UnMarginalizing Workers: How Big Data Drives Lower Wages and How Reframing Labor Law Can Restore Information Equality in the Workplace

58 Pages Posted: 8 Aug 2016

See all articles by Nathan Newman

Nathan Newman

Information Law Institute- New York University

Date Written: August 5, 2016


While there has been a flurry of new scholarship on how employer use of data analysis may lead to subtle but potentially devastating individual discrimination in employment systems, there has been far less attention to the ways the deployment of big data may be driving down wages for most workers, including those who manage to be hired. This article details the ways big data can and in many cases is actively being deployed to lower wages through hiring practices, in the ways raises are now being offered, and in the ways workplaces are organized (and disorganized) to lower employee bargaining power — and how new interpretations of labor law are beginning to and can in the future reshape the workplace to address these economic harms.

Data analysis is increasingly helping to lower wages in companies beginning in the hiring process where pre-hire personality testing helps employers screen out employees who will agitate for higher wages and organize or support unionization drives in their companies. For employees who are hired, companies have massively expanded data-driven workplace surveillance that allows employers to assess which employees are most likely to leave and thereby limit pay increases largely to them, lowering wages over time for workers either less able to find new employment because of their age or less inclined in general to risk doing so. Data analysis and so-called “algorithmic management” has also allowed the centralized monitoring of far flung workers organized nominally in subcontractors or as individual contractors, while traditional firms such as in retail implement data-driven scheduling that resembles the “on-demand” employment of independent contractors. All of this shifts risk and “downtime” costs to employees and lowers their take-home pay, even as the fragmenting of the workplace makes it harder for workers to collectively organize for higher wages.

The article addresses how we should rethink and interpret existing labor law in each of these aspects of the employment process. The NLRB can reasonably construe many pre-hire employment tests as violating federal labor law’s prohibition of screening out union sympathizers, much as the EEOC has found many personality tests violate the Americans with Disabilities Act by allowing indirect identification of people with mental illness. Similarly, since big data analysis can reveal pro-union sympathies of current employees, under existing prohibitions of “polling” employees for their views, a reasonable extension of the law would be to prohibit sharing any personal data collected by management that might reveal protected conduct or union sympathies with line managers or outside management consultants involved in advising in labor campaigns. The Board can also level the informational playing field by making both hiring algorithms and those determining pay increases more available during collective bargaining. The Board is already moving to expand its “joint employer” doctrine to allow workers to challenge the fragmented workplace increasingly driven by algorithmic management and a clear recognition that algorithms establish exactly the control of nominally independent contractors or subcontractor’s workers that entitle them to collective bargaining rights with a central employer, strengthening worker bargaining power.

Such a “collective action” approach to the problem is far more likely to succeed than other proposals focused on strengthening individual worker privacy or anti-discrimination rights in the workplace in regards to data-driven decision-making. As scholars have noted, disadvantaged groups under the civil rights laws may have sharply different preferences in wage versus benefit packages, so a process that increases informational resources for all workers and allows them to negotiate together for the mix of wages, benefits, work conditions and other “public goods” in the workplace, including privacy protections, will better reflect the overall interests of employees than in either a classic economic model based on a marginal worker’s “exit” or a “rights consciousness” litigation approach to rein in individual employment harms. In making this overall argument, the article partially addresses the debate on why wages have stagnated and even fallen below productivity gains over the last four decades as the deployment of data technology has played a significant and growing role in helping employers extract a disproportionate share of employee productivity gains to the benefit of management and shareholders.

Keywords: Labor Law, Employment Law, Cyberlaw, Privacy, Law and Economics, Theory of the Firm, Big Data

Suggested Citation

Newman, Nathan, UnMarginalizing Workers: How Big Data Drives Lower Wages and How Reframing Labor Law Can Restore Information Equality in the Workplace (August 5, 2016). Available at SSRN: https://ssrn.com/abstract=2819142 or http://dx.doi.org/10.2139/ssrn.2819142

Nathan Newman (Contact Author)

Information Law Institute- New York University ( email )

40 Washington Square South
New York, NY 10012-1099
United States

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