The Symbolic Analyst Sweatshop in the Winner-Take-All Society

The current job market is tough, especially for recent college graduates with limited experience. The unemployment and underemployment rate for twenty-somethings is around 53%. Many who are employed work jobs for which they are overqualified. My wife, for example, has a master’s degree in Biotechnology and several years experience but works part-time for fifteen dollars an hour with no benefits as a laboratory technician. It increasingly appears that most job growth is occurring in low-skilled and low-paying positions. Some rise in the demand for highly skilled technical positions, however, suggests not a rising tide but a job market becoming more and more polarized in terms of both skill level and wages.

Yet, what is most disturbing about recent job market trends is not the continuation of wage/skill polarization but the dramatic increase in highly skilled knowledge workers, what Robert Reich called “symbolic analysts,” driven to work for nothing or next to it. Some have referred to this phenomenon as the “post-income” or the “post-employment” economy. While internships and other low paying positions traditionally amounted to a form of apprenticeship and eventually led to a stable position, the economics of the recession has spurred their development into a more permanent form of employment. Yet, it would be inaccurate to blame this simply on the weak job market. These areas of the economy are winner-take-all markets, and the recession has likely just exacerbated their effects.  

Economists Robert Frank and Philip Cook both described the functioning and explained the rise of winner-take-all markets in many areas of economic life in their 1996 book The Winner-Take-All Society. Such markets exist whenever the institutional and technological circumstances are such that an economic good is enjoyed on a large scale and/or fewer producers become required to produce it. As a result of exponentially increased payoffs accruing to those you succeed in becoming one of the few producers at the top, evermore contestants enter the game and invest increasing amounts of resources towards their attempts to win the competition.

A classic example of a winner-take-all market is popular music since the advent of recording technologies. The ease of distributing music content and the low cost of duplicating performances, coupled with the small number of artists that any particular consumer can remember or remain interested in, both limits the number of pop stars at any particular moment and greatly amplifies the benefits enjoyed by those successful at becoming one. At the same time, the difference in talent between a successful pop star and someone who almost was one is close to negligible. It is this latter aspect that is critical to understanding the winner-take-all phenomenon: ever slighter differences in ability account for ever larger pay differentials. This, along with the increase in competitors and the intensity of the competition, accounts for the main negative consequences of such markets: social waste, inefficiency and augmented levels of inequality. Not only does the contemporary winner-take-all market in music waste the efforts of would-be pop musicians who over estimate their chances and never make it but also results in job markets consisting of a few super-rich and many making nothing at all, rather than a larger number of musicians of more moderate means.  

While music, art and sports have clearly been winner-take-all markets for at least a generation, their emergence in other fields is new. Increasingly, highly skilled knowledge workers work long hours for poverty wages or even no pay at all, often for years, in the hopes of winning the contest to become career Washington insiders, college professors, magazine/blog writers or attorneys. The second novelty to this growth in winner-take-all markets is that, in contrast to would-be pop singers whose talents go unheard, the fruits of these wannabe career knowledge workers do get consumed. It just so happens that much of the revenue generated from it never ends up in their pay checks. Seventy percent of college instructional faculty members, for instance, are not tenure-track, but adjuncts making as little as two thousand dollars to teach a course that twenty or more students each paid several hundred to thousand dollars to take. Contestants are not competing in these markets for the right to produce goods for them but for the chance to earn a good wage, status and job security.

There is a name for workplaces within which human beings toil for long hours creating products that are sold by their managers for ten to twenty times more than the cost to make it: sweatshops. Unsurprisingly, arguments for maintaining sweatshops for American college graduates often vary little from those mobilized in defense of those present in countries like Haiti.  Some decry the idea of raising sweatshop wages or banning unpaid internships since doing so would entail fewer positions in the short-run, seemingly implying that social utility is better maximized by large numbers of people scrapping to get by rather than some smaller number of people earning a decent paycheck. Such arguments, for either kind of sweatshop, ignore both the multiplying economic benefits of living wages and the larger problems cascading throughout economies as a result sweatshop practices, including: lower incomes for the average worker in the global/national job market and increased inequality. There are, of course, major differences between sweatshops in places like Haiti and the contemporary sweatshop for symbolic analysts. The former are simply seeking to feed and house themselves; the latter are vying against each other for a shot at a high-status and salaried job.

By many measures the growth of the symbolic analyst sweatshop market is clearly undesirable; something ought to be done about it. Free marketers, of course, will deny any problem, likely claiming that it is just the analyst’s free choice to work for very little; this position obviously ignores how the employers involved are exploiting both the human tendency to overestimate one’s abilities and chances to succeed and the psychologically seductive power of a potentially high pay-off gamble. It is one thing when the loss from a bet is the ten dollars for a lotto ticket but quite another when someone’s livelihood and several years of their life is at stake.

Regardless, Frank and Cook list several possibilities for reform. They suggest that winner-take-all markets can be mitigated through mechanisms that lower the rewards accruing to winners and reformulating incentive schemes to prevent too many people from entering the market, such as student loan and aid policies. True enough, there are likely far too many people being encouraged to pursue careers as lawyers, college professors and Washington policy analysts. Yet, the problem may be bigger than that and not solved by simply redirecting students into STEM fields. It might be that there are too many college grads seeking too few highly skilled positions. The continuing polarization of the job market and decline of moderately skilled but otherwise good jobs due to automation and other technological changes likely has only amplified the winner-take-all competition. It is one thing to give up one’s dream of becoming a college professor to be an engineer or accountant instead; graduates faced with the prospect of stocking grocery store shelves or sweeping floors for minimum wage pay are understandably desperate.

A broader view of the development of the symbolic analyst sweatshop would take account of the whole range of policies, cultural ideas and sociotechnical systems that facilitate the current ways of doing employment. Rather than aiming to make the nation as compatible as possible with the winner-take-all market of international free-trade and look appealing to global financial capital, why not use the standard of the “good job” to guide employment policy. Such a standard would take as given the desirability of a broader distribution of jobs that are mentally stimulating, connect workers to each other and their communities, and pay a living wage. CEO’s could be awarded bonuses according to the number of people making a decent wage at their firms, counteracting the tendency to slash positions to appease stockholders. Policies encouraging workplace democracy or cooperative arrangements could avoid the necessity for legislators to actually design the exact conditions for the “good job,” encouraging workers to do it for themselves. Some constellation of such changes would likely create new problems of its own but certainly could not be any worse than the status quo.