Examining Outsourcing in a political economy | Teen Ink

Examining Outsourcing in a political economy

July 24, 2024
By JackySun SILVER, Blairstown, New Jersey
JackySun SILVER, Blairstown, New Jersey
8 articles 0 photos 0 comments

The Fissured Workplace, written by David Weil in 2014, discusses the increasing 

fragmentation of employment relationships and its consequences for workers, businesses, and society. In this reflection I will examine the first chapter, addressing the intricate nature of fissuring that made it appealing to shareholders while negatively impacting the workers. Fissuring differs from the employment relationship compared to the twentieth century in ways that “employment has been actively shed by these market leaders and transferred to a complicated network of smaller business units”(Weil 2014, 8). In other words, subcontractors and lower-level companies perform the tasks once performed by core companies, which can often be blurry regarding the policies, responsibilities, and payments. Operating in “more highly competitive markets than those of the [core companies]”(Weil 2014, 8) and an extremely vulnerable environment, fissured companies face various challenges…posing the question of whether fissuring is the ideal economic approach for shareholders and employers, and workers. 

On one hand, fissuring gradually became an efficient approach for employers to maximize profit through multiple approaches. They avoid responsibilities: escaping mandatory payments “such as unemployment and workers’ compensation insurance or payroll taxes”(Weil 2014, 10).  Meanwhile, by cutting off direct relationships with lower-level companies, core employers escape from liabilities such as medical care payments, legal holidays, and workplace injury compensations. Nevertheless, as bad as the instances above may sound cruel, fissuring significantly benefits society as a whole. Through fissuring, the emergence of varying subcontractors and new entities provides more job opportunities and instigates more competition, potentially lowering prices for the good of the consumers.  Moreover, companies can focus on improving their core competencies by specializing in specific areas, leading “to the development of new and better products available at lower prices”(Weil 2014, 15); increasing commodities’ availability to a greater population.  

On the other hand, as appealing as fissuring might sound, let us not neglect the social challenges, instabilities, and inequality it poses. Foremost, the stagnant growth or even decline of wages and pensions has been an pervasive, and ongoing issue. Focusing on core competencies and value shifts the risks and responsibilities onto smaller units, creating downward pressure on wages and working conditions. For instance, exacerbated by fissuring, “real wages for median workers grew by only 0.5% between 2000 and 2012”(Weil 2014, 16); workers in the lower levels are squeezed by employers, with increasing labor and productivity, with little to no bargaining power and access to economic opportunities. Furthermore, the vast majority of the existing labor laws are based on traditional employer-employee relationships, thus often failing to account for changes. As a result, these laws often fail to protect workers' rights and safety. Due to the sophistication of relationships between core companies and the branches, blurred responsibilities often leaves labor disputes, healthcare, retirement plans, and violation of standards/laws unaddressed. In the meantime, fissuring brings about extreme job insecurities. Along with those minor sectors of core companies, layoffs or the hiring of temporary workers or contractors instead of full-time employees, also known as ‘gig’ economy, gradually becoming commonly practiced. Likewise, it continues to put workers in vulnerable positions in terms of rights, wages, and freedom. 

Nowadays, large companies like Marriott, Time Warner, Walmart, and Hershey have increasingly outsourced jobs that were traditionally done in-house. These include roles like maids, cable installers, janitorial services, loading dock crew members, and so on. As you can see, the majority of individuals in lower-level companies and the gig economy tend to settle in the lower social classes. Therefore, it is debatable whether the form of economy is ideal for society: benefiting the high-ends while exploiting the lower-class workers. 


The author's comments:

A summer course-PLSC 10301 Confronting a Political Economy in Crisis: Examining Causes, Creating Change-discussion essay addressing outsourcing in a political economy's perspective. 


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