese, Japanese or Indian restaurants, in each of which a team of skilled chefs is waiting to serve your family at less than an hour’s notice. Think of this: never before this generation has the average person been able to afford to have somebody else prepare his meals.
You employ no tailor, but you can browse the internet and instantly order from an almost infinite range of excellent, affordable clothes of cotton, silk, linen, wool and nylon made up for you in factories all over Asia. You have no carriage, but you can buy a ticket which will summon the services of a skilled pilot of a budget airline to fly you to one of hundreds of destinations that Louis never dreamed of seeing. You have no woodcutters to bring you logs for the fire, but the operators of gas rigs in Russia are clamouring to bring you clean central heating. You have no wick-trimming footman, but your light switch gives you the instant and brilliant produce of hardworking people at a grid of distant nuclear power stations. You have no runner to send messages, but even now a repairman is climbing a mobile-phone mast somewhere in the world to make sure it is working properly just in case you need to call that cell. You have no private apothecary, but your local pharmacy supplies you with the handiwork of many thousands of chemists, engineers and logistics experts. You have no government ministers, but diligent reporters are even now standing ready to tell you about a film star’s divorce if you will only switch to their channel or log on to their blogs.
My point is that you have far, far more than 498 servants at your immediate beck and call. Of course, unlike the Sun King’s servants, these people work for many other people too, but from your perspective what is the difference? That is the magic that exchange and specialisation have wrought for the human species.

Source:
Ridley, Matt. The Rational Optimist: How Prosperity Evolves. New York: Harper, 2010.
(Note: ellipsis in original.)