Both Workplaces and Gig Economy Companies Are Killing People, This Stanford Professor Warns
'Dying for a Paycheck' author Jeffrey Pfeffer dispels the myths of gig work as a reprieve from the 9-to-5.
In this series, The Way We Work, Entrepreneur Associate Editor Lydia Belanger examines how people foster productivity, focus, collaboration, creativity and culture in the workplace.
Workplace stress is the cause of 120,000 deaths per year in the U.S. alone. Demanding bosses and schedules, smaller staffs and increased workloads, long commutes and more entice some to ditch the 9-to-5 for entrepreneurship and freelance or gig work. But once you break free of the confines of the traditional workplace, are you really that much better off?
That’s the ultimate conundrum entrepreneurs face, especially when major research organizations such as Gallup define a “good job” as “30-plus hours per week for an employer who provides a regular paycheck.” Meanwhile, the U.S. Supreme Court ruled Monday that companies can continue to include arbitration clauses in employment contracts to prohibit workers from filing class-action lawsuits.
In his book published this spring, Dying for a Paycheck, author and Stanford Graduate School of Business professor Jeffrey Pfeffer examines how poor worker management translates into poor physical and mental health for full-time employees and contractors alike. Many in both groups lack autonomy and job security, and they’re overworked and expected to be reachable 24/7 in a connected world.
In this Entrepreneur interview, Pfeffer dispels the myths of entrepreneurship to caution those who think it might solve all of their work-related problems. Those who don’t have cushy “good jobs” face other disadvantages. While you might be able to afford forgoing a stable salary, it might be tougher to manage without the various forms of insurance your old employer supplied.
Read on for Pfeffer’s candid take on work of all kinds today, as well as his thoughts about what solopreneurs can do to cope and what company leaders can do to boost well-being in their organizations to help their workers and their bottom line.
1. Do you think workplace conditions are driving people to work for themselves, as traditional entrepreneurs or freelancers?
Well, it may be, though I think one of the big sources of stress in life is economic insecurity. There is a tremendous amount of data that suggests when people are not sure what their schedules are going to be from one minute to the next, that's a significant source of stress. If you don't know how many hours you're going to work, you obviously don't know how much money you're going to make, either.
People may leave bosses who micromanage them and places that expect them to be on all the time, anticipating that they're going to have more flexibility and a less stressful life. But you have to balance those sources of stress against the stress of economic insecurity and the scheduling risks that come from being out on your own.
2. What are those roadblocks freelancers or gig workers run into that actually end up making them less prosperous or less healthy?
As an individual entrepreneur, you do not necessarily know where your next gig is going to come from. Therefore, people feel they have to be always in the market and always available. Ironically, these workers experience psychologically less freedom and autonomy than some people working inside organizations.
Everybody has this idea that life is going to be wonderful as an entrepreneur. But of course, most small businesses fail. And it's very competitive. Inside of companies, of course, it's competitive, but it's also competitive when you're out on your own. When you're out on your own, you have to be very good at marketing and business development. Many people are very good at doing the work. They don't necessarily have great skills in getting the work.
3. And then there's the issue of insurance being tied up in employers in this country as well.
We are unique among industrialized countries in having so many benefits -- health insurance, unemployment insurance, workers’ comp, retirement -- all of this stuff is tied to the employer. Many countries make it much easier to be a free agent, because there's a national system that's kind of a national IRA or Keogh system in which you contribute and the government invests the funds, or you direct how the funds are going to be invested. It's very portable, and it doesn't depend on you having a job with a specific employer. The U.S. has made it harder for people to be out on their own, because so much of the stuff depends upon you being an employee.
4. What do you think are some of the steps we need to take as a society to make the gig economy the utopian ideal that it's often touted as?
I'm not sure we can ever do anything about the utopian ideal, but there are many issues with the gig economy. The most obvious one is that the gig-economy companies' interests and workers' interests are almost 180 degrees opposed to each other.
If I'm Uber, I want basically a zillion Uber drivers so that nobody ever has to wait more than two or three minutes for an Uber car, and therefore they're never tempted to use a taxi or a Lyft. But for the drivers, this excess capacity looks like reduced income. Under the old taxi regulated scheme, they limited the number of medallions for public policy reasons, but they also limited the number of medallions so that the taxi drivers could make a living.
There was a service earlier this year for four taxi drivers who had killed themselves. They put four empty coffins at City Hall, and there was a protest. People can't earn an income, and they're killing themselves.
5. Are certain organizations out there that you've seen in your research, or policy groups that are doing promising work?
The Freelancers Union has tried to do some things to offer medical benefits, for instance, to freelancers. They get you collective buying power and administer pensions. Beyond that, I'm not sure who else I would point to.
6. Are there resources or mindsets people who aren't within the ‘full-time jobs for an employer’ group can do to mitigate some of the problems that they face?
Social support reduces stress. There have been a bunch of studies that show that friends are good for your health, not surprisingly. So you need to have friends, preferably friends outside of work, and time to spend with them. You need to live in a community where people know and like each other and you can hang out together.
One of the other interesting aspects, of course, of the so-called gig economy is that everybody is not only working in much more precarious arrangements where they don't know their pay from one minute to the next, but they're also working by themselves, and that's too bad as well, because another thing a job gives you is this kind of social connection.
7. What can company leaders do to be forces for good?
When your employees feel stressed, they're more likely to quit, and turnover is expensive. Also, there's no evidence that suggests that long work hours actually make people more productive. As a matter of fact, there's evidence that suggests the reverse. And when people are sick, they're not as productive -- there have been studies of that.
Walmart figured out that environmental stewardship turns out to be profitable, because when there's less waste of physical environmental resources -- things such as cardboard and building materials, et cetera -- it turns out to be much better economically. The same is true for human resources. To the extent that we get better at conserving our human resources, we will find that it's much more profitable for individual companies.
8. Even when companies proclaim to have people-first values, you see instances coming out of these companies of people being overworked and mentally unstable. Are companies making a bunch of noise and jumping through hoops to make it look like they care?
It's one thing to have policies and names and labels, it's another thing to have values that actually reflect some concern about people's well-being. One of the stories I tell in the book is a $170,000-a-year Uber engineer who killed himself. There's a lot of discussion of Uber's difficult work culture, though it may be changing under the new CEO -- who knows?
If you're a large organization administering a health plan, all you need to do is go to your health plan administrator and say, 'What percentage of my employees are on antidepressants?' 'What percentage of my employees are on sleeping medications?' 'What percentage of my employees are taking ADHD drugs?' In other words, 'What percentage of my employees are taking psychotropics to cope with the work environment I've created?' And if that number is high, you ought to do something about it.
9. It's just so hard for some people to know what to do about it, because they've had so many pressures themselves to act in the way they've been acting, or have fewer people working full time.
I tell people all the time, they say, “Summarize your book in a sentence,” and I say, “The workplace is killing people, and nobody cares.” And to me, the second part is worse than the first. We do not care about human health and well-being. We do not care about human psychological physical health. We do not care about people. And until we change that orientation, it's going to be ugly.
And, by the way, countries are going to face higher healthcare costs. The British government says, we're paying, through our national health system, for the healthcare for all of these people that companies are making sick. We need to get the companies to stop making people sick. If we're concerned about healthcare costs in the United States, the first thing you need to look at is the workplace. Chronic disease comes from stress, stress comes from the workplace.
10. Then there are all of these wellness initiatives, where you can go to yoga class. But I read a study that found wellness programs don't really work.
They don't, because they're remediation. We know for almost any kind of health and wellness issue, or for that matter, any kind of issue in business in general, prevention is much more effective and cheaper than remediation. So instead of giving you a nap pod, why don't they give you work hours that you don't need to take a nap?
11. What needs to be done to improve workers' health and well-being?
We learned years ago from the quality movement that what gets measured receives attention and often improves, and what is not measured falls from view and typically degrades. That principle can be applied to the domain of human sustainability as well. One question assessing self-reported health prospectively predicts mortality and healthcare spending, even after statistically controlling for people’s current health status. There are well-validated scales measuring many important dimensions of work environments, such as work-family conflict, economic insecurity and job control. If we are serious about improving human sustainability, the simplest and most important thing to do is to measure it, and the dimensions of workplaces that numerous epidemiological studies show predict health and well-being.