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Forbes

What Fissured Workplaces Really Mean for Workers

For much of the 20th century, companies were structured very hierarchically. Workers reported to those above them in the organizational structure, with a CEO or company president at the top. But many companies today have adopted a different model that has significant implications for workers. Welcome to the rise of the fissured workplace. LONDON - NOVEMBER 03: Production staff on the weekly fashion magazine, Grazia edit the magazine in ... More a temporary office inside the Westfield shopping centre on November 3, 2008 in London. For one week Grazia magazine is being produced in the Westfield shopping centre and are offering shoppers free make-overs, fashion consultations and advice on pursuing a modeling career. (Photo by) WHAT ARE FISSURED WORKPLACES? Economist David Weil describes fissured workplaces as an arrangement where lead companies outsource core functions to smaller firms. This can mean a hotel chain subcontracting cleaning services out to a staffing agency rather than directly hiring cleaners; a financial services firm that routes tech support through a separate company instead of taking on these workers as employees; or a franchise model where independent operators bear responsibility for hiring, wages, and even work conditions. In these cases, companies can, for the most part, still manage to meet core basic needs and provide services. The hotel can house guests, the financial services firm can make clients' money, and the franchise can serve customers food. But they all do this by relying on workers who are not classified as employees, creating additional layers and rungs between organizations rather than within them. We can trace the rise of fissured workplaces back to the 1980s, when increasing numbers of companies began adopting this model over the previous one of more direct employment. And since then, fissured workplaces have grown remarkably. Today, fissured workplaces are not just affecting those in jobs like cleaning and food service that have historically yielded low wages and uncertainty. Now, even professional jobs that require college or even advanced degrees—accounting, tech, human resources--are becoming subject to the whims and vicissitudes of the fissured workplace. PROS AND CONS OF THE FISSURED WORKPLACE Proponents of fissured workplaces will argue that they allow firms to reduce costs, streamline operations, and of course, maximize profits. And there is a case to be made that fissured workplaces, and the short-term contracts that characterize them, give workers flexibility and freedom to pursue options freely, move in and out of the work force when desired, and more leverage to follow opportunities that are right for them. But there are numerous disadvantages to this type of arrangement as well: low wages, lack of benefits, and precarious employment, potential health and safety violations. Workers who rely on client firms can have a very difficult time establishing long-term employment, since their work is often contract based. And even when those in the fissured workplace secure full time employment, the distance from the lead company can make the work experience very different than the case of direct employment. Benefits like health care coverage, disability insurance, and sick or vacation leaves may be harder to attain in a fissured workplace model with more short-term employment and fewer direct employees. Companies can also exploit health and safety standards more easily in fissured workplaces by saddling contractors they hire with more dangerous or even illegal tasks. Data from the Census of Fatal Occupational Injuries bears this out, with reports showing that in 2017 12% of workplace injuries that resulted in fatalities were among short-term contract workers, a much higher percentage than that of full time employee counterparts. Sociologist Dustin Avent-Holt and Don Tomaskovic-Devey find that earnings inequality is on the rise in many countries, and much of this is related to the disparities between firms—the larger ones that offer jobs with security, benefits, and wages, and the smaller ones these companies contract with, that offer none of these. Coronavirus outbreak, Covid 19, remote working, video conference in a company. Man sitting at his ... More desk holding his head with his hands. (Photo by: Tesson/Andia/Universal Images Group via Getty Images) IMPLICATIONS Maybe one of the most important takeaways from the rise of fissured workplaces is that they can contribute to worker pessimism and doubts about the economy and how well it is working for them. For workers who are on short term contracts with a client company, subject to potentially dangerous work, and doing jobs that do not provide benefits or high pay, it can be very hard to hear that companies are adding jobs, unemployment is low, and that the stock market is strong. The rise of fissured workplaces--and all the detriments they bring to workers--is an important reminder to pay attention not just to the quantity but the quality of jobs in our economy. It's also worth asking about the implications of fissured workplaces on consumers. Organizations in the health care industry have become increasingly reliant on this model for hiring and staffing, but this approach could theoretically have adverse consequences for patients who rely on long-term, close relationships with providers to advocate for them and ensure quality care. And it's not too hard to imagine disastrous (and gross!) outcomes for patrons of a restaurant franchise in the fissured workplace if the workers face pressure to skirt health and safety regulations. Fissured workplace models are becoming increasingly common, but it's worth asking exactly what economic, social, and physical costs consumers and workers are paying as a result.