A recent article in the NY Times takes Google to task for employing a “shadow” workforce of temps. It’s not a nuanced piece of business journalism and I take exception to many of its implied conclusions. Here are some of my criticisms and I encourage others in our industry to comment as well.
Employers need the freedom to choose employees
As business processes become fully digitized, who operates digital processes is core to management. It’s no longer what machines are being used, but who operates the machines. Technology companies by their nature are almost fully digitized and therefore at the frontier of digital business practices.
Employers need the right to employ only those that fit their core culture and strategic needs. At companies like Google, that means a certain level of intelligence and adaptability, more similar to what is looked for in management positions even for non-managers.
Competitive capitalism requires people intensive task outsourcing
Certain tasks — like the machine learning training — are only performed cost effectively via outsourcing to temporary labor. People good at such repetitive tasks are not going to fit in a Google-like culture, and may in fact only be needed episodically.
Outsourcing tasks and entire business processes is nothing new or unique to digital firms. A business process not central to a firm’s strategy should be outsourced to a firm for not only cost but quality reasons. Capitalism is meant to be efficient, not socialist “fair”.
USA labor laws date from the mass production age
Finally, the article implies that Google was not responsive to questions. But legally Google will have trouble responding to the author’s comments. If the author had spoken with a labor law expert first, it would have helped.
Our labor laws date from the days of mass industrial production, vary state by state, ofttimes city by city, and have never been updated for our digital and “agile” economy. On top of our unique and expensive tort law system, the potential compliance costs and risks are huge. The article leaves out the fact that there is a subsector of firms whose only job is to manage these risks.
Our broken medical insurance system makes temps attractive
Forcing all medical insurance through employers — an artifact of WWII that has never been changed — is at the source of many cost savings through the use of temps. A lower skilled workforce that is paid less naturally gets lower benefits.
Until our horrendously expensive medical regime gets fixed, huge differences in benefits are going remain institutionalized. The benefits expected by a Google employee are platinum-level expensive, and won’t be affordable if a large lower-skill workforce become employees too.
Our broken H1B and immigration system makes temps attractive
I’ve written before (here and here) how the H1B system has become a form of indentured servitude by delaying the ability of high-skill technologists to remain in the USA. H1B encouraged the creation of “consulting” companies built entirely on H1B labor who are generally paid less in exchange for the lottery chance of becoming a permanent resident.
Under a different immigration regime, the shadow H1B workforce would become employees faster and reduce the attractiveness of temps. But we’d need a different government than now for that to happen.
Try before you Buy (Contract before Hire) is less risky
The only low-risk way to hire technologists is “contract to hire”, because you never really know if someone is both technically and socially competent until you’ve worked together with them. That is why digital companies make such effort to recruit entire former colleagues of current employees.
Digital business is a team sport. Digital business is not performed by lone geniuses — even under Elon Musk. Temporary labor firms facilitate try before hiring, reducing risk and expand the available labor pool to potential employees never worked with before.
Not everyone wants to be an employee
Some technologists don’t want to be employees: Their spouse may work and get medical benefits, so they’d rather just make more income. The new tax law exaggerates the economic benefit to gig technologists.
Especially for late career technologists, consulting is more desirable than having to adapt to yet another company culture or startup business model.
Article relies on provocative headline claims and outliers
I’m not excusing bad behavior, but the Times is trying to sell papers, subscriptions and page views, but leading with a female recruiter who was allegedly harassed?
Most of the other examples are also cherry picked and not representative of Google’s temporary workforce in total. For example, exclusions from company meetings: What steel mill in the past had to worry about intellectual property protections? But Google does.
No wonder firms are shy to make ever more people employees
As all firms become digital firms, the use of temporary labor will only increase. It doesn’t mean such people are not full time employees — they usually are, just not of the primary digital firm itself.
The terminology itself is confusing — Temps? Contractors? Consultants? Gig workers? There is nothing inherently wrong with having temporary status.
And the larger policy issues that make temporary labor attractive — expensive medical, expensive lawsuits, broken immigration — and therefore “unfair” — can only be solved by governments, not individual firms. The topic deserves a more nuanced and careful examination.