Authors such as Richard Florida in "Who's Your City?" and Roger Martin & James Milway in "Canada What It Is, What It Can Be" mention a "Creative Class" - workers with good wages doing interesting things, versus RoutineService and RoutinePhysical with lower wages. But what exactly is driving the wage gap? And what might the future look like for careers?
CREATIVE CLASS - the 'profit' gap with everyone else:
Economists talk about 'monitoring' and agency theory and efficient wages. I mention it because one way to explain the wage gap between CreativeClass vs RoutinePhysical and RoutineService is how easy it is to monitor effort. Which has been changing with the era of digital records. Hiring a night-shift worker for your fast-food store? 50 years ago you would need to pay enough so the worker would fear losing their job even when not directly monitored. That's because you had no way of tracking how much they were taking home in their pockets. So the fear of being discovered had to be high: loss of a good paying job. The extra wage premium that created a sufficient level of fear economists call 'efficient wages' - efficient because it saves the cost of having a supervisor standing over every worker every shift. But even supervisors are often 'agents' for the owners if they are hired help. So they need efficient wages too. To reduce the agency and efficient wages, owners can do the supervising themselves. But then it's hard to scale up the business. And that led to more small local businesses doing routine things. It was hard to scale a routine business because of the agency / monitoring issue.
More recently with the digital era of bar codes, computer reciepts and computer tracking -and with tiny cameras positioned around the place of business, and telling the employees the cameras are there in case a bad guy comes in- the cost of monitoring employee effort has gone way down. And that means more monitoring. And that means less 'efficient wage' premium. And less need for extra layers of agent supervisors being paid efficient wages to monitor. And that means small proprietor shops can be replaced by / consolidated into cross-country chains.
HARD-TO-MONITOR CREATIVE WORK
The exception to this trend would be the kinds of jobs that even if you were staring directly by the individual, you might not be able to tell if they are performing well or poorly. To a large extent you rely on 'qualifications' and assume if they were driven to get say a BSc in something that might be a somewhat indirect measure of some natural baseline internal motivation the individual has for making a contribution to understanding and knowledge. Then look if they published anything - a sign they not only like to build knowledge but do it in a shareable way. Still, since it's hard to monitor effort, you'd want them to at least not be worrying about their financial future and hedging their bets. You'd want them to focus on your stuff. And you'd want them to fear losing the opportunity to contribute, so you'd pay them highly efficient wages.
They would know a few things from that: a) they may be able to slough-off shoddy effort for 6 months or a year but eventually when it comes to publishing they would be found out and let go, and b) they're making enough money that if they focus and do a good job they should be well looked after - no need to hedge with other activities.
The dichotomization is on the dimension of monitorability.
MONITORING THE (CURRENTLY HARD-TO-MONITOR) CREATIVE CLASS
Lets say I come up with computer algorithms that can now monitor the creative types. Like bar codes, computers and security cameras did for routine jobs. There are some analogies: software boiler rooms have 'testers' so instead of paying programmers highly efficient wages so they are more careful not to make mistakes and to think of everything, you can pay them less and hire testers. The testing is like monitoring. If a programmer is spewing out a lot of broken code the testers will have statistics on that. So you should be able to pay programmers less efficient wages. And you should be able to scale your operations beyond a small-shop environment. You could even outsource the implementation overseas.
Likewise you might be able to peel away at more of what has been traditionally efficient wage territory, one by one. Step 1: adopt modern monitoring techniques Step 2: cut efficient wages
ADOPTING vs INVENTING MODERN MONITORING TECHNIQUES
Now lets say you're left with some work tasks still falling into the CreativeClass. You've searched high and low for off-the-shelf monitoring techniques and came up empty. Still expensive efficient wages. What to do?
Now lets say you're left with some work tasks still falling into the CreativeClass. You've searched high and low for off-the-shelf monitoring techniques and came up empty. Still expensive efficient wages. What to do?
a) scale implementation -which is monitorable- of creative output and/or outsource it to low wage zones so there's more revenue to pay the highly creatives efficient wages
b) invent some new monitoring techniques for those creative jobs, and then cut the efficient wages to save money. But how?
Some ideas that pop to mind:
1. analogies to software testing: specify testable outputs in the job description and hire routine (non-efficient wage) monitors
2. statistical programs and large comparison datasets with many parameters
- for example a dataset for 5000 economists: how many papers and books published, weighted by number of downloads and references, number of students who go on to great things, impact of research on positive economic results for the world
3. algorithmic programs - something that tries to think like an expert, and can 'judge' or serve as a peer expert to compare against. Expert programs have been used in diagnostic medicine. Then some statistics on how well you are doing.
4. peer review - something done in science publishing. Somehow make more of the creative job peer reviewable, and somehow motivate independent peer reviews while avoiding collusion or petty politics - likely using modern web technologies to make the peer reviews fast and cheap
5. online review > comments/feedback - get those affected to put in their Comments, Like, and cut the cost of monitoring.
VS SPREADING THE JOY - MAKE ROUTINE JOBS PARTLY CREATIVE
Some authors seem to argue for a 'creativization' of routine work: rather than make all jobs more monitorable, and therefore more routine and therfore paying less efficient wages, the idea is to get more hard-to-monitor creative component into each job, in such a way it pays off for the company and the employee. In some cases computer technology may be able to assist: help capture and utilize creativity by every worker, like a suggestion box on steroids. For example an internal issue system where any employee can create an issue, and any employee can offer suggestions to solve/improve the issue. To some extent this would reduce the need for a CreativeClass worker doing all the thinking. So it would be like spreading the CreativeClass premium across the RoutineClasses. That may have net benefits to the company: better profits, differentiation, competitiveness, flexibility of the business model across geographic and cultural zones, and over different stages of economic cycles: flexibility, growability and sustainability.
Firms might differentiate on the extent to which they attempt to increase routineness through monitoring to cut efficient wages, or increase creativity for flexibility, growability and sustainablity at some cost of more efficient wages, or some cross such as increasing creativity monitoring while increasing or sustaining efficient wages.
In the last century we saw Hollywood movies with future themes, where some computers are supervising everyday life, implying that computer intelligence supercedes human, so why fight it.
In this century I expect to see us getting closer to that, as computer technology facilitates less costly means of monitoring the human effort we currently class as creative. Where that all leads I can only ask my creative peers to explain their wage premiums as reshuffling of staff positions occurs.
