to: Proponent of shorter work hours and humane trade regulation

The Nature of Work in a Knowledge-Based Economy

Work has long been a focus of value in western society. Economically and socially, it has defined a person’s place in the community. Despite its importance, however, the concept of work is widely misunderstood. Lacking recent examination, it is bound to a definition conceived in terms of 19th Century schemes of production that no longer apply to what most working people today actually do.

In physics, the concept of energy, combining the variables of force and distance, describes the capacity to do work. Power is energy expended over a period of time. One horsepower equals 550 foot-pounds per second; it is the expenditure of enough energy in one second, for instance to move an object for 110 feet with 5 pounds of force.

In labor economics, work has a more ambiguous nature although its elements are presented with a veneer of mathematical precision. Generally speaking, work represents the human capacity to perform economically useful functions. In a slave-based economy, such capacity might have been defined by the number of persons owned by a slave master. Today, when most work is performed in the context of an employment contract, the amount of time which an employee has agreed to spend in employer-directed activities in return for wages has become a measure of its quantity.

The amount of work available to the employer can be calculated by multiplying the number of employees under contract by the average time which they are committed to spend on the employer’s projects in a given time period. Its unit of measurement would be the “worker-hour”. This definition of work assumes that economic output is proportionate to the time spent producing it. The time can, in turn, be broken down into two elements. Aggregate hours of work are the product of employment (or numbers of people employed) and average working hours.

A common practice is to pay workers by the hour on the theory that such a reward would be roughly in line with the benefit which the employers receives from their production. The employer presumably is interested in expanding production because that is what he sells to gain revenue. It seems obvious that the more people who work at something or the more time they each spend working, the more labor is contributed to the production process. The more labor contributed, the more goods or services are produced, the more revenue the employer derives from sales, and the higher the profits. The economic relationships appear to be iron-clad.

Actually, this model of work is based on a situation which once was more prevalent than it is today. We still think of work in terms of simple manual labor. For example, one can imagine a group of people peeling potatoes. The workers might be seated on stools as they remove peelings from the potatoes with paring knives and then toss the peeled potatoes into a basket. In this situation, there would be a direct correlation between the worker-hours of labor assigned to the task of peeling potatoes and the number of potatoes peeled.

If the employer wanted more potatoes to be peeled, he could engage more labor. Either he could hire more workers, or he could schedule longer hours of work for his existing crew. But even here, there is another factor to consider - how fast the people work. The generic term for this factor is labor productivity. Besides employment and hours, the number of peeled potatoes can also be increased by increasing the number of potatoes each worker peels in an hour, in other words.

Labor economists have developed the following equation to describe the relationship between the various factors: Output equals employment times average work hours times productivity. Output describes the physical volume of goods and services produced within a system. Employment, work hours, and productivity are elements of labor input. Labor productivity is not measured directly, but is instead a ratio calculated from the other three variables in the equation. It is output divided by aggregate hours of work.

We therefore tend to exclude productivity from the concept of work, regarding it instead as a measure of efficiency in using labor. We think of an employer motivating his people to do more work in a given time period, as if the boss were a football coach urging his team on to a greater effort while on the playing field. While that model might describe a simple process like peeling potatoes, its definition is inadequate for the kinds of work which most people do today. Much of the large-scale production has been assumed by machines. Those machines have raised the speed of production far more than what human laborers could achieve through intensified work performance. Capital investment drives expanded production, not changes in labor practice.

Furthermore, goods production has itself become a shrinking area of work. More and more people are employed in occupations where the object is not to produce particular quantities of goods but to perform a required service as the need arises. For this, the worker needs mainly to know how to do the work when it needs to be done. The rest of the time the worker is on standby, not doing anything but waiting for an opportunity to perform a required function. Think of a sales clerk at a counter in an empty store.

the knowledge economy

A growing number of people are employed in offices. Office work involves the gathering, manipulation, and transmission of information. There appears to be a looser connection between this kind of work and time spent on the job. In addition to time and numbers employed, the element of knowledge has become an important ingredient of work in its contemporary form. But how to measure knowledge? That is a difficult question to answer.

The type of work illustrated by peeling potatoes does not involve the use of equipment except for a small knife. It requires no knowledge beyond that involved in cutting the outer skin off a potato. Consequently, work performance can be improved - done more quickly - if the worker handles the peeling operation in a mindless, automatic fashion. The knowledge to do this job can be learned in a minute or two, and is always there.

That kind of work is different than situations where the challenge is not to repeat a simple operation more quickly but to solve problems that have seldom, if ever, appeared before. Intelligence is brought to bear upon such problems either through original discovery or improvised techniques or else by knowing where the pertinent knowledge can be obtained. In office work, new knowledge often obtained second hand. One asks a supervisor or co-worker how a problem should be solved; or, one reads a manual, memo, or other document providing information on the subject. It is up to the worker individually to find this knowledge and learn it in time to perform the required work function.

One can see that the capacity for work involves much more than having enough time or expending enough personal effort. Access to work-related knowledge also determines how fast a piece of work can be completed. In this regard, such factors as maintaining a complete and orderly filing system can become important. Having a good memory, years of experience, and active lines of communication with one’s co-workers are other assets from a knowledge standpoint.

When work is seen from this perspective, one realizes that the traditional way of improving work performance - putting in the time and working quickly - may be less important than cultivating sources of knowledge. Also, one sees that applying knowledge to work does not necessarily occur in proportion to the time spent. Knowledge can be revealed in a flash. The essential benefit is access to knowledge as needed, not a process of steady delivery. In that respect, the economic structure of work may be like that of public utilities where the electric-power company levies a surcharge for use in a period of peak demand or the telephone company adds an access charge to its monthly billing.

Another kind of knowledge-related work would be where the work depends upon highly personal skills or attributes of personality. There is, for instance, no known way to teach the unusual baseball skills of Dave Winfield or Johnny Carson’s knack for entertaining late-night television audiences, or Vanna White’s fetching way of turning letters in crossword puzzles. Such workers have talents unique to themselves and so can command exorbitant salaries. Part of their talent may lie in the genes, another part may have developed through cultivation, and still another part would depend on the fortunate circumstances of their particular occupation.

As I write these words, I am waiting for the Minnesota Vikings to play the New Orleans Saints in the NFL playoff. The Vikings Quarterback, Brett Favre, must have been paid a fortune for his past, present, and future “work” this season. Can we say it is millions of dollars to deliver a certain skilled performance that might help the team win the NFL championship and possibly the Superbowl? What economic utility might that have? A Superbowl victory might produce thousands of additional Vikings fans in the future willing to pay high ticket prices. Additionally, it might create an overpowering argument in the next session of the Minnesota legislature that Minnesota taxpayers should help build the Vikings a new stadium. The issue is much more complicated than what a “worker” - Brett Favre, in this case - can do to produce valuable economic output.

Brett Favre knows how to throw touchdown passes. This is at least “productive” knowledge. Some highly paid workers are paid not for what they know, but who they know. On January 3, 2005, Rep. Billy Tauzin of Louisiana retired from Congress after serving for 25 years, including a stint as chair of the House Energy and Commerce Committee. He immediately took a job for $2.5 million a year as head of the Pharmaceutical Research and Manufacturers of America. His lobbying former colleagues resulted in passage of the Medicare Prescription Drug bill which many have said was far too generous to the drug companies. Tauzin, as former head of a key committee, knew the people he needed to convince. His services were possibly worth billions to the drug companies, although he was paid less.

It makes little sense to talk of Tauzin’s effectiveness per hour in doing economically useful work (which resulted in additional expense to U.S. taxpayers). Yes, he had personal skills and knowledge honed by years spent in Congress which were put to good use in lobbying his former colleagues. But his main selling point was that the other members of Congress knew him personally. His years of serving on Capitol Hill all came to bear on his visits with former colleagues and his testimony before committees. And so it is with most sales jobs. It is not the selling skill so much as the cumulative contacts and reputation that one acquires over a career which makes for effective “work”. How to frame this in schemes of “output per man-hour” is difficult to fathom.

But let’s get back to the idea of packing knowledge into work. Many employers continue to function as if work were time-based, and fail to exploit the available resources for knowledge. There is simply not the documentation of work procedures to maintain reliable access, which can cause problems during personnel interruptions. The training process, too, is often misdirected because the trainers do not know what knowledge is needed or they lack the knowledge itself.

The model of work may be partly responsible for such errors. If one believes that work improvement is primarily a matter of employee motivation, one may respond differently than if one believes it has to do with application of knowledge. In the first case, corporate training programs may be conducted by psychologists and other human-resources specialists whose purpose is to instill the proper attitudes in people. In the second case, the programs would attempt to deliver useful information related to the employee’s field of work, if the information exists in a tangible form.

Work-related knowledge is in the nature of an asset; it is a legacy from the past benefitting present performance. The question is: Who owns this asset? Unlike capital equipment, which clearly belongs to the employer, the ownership of knowledge is uncertain. To the extent that the knowledge is of a particular work situation only, then the employer receives exclusive benefit from it and exercises real ownership. Even so, one must recognize that the employee effectively controls knowledge which is inside his own head. If he quits a job, he takes that knowledge with him. This is useless knowledge if too specific to be applied to other employment situations, but, alternatively, a thing of some value as analogous to situations found elsewhere.

The American career system is built on the theory that most work-related knowledge is portable. The worker pursuing a career becomes a labor commodity, in which the knowledge acquired in school or in previous jobs become fused with the worker’s own energies and talent. Therefore, the U.S. worker tends to be a specialist in a particular field of work, whose basic skills are assumed to apply as well to one employer as to another. This is therefore a scheme of careers that encourages job hopping.

It is assumed, for instance, that an experienced purchasing agent from another firm, knowing the “principles” of purchasing, can easily pick up the incidental knowledge involved in changing employment - e.g., meeting the people in different departments or learning where the file cabinets are located - but that a secretary in the purchasing department, already familiar with its operation, cannot be promoted to a buyer’s position due to an insurmountable lack of professional knowledge.

In Japan, the career system is built the other way around. Employees are not labor commodities but members of an organization. They are hired without presumption of any work-related skills, and are subsequently transferred within the firm from one type of work to another in a lifelong process of job rotation and promotion. The Japanese worker thereby learns many aspects of the employer’s business and is less apt to change employers.

The U.S. system of career development is structured that way for reason other than economic advantage. The myth that some workers are endowed with greater amounts or a higher quality of knowledge serves to justify differences in pay. The rigid barriers between jobs of different types are a force serving to restrict labor competition and so drive up compensation.

Why do U.S. employers tolerate this practice? It may be that the people who benefit most from this system, the upper-level managers and professionals, are the ones making the decisions. It may be that educational institutions, with their vast networks of teachers and alumni, also have an interest in the mythology supporting this practice: that only the knowledge acquired in schools or in formal training courses have a real value as knowledge and that knowledge picked up on the job, being incidental, is somehow inferior to that kind.

For employers, an opportunity lies in removing the knowledge from the employees’ heads and expressing it in a more open and objective way. For, most kinds of work are organized along the lines of a rational procedure. Accordingly, the work-performing techniques and procedures can be expressed in words to describe a set of steps needing to be taken. Once that is done, the knowledge so embodied becomes available to any reasonably intelligent person That means that the employers are no longer at the mercy of particular employees, but, if need be, they can hire replacements at an entry-level wage and reliably bring them up to the level of knowledge required in the job position.

The possession of knowledge does not confer such a permanent economic advantage because knowledge is inherently general and therefore accessible to anyone of ordinary intelligence. Only its original discovery involves the uncertainties of the creative process or what is called “genius”. After that, the task becomes to capture the knowledge in a form which will allow it to be transferred easily and reliably to others for the knowledge will be of no use unless the person applying it receives the full communications There is a chain of events in passing knowledge from one person to another which could break down at any point. The challenge for an employer who wants to improve work performance becomes to find the weak links in the chain of communicated knowledge and make the necessary repairs.

The medical industry has undergone a certain revolution with the procedure of following checklists before performing difficult operations. The checklist ensures that all essential knowledge will be brought to bear on the situation at hand. Did, for instance, the surgeon remember to wash his hands? Airlines pilots have long followed this procedure; and it has helped to prevent many accidents. Yet, because medical doctors have an elevated position due to their many years of education, the checklist revolution has met some resistance from that quarter. Who wants to be reminded by a lowly nurse what to do?

In manufacturing, an enormous improvement in production processes took place with the adoption of standard or interchangeable parts, and later with the development of the assembly line. What happened was that the manufacture of goods was removed from the realm of personal craftsmanship. Parts and processes of production were subjected to a universal design. Therefore, the knowledge to do this kind of work no longer belonged to individual workers; it belonged to the system. The workers were required only to follow a rigorous set of instructions provided by engineers. Each part was given a unique number for inventory-control purposes. The smaller and simpler parts were combined in larger and more complicated assemblies belonging to the final product. The work to support such production was likewise organized with meticulous attention to detail. The employees, though highly productive, did not participate intellectually in the work.

Much the same process has begun to affect the world of white-collar work. With the advent of the computer, erstwhile professionals are being turned into knowledge mechanics. We speak of “processing information” as if information were physical parts in manufacturing. Information, too, can have a rational design and what is done with it in the office can resemble processes in a factory. Functions performed in the office might be dramatically improved if their knowledge were explicitly identified. Each piece of knowledge might be given a precise description and be tagged with a number or other identifying feature. The knowledge might be kept in a known storage place, scheduled for regular use, and made accessible to its user. It is here at the point of integrating human labor into a sophisticated operation of knowledge that many systems fail.

It is fair to say that industry’s first experience with computers did not live up to expectations. Mainframe computers were an efficient means of handling large amounts of similar information, but they did not respond well to the need to make adjustments in particular cases. Lacking a sense of reasonableness, they sometimes produced errors which human beings would have caught. Perhaps the worst problem was poor communication of knowledge between computer specialists and the end user. Although reference manuals were usually provided with the software, they were often poorly written, providing much computer-related detail but little help for novices to the system.

Later the personal computer came along, offering more “user-friendly” features. The term, “user-friendly”, is a euphemism for giving the user enough knowledge to work with the computer system. Software packages such as Lotus 1-2-3 were developed, with an array of knowledge-providing features including user-directed menus, step-by-step tutorials, helpful prompts, and reference keys. Gradually more office workers warmed up to the computer, and the technology began to fulfill its promise. The lesson from this is that technologically advanced products may have little benefit unless supported by the right structure of knowledge. The connection between an electronic system and its human user is the weak link in the chain.

Because most people are reluctant to admit their ignorance of work-related knowledge, the problem of simple incompetence may be underestimated. Every work procedure or piece of knowledge required in work can be expressed in numbers and words. The simplest way to do that would be to write it down on a piece of paper. Other techniques exist, however, which may improve the expression or transmission of knowledge. There is the possibility of recording lectures or work demonstrations on videotape which can be played back on television screens as often as a person wants. There are audiocassette tapes, slides, flip charts, and so on, to enliven a presentation of knowledge and reinforce its retention in memory.

Even in a small operation, cultivating knowledge should be the center of improvement efforts. The manager or supervisor is generally the one responsible for this function. Such a person trains new employees or arranges for training. He or she defines the tasks that need to be performed; the definition, in turn, defines the required knowledge. A strong and able leader will communicate well with subordinates, make sure that knowledgeable back-up people are available for various positions, and review methods and procedures in search of a better way. As much as possible, the knowledge should be made objective - be cut loose from particular people and what lies within their brains - so that behind each work function or position there stands a ghost-like structure of expressions to define its being.

But since work is anachronistically viewed in terms of spending time, this part of the process is often ignored. Workers are left alone to do the work they know how to do, and no one else, not even the supervisor, knows that they do. In the absence of such knowledge, the supervisor develops other standards of performance which are more readily determined. He imagines, for instance, that the person who puts in many hours of work must be making an extra effort and doing a good job. The ability to talk intelligently, dress well, tell good jokes, etc, would be some other indications that the employee is probably competent and doing a good job. As a direct result of ignorance and confusion about what workers actually do in this technical age, employers have made a fetish of working long hours. Its basic theme of this philosophy is: If you can’t measure output, you measure input. You see the time that has gone into an activity and assume that something useful has been produced.

value of leisure

Leisure is correspondingly a condition much out of favor in our society today, because it suggests that a person did nothing. At least, the employer did not benefit directly from what the person did. Yet, if creation of knowledge is the key to industrial progress, the people expected to produce this knowledge must have refreshed minds. They refresh their minds more in recreational and other leisure-time activities than in plodding along for many hours in an existing job routine.

Long ago, trade-union agitators argued that it was necessary to cut the hours of work to save jobs from displacement by machines. Advancing technology has made it possible for a smaller number of workers to produce more goods, so that the employer would be able to dismiss others currently employed. If a similar process took place in a number of industries at the same time, the dismissed workers might not be able to become reemployed. Arguments that the economy cannot afford to give working people more time off from work are usually based on the idea that production is directly proportionate to time worked and that less production means less wealth. However, this argument overlooks the vast amount of waste generated in the economy. There is waste in useless products and unwholesome consumption. There is also waste in the process of production.

The “potato-peeling” model of work assumes that production is the limiting factor in the economy whereas we all know that in a capitalistic economy the constraint is usually consumer markets. Production capacity is perpetually in oversupply relative to markets. Given that situation, the remedy is not to increase production through increased hours of work but to increase markets. Cutting hours helps to increase markets because people use more consumer products in their free or leisure time than they do during working hours. The new potential use stimulates consumer demand. Moreover, the job-creation aspect of reduced work hours puts more money in the pocket of previously unemployed workers.

Knowledge is also an element in the consumption of goods. One must learn how to use technologically advanced products. Therefore, to purchase such products implies a commitment to spend the time to acquire the requisite knowledge. Persons who know that they lack the time for this will be inclined not to buy the product. Alternatively, they may purchase the product but never use it.

It may be that goods production may be lagging as an industrial sector because in our leisure-starved society people do not have the time to find a use for certain products, or they may lack the time to learn how to use products properly for which they have a use. Their free time is too scarce to be committed to acquiring knowledge about those products. The consumption of services, on the other hand, is expanding. That may be because purchased services save people’s time. When a person hires a tax preparer to prepare his taxes or a tailor to mend clothing, he does not need to spend time either doing the work or learning how to do it. The provider of the service has this knowledge already and will apply it to one’s service for a sum of money.

In the future, employees of a firm may be given easier permission to reduce hours or take leaves so long as they remain available for consultation as their knowledge is needed. That way, their accumulation of work-related knowledge would not be lost to the firm; neither would it be sold to a competing firm. Such arrangements are often made with recently retired employees, especially in the upper echelons, but there is no good reason why it should not be extended to other employees. Work would then assume a bifurcated structure. Part of it would remain tied to time-based employment and expenditure of personal effort. The other part would supply knowledge and levy an access charge. In such arrangements, the contractual form of labor would coincide more closely with its underlying purpose.

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