Winner-Take-All Economics

View image |

In the fall of 2013, Goldman Sachs began discouraging their investment banking analysts from working weekends, reasoning that it would prevent employees from burning out or hightailing it to Silicon Valley, where they could land a well-paid job and work fewer hours.

“The goal is for our analysts to want to be here for a career,” a Goldman head of investment banking told Bloomberg. “We want them to be challenged, but also to operate at a pace where they’re going to stay here and learn important skills that are going to stick. This is a marathon, not a sprint.” Other large banks followed suit.

A year later, reports began trickling out that “protected weekends” weren’t very effective. A junior banker at Deutsche Bank told the Times, “If you have 80 hours of work to do in a week, you’re going to have 80 hours of work to do in a week, regardless of whether you’re working Saturdays or not.” And a Bank of America source told a reporter at Slate, “If you ask any junior banker, they would rather get paid the way bankers used to be paid and work the way bankers used to work than have protected weekends.”

Wall Street is known for its cutthroat culture, and as the anonymous sources revealed, giving up weekends was one way to remain in the competition for big bonus checks.

This cutthroat mentality has been reproduced by Amazon, and depicted in the Times:

The company’s winners dream up innovations that they roll out to a quarter-billion customers and accrue small fortunes in soaring stock. Losers leave or are fired in annual cullings of the staff — “purposeful Darwinism,” one former Amazon human resources director said.

Robert H. Frank, an economist at Cornell, told another Times reporter, “In a competitive environment, that’s what you get.” Frank had previously written a book about “winner-take-all economics,” a theory that argues that a few top performers in a market will capture a large share of rewards, leaving the remaining competitors with scraps.

You can also see this in the legal profession: only a select few ever make partner. A post on the American Bar Association’s website about making partner includes tips such as billing 2,200 hours a year, working on professional panels, and generating a lot of business — essentially being married to your job.

The Amazon story provides several sources who expose the problem with the “winner-take-all” mentality: people get thrown under the bus in the name of “purposeful Darwinism,” parents — especially women — get penalized for having children and needing flexible work hours, those who experience health crises receive little empathy. We can chasten Amazon for their dreadful treatment of white collar workers (and remember that their blue collar workers have it even rougher), but the reality is that “winner-take-all economics” is being replicated not just at Amazon and Wall Street and the legal field but so many other companies that haven’t yet received the Times treatment and very well should (recall that Times reporter Jodi Kantor, who worked on the Amazon story, also exposed the chaotic working lives of Starbucks employees, which resulted in the mea culpa that immediately followed). Amazon’s story is an example of the bad things that can happen when we embrace winner-take-all economics, but it’s also the poster child for the American culture of work. It’s our worst fears realized when we think about success-at-all-costs corporate America.

This culture of work and fierce competition is entrenched in the U.S. It’s a talking point for politicians whenever they mention everyday hard-working Americans. These Americans don’t use their vacation days. Netflix, Google, and Facebook’s generous family leave policies and other benefits promoting work/life balance don’t demonstrate a sudden shift in our work values — they’re examples of outliers. We dream about mandatory paid family leave in the way we dream about affordable health care for all. And we know that we are still a long way off.

Support The Billfold

The Billfold continues to exist thanks to support from our readers. Help us continue to do our work by making a monthly pledge on Patreon or a one-time-only contribution through PayPal.


More ...