# Professions under the Microscope

## Ethical Issues in the Provision of Health Care

### Learning Objectives

By the end of this section, you will be able to:
1. Identify ethical problems related to the availability and cost of health care in the United States and elsewhere
2. Discuss recent developments in insuring or otherwise providing for health care in the United States
Private health care in the United States has historically been of high quality and readily available, but only for those who could afford it. This model for rationing health services is rare in the developed world and stands in dramatic contrast to the provision of health care in other industrialized economies. Those who provide health care and administer the health care system find that balancing the quality of, access to, and cost of medical care is an ethical dilemma in which they must continually engage.

### Multipayer Health Care in the United States

Typically in the United States, medical services have been dispensed through a multipayer health care system, in which the patient and others, such as an employer and a private health insurance company, all contribute to pay for the patient’s care. Germany, France, and Japan also have multipayer systems. In a single-payer health care system such as those in the United Kingdom and Canada, national tax revenues pay the largest portion of citizens’ medical care, and the government is the sole payer compensating those who provide that care. Contributions provided by employers and employees provide the rest. Both single- and multipayer systems help reduce costs for patients, employers, and insurers; both, especially single-payer, are also heavily dependent on taxes apportioned across employers and the country’s population. In a single-payer system, however, because payment for health care is coordinated and dispensed by the government, almost no one lacks access to medical services, including visitors and nonpermanent residents.
Many reasons exist for the predominance of the multipayer system in the United States. Chief among these is the U.S. tradition that doctors’ services and hospital care are privatized and run for profit. The United States has no federal health care apparatus that organizes physicians, clinics, and medical centers under a single government umbrella. Along with the profit motive, the fact that providers are compensated at a higher average rate than their peers abroad ensures that health care is more expensive in the United States than in most other nations.
The United States also has more health care professionals per citizen than most other countries, and more medical centers and clinics (). One positive result is that the wait for most elective medical procedures is often shorter than in other countries, and travel time to a nearby medical facility is often less. Still, paying for health care remains one of the most controversial topics in the United States, and many question what it is that Americans gain from the current system to balance the cost. As an exhaustive study from The Commonwealth Fund asserted, “the United States spends far more on health care than other high-income countries, with spending levels that rose continuously over the past three decades. . . . Yet the U.S. population has poorer health than other countries.”
Besides its inefficiencies, the state of U.S. health care raises challenging ethical issues for professionals in the field and for patients as well. What happens if many poorer people cannot afford health care? Should doctors treat them anyway? Who is qualified to receive subsidized (insured) health care? In the absence of universal health care, which is generally ensured elsewhere by a single-payer system that entitles everyone to receive care at very low cost, can the United States truly boast of being the richest nation on Earth? Put another way, when the least materially advantaged in a country do not have access to quality health care, what is the worth such a nation patently is assigning to those human beings residing within it?
Supporters of the status quo for health care in the United States may point to state-of-the-art facilities as evidence of its success. Yet other nations, such as Australia, the United Kingdom, and the Netherlands, have equal levels of medical technologies available for patients and are given much more favorable marks for universal health insurance and accessibility by The Commonwealth Fund.

### The High Cost of Prescription Drugs

Discussions of health care accessibility have become politically charged, so for now it is enough to observe that not only is medical care enormously expensive in the United States but so are prescription drugs. According to William B. Schultz, an attorney writing in the Washington Post in 2017, “in the past 35 years, the only significant victory in the battle to control drug prices has been the enactment of legislation that established the generic drug program at the FDA [Federal Drug Administration].” Otherwise, he stated, “prescription drug prices account for 17 percent of the nation’s health-care costs, up from 7 percent in the 1990s,” and “prescription drug spending accounts for nearly 20 percent of total program spending for Medicare, the largest of the governmental health-care programs.” (Schultz is not entirely impartial; he is a partner in a law firm that represents generic drug providers, among other clients.)
The only way to recoup the enormous cost of developing new drugs, says the pharmaceutical industry, is to pass it along to consumers. Critics, on the other hand, assert that the much of the expense incurred within the industry results from the high cost of marketing new drugs. Wherever the truth lies in this debate, it remains that exorbitant prices for much-needed medicines dramatically reduce their social value when only a few individuals can actually afford to obtain them. What does it say of our priorities if we have the technology to create life-saving medicines but allow astronomic prices effectively to deny them to many patients who require them?

### Paying for Health Care and Wellness

Within the multipayer system, many U.S. workers have traditionally looked to their employers or their unions to subsidize the cost of care and thereby make it available for them and their families. Many reasons explain why this is so. In contrast to the European and Canadian perspective, for example, in which both the state and employers are presumed to have an interest in and responsibility for underwriting the cost of health care, the traditional U.S. approach is that workers and their employers should be responsible for securing this coverage. This belief reflects an unease on the part of some about assigning services to the government, because this implies the need for a larger governing entity as well as additional taxes to sustain it. The sentiment also reflects a conviction on the part of some that self-reliance is always to be preferred when securing the necessities of life.
John E. Murray, a professor of economics at the University of Toledo, offered a related explanation. He cited the existence of industrial sickness funds in the United States, which arose in the late nineteenth and early twentieth centuries. These were monies “organized by workers through their employer or union [that] provided the rudiments of health insurance, principally consisting of paid sick leave, to a large minority of the industrial workforce of the late nineteenth and early twentieth centuries.” Murray stated that these funds declined in popularity not because they were ineptly administered or rendered bankrupt by World War I or the Great Depression but rather because they gave way to even more effective instruments in the form of group insurance policies offered by employers or labor unions.
So the U.S. worker’s experience differed from that of European labor in that much significant health care coverage was provided under the auspices of unions and employers rather than the state. Murray noted another source of relief for workers who experienced illness or injury that prevented them from working for any period of time, and that was charity. Specific versions of charity were offered by religious organizations, including Christian churches and Jewish synagogues. Often, these religious bodies banded together to provide monetary benefits for sick or injured members of their own faith who might otherwise have been denied health coverage due to prejudice. The U.S. social experience featured more ethnic and cultural diversity, especially in the nineteenth and early twentieth centuries, than was present in many European nations, and a downside is the racial, ethnic, and religious prejudice it inspired.
A final distinction Murray pointed to is the past opposition of the American Medical Association to any sort of state-sponsored insurance. Early supporters of industrial sickness funds, including some physicians, anticipated that most doctors would support these funds as pathways ultimately directed to state-provided coverage. Instead, in 1920, “the American Medical Association voted officially to state its opposition to government health insurance. A sociologist concluded that from this time to the 1960s, physicians were the loudest opponents of government insurance.” By default, then, many U.S. workers came to rely more on their employers or unions than on any other source for coverage. However, this explanation does not answer the larger ethical question of who should provide health insurance to residents and citizens, a question that continues to roil politics and society in the nation even today.
Physicians and other healthcare professionals in the United States have always been held to high ethical standards in terms of the care they provide their patients. In fact, the American Medical Association first proposed a code of medical ethics in 1847, its founding year. Since then, the AMA has continued to revisit precisely what constitutes medical ethics for its members. In 2008, its code of medical ethics was revised. The revisions imply that education in medical ethics for healthcare professionals is not accomplished once and for all. Rather, retraining and recertification is an ongoing process.
More recently, large corporations have moved from providing one-size-fits-all insurance plans to compiling a menu of offerings to accommodate the different needs of their employees. Workers with dependent children may opt for maximum health care coverage for their children. Employees without dependents or a partner may elect a plan without this coverage and thereby pay lower premiums (the initial cost for coverage). Yet others might minimize their health-insurance coverage and convert some of the employer costs that are freed up into added pension or retirement plan value. Employers and workers have become creative in tailoring benefit plans that best suit the needs of employees (). Some standard features of such plans are the copayment, a set fee per service paid by the patient and typically negotiated between the insurance carrier and the employer; the annual deductible, a preset minimum cost for health care for which the patient is responsible each year before the carrier will assume subsequent costs; and percent totals for certain medical or dental procedures that patients must pay before the carrier picks up the remainder.
Despite the intricacies of this customization, employers have found the group coverage policies they offer to be expensive for them too, more so with each passing year. Full health care coverage is becoming rarer as a standard employment benefit, and it is often available only to those who work full time. California, for example, stipulates that most workers need not be provided with employer health care coverage unless they work at least twenty hours a week.
Rising costs for both employers and employees have combined to leave fewer employees with health care benefits at any given time. Employees with limited or no coverage for themselves and their dependents often cope by cutting back on the medical attention they seek, even when doing so places their health at risk. Whenever workers must skip medical services due to cost considerations, this places both them and their employers in an ethical quandary, because both typically want workers to be in good health. Furthermore, when employees must deny their dependents appropriate health care, this dilemma is all the more intensified.
To try to reduce the costs to themselves of employee health care insurance coverage, some companies have instituted wellness programs to try to ensure that their workforces are as healthy as possible. Some popular wellness program offerings are measures to help smokers quit, workout rooms on work premises or subsidized gym memberships, and revamped vending and cafeteria offerings that provide a range of healthier choices. Some companies even offer employees bonuses or other rewards for quitting smoking or achieving specific fitness goals such as weight loss or miles walked per week. Such employer efforts appear benign at first glance, because these measures truly can produce better health on the part of workers. Still, ethical questions arise as to who the true beneficiaries of such policies are. Is it the employees themselves or the companies for which they work? Furthermore, if such measures were to become compulsory rather than optional, would it still reflect managerial benevolence toward employees? We discuss this in the following paragraphs.
Wellness programs were inspired by safety programs first created by U.S. manufacturers in the 1960s. These companies included Chrysler, DuPont, and Steelcase. Safety programs were intended to reduce workplace accidents resulting in injuries and deaths. Over the years, such programs slowly but steadily grew in scope to encompass the general health of employees on the job. As these policies have expanded, they also have fostered some skepticism and resistance: “Wellness programs have attracted their share of criticism. Some critics argue workplace programs cross the line into employees’ personal lives.” Ann Mirabito, a marketing professor at the Hankamer School of Business at Baylor University agrees there is potential for abuse: “It comes back to the corporate leader. . . . The best companies respect employees’ dignity and offer programs that help employees achieve their personal goals.”
Employees who exercise, eat healthily, maintain their ideal weight, abstain from smoking, and limit their alcoholic consumption have a much better chance of remaining well than do their peers who undertake none of these activities. The participating employees benefit, of course, and so do their employers, because the health insurance they provide grows cheaper as their workers draw on it less. As Michael Hiltzik, a consumer affairs columnist for the Los Angeles Times, noted, “Smoking-cessation, weight-loss and disease-screening programs give workers the impression that their employers really care about their health. Ostensibly they save money too, since a healthy workforce is cheaper to cover and less prone to absenteeism.”
Certainly, employers are also serving their own interests by trying to reduce the cost of insuring their workers. But are there any actual disadvantages for employees of such wellness programs that employers might unethically exploit? Hiltzik suggested one: “The dark downside is that ‘voluntary’ wellness programs also give employers a window into their workers’ health profiles that is otherwise an illegal invasion of their privacy.” Thus the health histories of workers become more transparent to their bosses, and, Hiltzik and others worry, this previously confidential information could allow managers to act with bias (in employee evaluation and promotion decisions, for instance) under cover of concern about employees’ health.
The potential for intrusion into employee privacy through wellness programs is alarming; further, the chance for personal health data to become public as a consequence of enrolling in such programs is concerning. Additionally, what about wellness rules that extend to workers’ behavior off the job? Is it ethical for a company to assert the right to restrict the actions of its employees when they are not on the clock? Some, such as researchers Richard J. Herzog, Katie Counts McClain, and Kymberleigh R. Rigard, argue that workers surrender a degree of privacy simply by going onto payroll: “When employees enter the workplace, they forfeit external privacy. For example, BMI [body mass index] can be visually calculated, smokers can be observed, and food intake monitored.” They acknowledge, however, that “protecting privacy and enhancing productivity can provide a delicate balance.”

### The Affordable Care Act

Health care reform on a major scale emerged in the United States with the passage of the Patient Protection and Affordable Care Act, more commonly known as the Affordable Care Act (ACA), in March 2010, during the Obama Administration. The ACA (so-called Obamacare) represents a controversial plan that strikes its opponents as socialist. For its supporters, however, it is the first effective and comprehensive plan to extend affordable health care to the widest segment of the U.S. population. Furthermore, like most new federal policies, it has undergone tweaks and revision each year since becoming law. The ACA is funded by a combination of payments by enrollees and supplemental federal monies earmarked for this task.
The ACA mandates a certain level of preventive care, a choice of physicians and health care facilities, coverage at no extra cost for individuals with preexisting health conditions, protection against the cancellation of coverage solely on the basis of becoming ill, and mental health and substance abuse treatment, all of which must be met by carriers that participate in the plan. The ACA also permits its holders to select from a number of marketplace plans as opposed to the limited number of plans typically offered by any given employer. All in all, it is a far-reaching and complex plan whose full implications for employers and their employees have yet to be appreciated. Preliminary results seem to indicate that employer-provided coverage on a comprehensive scale remains a cheaper alternative for those workers eligible to receive it. Given the general efficiency of group insurance policies provided by U.S. employers, an ethical issue for all managers is whether these policies offer the best care for the greatest number of employees and so should be the responsibility of management to offer whenever it is possible to do so. Current law requires all companies employing fifty or more workers to make insurance available to that part of their workforce that qualifies for such coverage (e.g., by virtue of hours worked). Is it right, however, to leave the employees of smaller firms to their own devices in securing health care? Even if the law does not require it, we hold that an ethical obligation resides with small businesses to do everything in their power to provide this coverage for their employees.
Evidence of the intense debate the act has engendered is the Trump administration’s attempts, beginning in January 2017, to repeal the ACA entirely, or at least to dilute significantly many of its provisions. Nearly immediately upon his inauguration, President Trump signed Executive Order 13765 in anticipation of ending the ACA. Also that same month, the American Health Care Act was introduced in the House of Representatives, again with an eye to eliminating or seriously weakening the existing act. Much political debate within both the House and Senate ensued in 2017, with proponents of the ACA seeking to ensure its survival and opponents attempting (but, as of this writing, failing) to repeal it.
The ACA represents the first far-reaching health care coverage to take effect since 1965, after many stalled or otherwise frustrated attempts. Since the passage that year of the Medicare and Medicaid Act, which provided health coverage to retired, elderly, and indigent citizens, many presidential administrations, Democrat and Republican alike, have worked to enlarge health care coverage for different segments of the national population. In addition to expanding eligibility for benefits, the Medicare and Medicaid Act had direct implications for business proprietors and their employees. For one, the act set up new automatic earnings deductions and tax schedules for workers and employers, and employers were made responsible for administering these plans, which help fund the programs’ benefits.
The future of the ACA appears to depend on whether a Democrat or Republican sits in the White House and which party controls the Senate and the House in the U.S. Congress. Although legislation does hinge on the political sentiments of the president and the majority party in Congress, what is ethical does not lend itself to a majority vote. So regardless of whether the ACA survives, is revised, or is replaced entirely by new health care legislation, the provision of health care will likely continue to pose ethical implications for U.S. business and the workers who are employed by it.
The ethical debate over universal health care coverage is larger even than business and its employees, of course, but it still carries immense consequences for management and labor irrespective of how the ACA or other legislation fares in the halls of government and the courts. An ethical dilemma for employers is the extent to which they should make health coverage available to their workers at affordable rates, particularly if federal and state government plans provide little or no coverage for residents and the costs of employer-provided coverage continues to climb.

### State-Level Experiments with Single-Payer Health Care Plans

Against the backdrop of federal attempts to institute national health care over the past several decades, some individual states in the United States have used their own resources to advance this issue by proposing mandated health care coverage for their citizens. For example, in April 2006, Massachusetts passed An Act Providing Access to Affordable, Quality, Accountable Heath Care, the first significant effort at the state level to ensure near-universal health care coverage.
The Massachusetts act created a state agency, the Commonwealth Health Insurance Connector Authority, to administer the extension of health care coverage to Massachusetts residents. In many ways, it served as the most significant precursor of and guide for the federal ACA, which would follow approximately four years later. By many accounts, the Massachusetts legislation has achieved its purposes with few negative consequences. As Brian C. Mooney, reporting in the Boston Globe, put it about five years after the act’s passage: “A detailed Globe examination [of the implementation of the act] makes it clear that while there have been some stumbles—and some elements of the effort merit a grade of ‘incomplete’—the overhaul, after five years, worked as well as or better than expected.”
The proposed Healthy California Act (SB 562) is another example. SB 562 passed in the California State Senate in June 2017. However, the Speaker of the Assembly, the lower house of the legislature, blocked a hearing of the bill at that time, and a hearing is necessary for the bill to advance to ratification. A new effort was initiated in February 2018 to permit the bill finally to be considered by the lower house. (Two differences between the California bill and the Massachusetts Act include the number of state residents who would be affected. Massachusetts has a population of about seven million compared to California’s nearly forty million. A second distinction is that SB 562 is constitutes a single-payer plan, whereas the Massachusetts Act does not.)
Single-payer health care plans essentially concentrate both the administration of and payment for health care within one entity, such as a state agency. California’s effort is a very simple plan on its face but complex in its implementation. Here is how Michael Hiltzik summarized the intent of California Senate Bill 562: “The program would take over responsibility for almost all medical spending in the state, including federal programs such as Medicare and Medicaid, employer-sponsored health plans, and Affordable Care Act plans. It would relieve employers, their workers and buyers in the individual market of premiums, deductibles and copays, paying the costs out of a state fund.” The bill would create a large, special program apparatus tentatively entitled Healthy California. It is contentious on many fronts, particularly in that it would create the largest single-payer health insurance plan sponsored by a U.S. state and the scope of the plan would necessitate a huge bureaucracy to administer it as well an infusion of state monies to sustain it. Furthermore, it would extend health care coverage to all residents of the state, including undocumented immigrants.
A specific hurdle to passage of Healthy California is that it would cost anywhere from $370 billion to $400 billion and would require federal waivers so California could assume the administration of Medicare and Medicaid in the state as well as the federal funds currently allotted to it. All these conditions would be enormously difficult and time consuming to meet, even if the federal government were sympathetic to California’s attempts to do so. In 2018, that was decidedly not the case.
Is free or inexpensive access to health care a basic human right? If so, which elements within society bear the principal responsibility for providing it: government, business, workers, all these, or other agencies or individuals? This is a foundational ethical question that would invoke different responses on the part of nearly everyone you may ask.
As a nation, the United States has usually preferred a system predicated on private health care providers and insurers to pay for it. This arrangement has worked best in instituting high-quality care with minimal delays even for elective medical procedures. It has systematically failed, however, in establishing any sort of universal dispensation that is affordable for many citizens.
In the early twenty-first century, the United States is moving ever so slowly and with plenty of hiccups toward some degree of national or state management of health care. Precisely where these efforts will take us may not be clear for the next several years. The political, economic, and ethical dimensions of public management of our health care drive considerable controversy and very little agreement.

### Summary

The United States, unlike countries in Europe, has little tradition of merging the efforts of the state or federal government with that of private employers in the provision of health care. Although the quality of U.S. health care has rarely been challenged, its limited accessibility has posed ethical quandaries for business because many employees necessarily look to their employers for this benefit. The 2010 Affordable Care Act is an ambitious effort to meet the need for health care for all. Individual states have considered, and sometimes enacted, programs of their own to supply universal health care.

### Assessment Questions

### Endnotes


# Changing Work Environments and Future Trends

## Introduction

Beginning in the eighteenth century, in much of the Western world, the Industrial Revolution transformed the nature of work as industry displaced agriculture as the main driver of the economy and machines took over manual labor. Continuing technological changes have further altered the way people work and even the time and place where they do so. Growing numbers of people now spend some of their time working at home. Are they more productive without the distractions of the office or less productive without constant monitoring by managers? Some major companies like Apple, Amazon, Facebook, and Microsoft have constructed elaborate workplace campuses, offering unprecedented levels of amenities and even employee housing. Do these campuses facilitate the balancing of work and life, or do they blur the distinction and tie workers to their jobs instead?
Job sharing and flexible work schedules have emerged as alternatives to traditional patterns of work. These practices permit some workers to more easily fulfill work and life responsibilities. But does job sharing reflect employers’ efforts to respond to workers’ preferences or is it a move to reduce costs?
How will you prepare employees for the impact of robots at work () or manage the outsourcing of tasks to contractors in the gig economy? These challenges to traditional employment settings carry ethical implications for all stakeholders, including employers, employees, suppliers, customers, and clients.


# Changing Work Environments and Future Trends

## More Telecommuting or Less?

### Learning Objectives

By the end of this section, you will be able to:
1. Identify the benefits of permitting employees to work from home
2. Explain the drawbacks of telecommuting for the business and for employees
3. Discuss the ethical dilemmas related to telecommuting and some of the solutions
What if your business wanted to expand its local operations from six employees to ten but did not have the office space to add more workers? Today’s businesses have a toolkit of technical solutions to set up working relationships with employees far and wide through voice, computer, video connections, and offsite work-sharing spaces. Coworkers can share files on a remote network server or on the cloud, and managers can use nontraditional methods to monitor activity and performance. Companies like General Assembly, WeWork, and Workbar are leasing access to communal spaces equipped for the business needs of remote workers. Telecommuting is therefore easier to implement than ever. But what exactly are the benefits and drawbacks of telecommuting, and what ethical issues does it raise?

### Telecommuting and Its Advantages

The term telecommuting emerged in the 1970s to describe the practice of working at a specific location, whether the employee’s home or an alternate office, to reduce commuting time to a centrally located office space or store. “Telework” was greatly facilitated by new telecommunications technology, including the Internet, e-mail, and mobile phones. Today, telecommuting means any mode of working at a remote location (home or other space) by virtue of an electronic connection and/or telephone and encompasses a variety of employment types, from gig assignments to part-time contract work to traditional full-time employment.
The most recent Census data reveal that almost four million U.S. employees skip the commute for at least part of each week, and according to a 2012 poll, worldwide, one in five workers telecommutes frequently, with approximately 10 percent working from home every day.  depicts the growth in telecommuting in the United States, China, India, France, Germany, and the United Kingdom. Clearly, employers are embracing telecommuting as a tool for flexibility, on a scale from occasional use to full-time implementation.
Employees can connect to networked company computers from home and use work-enhancing tools on their laptops, tablets, and smartphones to make real-time connections by voice, text, or video with inexpensive or free applications (or “apps”) like FaceTime and Skype. Other software solutions, like GoToMeeting or WebEx, make setting up and even recording a synchronous meeting with sound and video possible for even the smallest companies at fairly low cost. The communication and productivity tools that facilitate telecommuting can only grow in number and sophistication. Virtual reality tools like Microsoft’s Mixed Reality allow a worker in one location to communicate with the holograph of another person in real time. For example, this technology could enable a job interview with a remote candidate. Of course, the use of technology brings with it the need to ensure information security and protection against hacking, including guaranteeing the authenticity of the persons engaging via this technology.
Employers allow employees to telecommute for a variety of reasons. First, it is a powerful recruiting tool for people who want to balance their work and personal lives. It allows employees to work a more flexible schedule to care for children or older relatives while maintaining a career and earning income. Individuals with ability challenges also prefer the flexibility that telecommuting affords them.
Telecommuting also reduces the hours that employees spend traveling to and from the job and can help keep cars off the road. Fewer workers commuting equals less crowding on public transportation. Fewer cars mean less air pollution as well. The average U.S. employee (who commutes 30 miles and 60 minutes per day) will save more than $1000 on gas per year by telecommuting (along with associated costs of parking and vehicle upkeep and insurance). Remote workers can continue to do their jobs despite weather conditions that impede travel. They are not exposed to sick coworkers’ germs and may take fewer sick days (which sometimes translates to fewer sick days company-wide). Remote employees are also seldom late for work or early to leave when their workday starts at home.
More broadly, there is a good deal of evidence suggesting that telecommuting has beneficial effects on worker productivity. For example, a call-center study reported in the Harvard Business Review found that telecommuting employees made 13.5 percent more calls, resigned their positions at only half the usual rate, and had much higher job satisfaction compared with employees who did not telecommute. The Colorado Department of Transportation, in a study of telecommuting productivity for a branch that issued permits, found 48 percent faster turnaround times for issuing permits and 5 percent more calls for telecommuters. Furthermore, studies of JD Edwards teleworkers found them to be 20 to 25 percent more productive than their office colleagues; American Express employees who worked from home were 43 percent more productive than workers in the office. With none of the distractions of a traditional office setting, like water-cooler gossip and long lunches, and with the happier attitude, workers tend to enjoy when they have control over their work lives. Telecommuting facilitates increased efficiency and productivity and also typically results in higher retention of workers, thereby reducing recruiting and training costs for firms.
Studies have shown that a person who commutes for an hour a day experiences added stress, anxiety, social isolation, and possibly depression. Perhaps that is why companies that implement telecommuting experience less absenteeism overall. It may also be easier to collaborate when not sharing a limited amount of space (such as in a cubicle forest), and people may be more willing to share resources with one another when the total number of workers present at the facility is reduced. Another point is that there may be less chatting and gossip among remote workers who are not in daily contact with each other or their colleagues.
Employers may be attracted to telecommuting for other reasons. Having remote employees can reduce office-space costs. In fact, a company can consider expanding even when there is no available real estate or capital to enlarge or improve the physical facilities. Companies that hire remote employees can also widen their pool of potential applicants. They can choose recruits with better job skills than the local population could provide and expand their sales and marketing territory by hiring employees based in a new area.
Finally, there are many external environmental benefits of telecommuting. We have seen that a business that reduces total office space also reduces its impact on the environment. Remote workers would increase their individual consumption of utilities while working at home, but chances are that their home’s energy consumption partially continues during the time spent at a traditional job as well ().

### The Drawbacks of Telecommuting

In 2013, Yahoo’s then–chief executive officer (CEO), Marissa Mayer, ended the company’s work-at-home policy, contending that the change would boost communication and collaboration by bringing people back to the office to work with their colleagues face to face. IBM, Aetna, and Bank of America followed her lead, citing a greater need for collaborative communication to compete with smaller firms. A backlash in the media followed this announcement, because working at home is popular among Yahoo employees. Yahoo has since shown greater flexibility in allowing some employees to once again work at home. But recent research does reveal that employees collaborate more creatively when they meet to discuss projects face to face. This finding has important implications for firms dependent on research and development for their future growth. In fact, Steve Jobs designed the Pixar facility to increase the likelihood of conversations that would promote idea generation.
Corporate culture is not easy to convey over distance. The remote worker might have developed certain working habits at a different company with a different corporate culture (sometimes in another country). It can be challenging to help employees adapt to the culture of a new company when they work remotely.
It is also more difficult for employers to monitor some kinds of work-related progress when an employee is working remotely. The likelihood of miscommunication increases when everything must be transmitted electronically or virtually. A manager cannot “manage by walking around” when the worker is remote. There are no incidental opportunities to witness a worker interacting with a client or customer. Workers may also be more hesitant to ask for direction on a project. Some managers worry that employees will slack off if there is no one there to watch them.
The remote worker may have qualms about privacy when his or her personal life inevitably intersects with the workday (as when a family member walks into the room or the dog barks during a conference call). Children may be confused when it seems like their parent is home but is not available for meals or play or homework help. It may be difficult for remote workers to maintain a work-life balance when their home becomes their office (especially if their hours are flexible). Workers may have to set aside living space for a home office and spend money to buy computing equipment, a desk, and other supplies.
Furthermore, it is difficult for an on-site technology team to provide technical assistance or secure data at the level the company may require when people are working at home. Moreover, when the definition of the workplace begins to blur, who is responsible for injuries that occur on the job at home? The employer is unable to exercise the same control over safety measures that holds in a traditional workplace.
There may also be productivity concerns. Some remote workers will rise to the challenge of motivating themselves to work diligently. In fact, studies have shown that some remote workers are more productive than their traditional counterparts. But it is not easy to sort potential employees into workers and procrastinators without some period of trial and error, which may be costly.
Not all fields are equally suited to telecommuting. Some jobs require consistent in-person contact with clients or customers, such as counseling, physical therapy, and medicine. Some industries need the highest computer security, such as banking and finance. Other work settings, such as law enforcement, have increased needs for building security that would make working remotely an unsafe alternative for employees.
The biggest drawback of telecommuting for the individual employee is the bias that studies reveal in employer attitudes. Most managers, after all, attained their status in a traditional job. When some employees telecommute and others do not, those who are in the physical presence of the employer every day can more easily make an impression (good or bad) simply by interacting with their manager. There is also some indication that employees who opt for a nontraditional work arrangement may be penalized if they are perceived as lazy or less dedicated than those who maintain traditional work hours. Employers might have a stronger recollection of the work produced by the employee they see regularly than they do of the work a remote employee is submitting online. Therefore, promotions and important projects may go to employees who are more visible. The remote employee might eventually be left without equal footing in the push for increased pay and status.

### The Ethical Challenges of Telecommuting

Ethical employers must juggle the potential ethical challenges of managing remote employees, including developing trust in remote workers, encouraging trust among project team members when some are working remotely, keeping equity in mind when reviewing the performance of remote and in-office staff, and deciding which employees get to work remotely. Supervisors also must guard against abuse of the remote-work opportunity, maintain the security of the remote employee’s work-related data, foster a level of collaboration that is vital to product development, and protect the remote worker’s safety. How can managers meet these challenges?
Although it is easy to consider allowing telecommuting for those who simply ask, managers should instead categorize jobs (not people) by their suitability for remote work. Best Buy recently announced it would modify its work-from-home policy for employees in its corporate office, changing it from a perquisite (or “perk”) of employment to one granted by management on a case-by-case basis and mindful of the circumstances of individual workers.
Managers should also carefully set up a framework of policies to govern at-home work and ensure fairness. For example, there could be a standard for how much time each person should spend in the office. The Massachusetts Institute of Technology created a remote pilot project in its Executive Education Program. Employees were encouraged to work remotely two or three days each week and to be present in the office each Wednesday. After six months of the pilot program, 100 percent of the employees recommended its continuation.
Managers should set clear expectations for remote workers, such as maintaining professionalism while working and accomplishing a certain volume of work or number of tasks by a certain time. Those who meet these goals should be rewarded. In the interests of fairness and equity, neither expectations nor rewards should differ from those established for in-house workers.
The ethical employer communicates trust in his or her employees when implementing telecommuting. That trust is based on respect for the employee’s motivation and the recognition that the employee has needs that are important in establishing work-life balance. Perhaps the employer’s vote of confidence in the employee’s ability to work well remotely is the reason that productivity tends to increase in successful telecommuting programs.  The  caption lists some of the best practices of successful telecommuting programs.
It would be unethical to place workers without assistance in a new situation in which they can easily fail. Telecommuting workers must be trained in time-management skills so they can maintain their productivity in an environment that may have more or different distractions than a traditional workplace and may make different demands on their time. Training should also strengthen communication skills, such as responding to messages promptly, that help ensure success in a remote setting. To help guard against the risk that telecommuting employees will be unfairly considered “out of sight, out of mind,” the ethical company will adopt written expectations about timely communication in both directions. For instance, it should ensure that managers’ lines of communication are as open to their remote employees as they are to those who can drop by their desk or office to chat.
Finally, many firms with successful telecommuting programs create a social network among employees. They sponsor online social occasions to help employees bond even though they are not in the same place. Workers can then find a way to have some virtual fun, despite the distance that might separate them.

### Summary

Remote workers save themselves the time and cost of a commute and are better able to balance work and home life. Companies often benefit from the higher productivity and lower turnover of telecommuting employees, and they can also provide a social benefit by permitting employees to avoid commuting, reducing traffic congestion and pollution. Some challenges of telecommuting for the manager are maintaining the privacy of the firm’s data, transmitting corporate culture, defining performance objectives, and encouraging collaboration. Employees have the challenge of remaining focused on work when they are working elsewhere. Ethical companies support their remote workers by developing and encouraging trust and guarding against abuse. They also set clear and equitable expectations and rewards to ensure fairness and keep open the lines of communication.

### Assessment Questions

### Endnotes


# Changing Work Environments and Future Trends

## Workplace Campuses

### Learning Objectives

By the end of this section, you will be able to:
1. Compare the workplaces of yesterday, today, and the future
2. Describe the benefits and potential drawbacks of workplace campuses
3. Identify ethical challenges in the development of workplace campuses
The physical workplace is changing. Most companies still inhabit traditional office spaces in which managers and employees each have an allotted space, whether an office, a cubicle, or just a desk. However, a growing number are redesigning their spaces with fewer separate offices, substituting flexible or shareable work stations built around communal space. The idea is that such “open plan” environments allow for more collaboration and brainstorming because employees are no longer walled off from one another. Shared, multipurpose spaces open to all allow people to gather informally throughout the day. In effect, then, these changes are aimed to augment productivity.
In another trend, companies like Apple, Microsoft, Facebook, Amazon, and Alphabet (which owns Google) are developing expansive campus-like facilities that offer generous on-site amenities like recreation centers, fine dining, parks, walking and biking paths, climbing walls, free snacks, child-care facilities, basketball courts, haircuts and massages, and laundry, dry-cleaning, and car wash operations, in airy spaces often powered by renewable energy sources (). Facebook and Alphabet/Google have plans for building mega-corporate campuses that also include housing. Facebook plans to reserve 15 percent of its housing units for low-income neighbors, but, in both cases, it is anticipated that most residents of these campuses will be employees. Presumably, workers who do not have to commute to and from work every day will be happier and more productive.
New workplace arrangements like these effectively serve as fringe benefits for employees that presumably offer the flexibility and work-life balance promised by corporate recruiters. Yet, looking from a different angle, we might consider the motivations behind these complexes to be less than altruistic, because such campuses encourage workers to stay in the office far longer than they might otherwise. Is this the case? Furthermore, if so, do they result in the same or higher levels of productivity? What ethical challenges do they present for the employer and the employee?

### Workplace Campuses and Historical Precedents

Traditional workspaces are designed to allow each person to get the maximum amount of work completed each day, spending most of the time alone in a fairly utilitarian environment with minimal distractions. The size and location of the offices indicate status (corner offices are prized), and lunchrooms or cafeterias and water coolers provide the only place for brief social encounters.
State-of-the-art workplaces today, however, incorporate technology and encourage collaboration. Ergonomic furniture is available for comfort, and laptops and tablets allow workers to move around the facility as desktop computers could not. In fact, workers in the new flexible workplace spend less than 50 percent of their time at a desk. Moreover, as we discussed in the previous section, many enjoy the flexibility of telecommuting as needed. Furthermore, in open-plan spaces, all work positions locations are alike; status is not signaled by location or size.
As early as the 1960s, large companies like Bell Labs built suburban compounds for their corporate headquarters, but they were a far cry from the campus settings of Apple and Google today. Bell Labs’ design, for example, was a series of laboratories and office buildings grouped together, with a functional cafeteria.
Workplace campuses are also modeled on university campuses that provide a relatively complete work and living environment for students. As noted, Facebook and Google are building apartments near their corporate campuses. Facebook’s new project, named Willow Village, is near Menlo Park, California, and will include some fifteen hundred units. Employees who lease an apartment there will be eligible for a company bonus. The future workplace campuses and mega-corporate campuses with housing bear a superficial resemblance to nineteenth- and early twentieth-century “company towns,” which existed around the world.
In a company town, the stores, entertainment venues, and housing were all owned by the same company, which also employed everyone in a local factory or mine. The remote locations of factories sometimes made it necessary for such employers to provide workers with housing and a means to acquire the necessities of life, but those who lived and worked in the company town paid for all purchases from their wages, which, of course, went straight back to the employer. The owners and builders of company towns, like George Pullman or Henry Ford, were often idealists who envisioned creating a social utopia. But the towns and their owners could also be paternalistic and self-serving. Indeed, company towns created what is called a monopsony in the labor market, where there is only a single buyer, and the economic analysis of monopsony shows that with the lack of competition for labor, wages of workers are suppressed. That is, “a monopsonist in the labor market can leverage its market power. Because it is the only firm hiring, it can pay its workers less.”
Company towns began to disappear when cars became affordable and employees could drive to work. However, all that driving lengthened some workdays and disrupted the balance people enjoyed between working hours and personal time. Like telecommuting, corporate villages are one approach to cut down drive time. However, critics of Facebook’s Willow Village are calling the property “Zucktown” and wondering whether the development will further blur the work-life balance for employees of Mark Zuckerberg’s social media company.

### The Pursuit of Work-Life Balance

Twenty-five percent of U.S. employees in multiple industries were recently surveyed and reported feeling “super stressed” as they juggled work and home responsibilities. Daily stress from trying to maintain work-life balance can produce health effects like reduced immunity and inadequate sleep. Stressed workers are also less productive in the workplace.
Efforts to offer employees an ever-widening array of amenities appear to be an effort by employers to create work-life balance and make their companies more desirable as places of employment. The idea is that life is simpler if food is readily available and free at work, if a doctor’s office or hair salon is just down the hall, and if home is right on campus.
Some research shows that millennials believe integrating work and leisure in some combination fosters work-life balance. They may see less need to have clear boundaries between their work world and their home life as technology pushes them to be connected in so many ways that once did not exist but now seem inescapable (e.g., an employee of a global firm that conducts business around the clock may never be truly separated from the office due to connectivity provided by mobile devices).
Have employers then crossed a line with these perks? Have they created an expectation that the employee who works on a corporate campus where all needed services are provided will, in turn, be accessible for long hours of work on a regular basis? Are the amenities really velvet handcuffs that tie employees to work? Living right next to work clearly will reduce commuting time, and via this path, it may promote work-life balance. But the expectation that long hours should be routine just because they are possible will hamper, rather than facilitate, the quest for work-life balance. Furthermore, to the extent that mega-corporate campuses do tie workers to their jobs, reduced worker mobility means that labor markets will be less able to adjust to changing conditions.

### The Ethical Challenges of Workplace Campuses

It is hard to imagine that anyone could find fault with a job that came with all the amenities of a campus-like environment. However, the all-encompassing aspect of these workplaces means a manager’s job description greatly expands to include small-city management functions. As the April 2018 shooting of employees at YouTube’s headquarters suggests, corporate campuses may have a greater need for security, with duties that dovetail those of the city police. Growth of the compound will challenge managers to comply with city planning and zoning regulations. How should these villages within a city contribute to the municipal services they need for the population they draw? Should the city be able to require a greater tax contribution from mega-corporate campus developers that equals the load they add to the city’s fiscal responsibilities?

### Summary

Traditional office buildings with separate workspaces for each worker are giving way to multifunctional worksites where employees are encouraged to actively collaborate. Some companies have expanded the workplace to include restaurants, recreation facilities, and convenient amenities to attract and retain employees. Other companies are building villages around their campuses to assist employees seeking to balance work and home life. These all-encompassing work environments have some potential downsides for employees, however, including a risk of tethering them to their workplaces. Their effects on local communities are being questioned as well.

### Assessment Questions

### Endnotes


# Changing Work Environments and Future Trends

## Alternatives to Traditional Patterns of Work

### Learning Objectives

By the end of this section, you will be able to:
1. Explain the benefits, drawbacks, and ethical issues of job sharing and flextime
2. Describe the business models that have emerged in the new millennium
3. Discuss the ethical challenges businesses face in the gig economy
New ideas about the way we work and for how long, as well as the business models we use, are challenging many traditional business strategies. Job sharing and flexible hours (or flextime), the access or sharing economy, and the rise of gig workers all force us to evaluate how they affect management, employees, and customers alike. Although new business models provide increased autonomy and flexibility, they have also led to the rise of what some call the new precariat. The precariat, for “precarious proletariat,” is a new social class of people whose work offers little predictability or security. The existence of such a class raises ethical dilemmas for business managers, who may be tempted to substitute gig workers, to whom benefits like health insurance are ordinarily not provided, for regular employees entitled to costly benefits.

### Job Sharing and Flextime

In job sharing, two or more employees perform the work of a full-time position, each taking part of the total workload for the job. For example, one job-sharing employee might work three eight-hour shifts a week and the other would take two such shifts at the same job. In some ways, job sharing is simply another name for part-time work. The two people need not work equal numbers of hours, but they perform a single job, doing the same tasks and shouldering the same responsibilities. Unlike nurses, who work shifts but each has their own job, job sharers work one job between them.
Most people in the United States seek a full-time job of thirty-five hours a week or more, usually because they want the income and benefits (such as health insurance) that often come with such a job. But some are willing to forego full-time work because they need or want to care for children or an elderly or ailing family member, pursue their education, run a business on the side, or volunteer. Allowing two people to share a job is an option that can lead to enhanced work-life balance for both individuals. A job-sharing parent can work weekends only, for example, saving on daycare costs during the week.
Many job sharers report less stress and an increased ability to produce high-quality work. Studies have shown that many accomplish more in a shorter workweek due to higher morale. Typically there is less absenteeism when the team can plan around the appointments and vacations of each individual. Job sharing may also reduce the absenteeism of employees with children by providing increased flexibility to cover family emergencies or obligations. There is even a synergistic effect when two people bring their insights to problems that one person would usually face alone.
Employers find that hiring two individuals to fill one job also opens the door to recruiting new talent. Job sharing might allow an employer to retain a knowledgeable associate who is ready to cut back work hours. Furthermore, an employee who is leaving or retiring can share the job for a time to train a replacement.
Many job sharers apply for jobs as a team. Those who have successfully shared a job advocate for setting clear performance expectations and progress checkpoints. Two employees might share an e-mail account and brief each other daily on their work. Specific examples include translators of legal documents at an international law firm—one translator takes the morning shift; the other, the afternoon. Or technical writers at an engineering firm—one might work Monday through Wednesday noon; the other, Wednesday afternoon through Friday. This scenario works when common documents are being written or translated. If the job sharers are equally competent, work can be passed off to one another at specific intervals.
Other aspects of job sharing actually benefit employers, but not necessarily employees. Replacing a full-time position with two or more part-time employees may allow an employer to avoid paying for the benefits to which a full-time employee would be entitled, such as health insurance mandated by the Affordable Care Act, and sometimes optional benefits as well. The number of involuntary part-time workers varies over the course of the business cycle: In 2009, as a consequence of the Great Recession, U.S. Department of Labor statistics put the number of involuntary part-time workers at more than nine million; in mid-2018, that number was just below five million.
There are some purely business drawbacks to job sharing. First, the practice does not work in all fields. Second, some work can suffer because of the extra time, and sometimes expense, necessary for coordination between job-sharing partners, especially if neither is formally in charge. Job-sharing arrangements also presuppose that the two people are going to work together collaboratively, but competitive instincts could lead one partner to withhold information or even sabotage the project. Another drawback is the “two Mondays effect”—the potential productivity loss due to the time it takes each partner to get up to speed on the first day back. Finally, some managers do not want the added responsibility of managing two people instead of one.
The ethical question raised by job sharing boils down to whether the employer is hiring job sharers to improve productivity and meet employee preferences, or hiring part-time workers to improve profitability at the employees’ expense. The ethical employer hires employees to best serve the needs of the customer and the company while respecting the needs of each employee. The first step in ethically managing a job-sharing partnership is to pick the right job to share. Data-entry jobs and those that require less supervision and coordination between partners are more easily managed. Then, with both employees present, the manager should spend some time creating a shared written agreement about procedures to follow and responsibilities to accept. Follow-up is important to be sure job sharers are working cooperatively and meeting their goals.
The practice of offering flexible hours, or flextime, lets employees choose their own start and finish time each day, arriving and leaving earlier or later than the normal 9-to-5 workday. Parents benefit particularly because they are better able to schedule their work around their children’s lives. Women are the predominant users of this family-friendly work policy.
Flextime was a starting place for creative new approaches to work. Teams now trade shifts to accommodate members’ needs for time off. Some companies allow a compressed work week that caters to the efficient employee who can get a week’s work done in less than forty hours. In some professions, such as accounting, employees might be allowed a reduced schedule during the off season.
All these variations allow employers to recruit a more diverse workforce. No longer is it necessary that someone be free of weekday responsibilities to have full-time work and gainful employment. Flextime also benefits clients and customers because companies can extend their hours of operation when workers are willing to cover flexible shifts.
Ethical employers base the decision to allow flextime on a clear and well-written policy that relies on objective job-related criteria. Without an objective policy, employees could claim discrimination if all were not eligible. Employers should also be aware of the law; in some states, daily work hours are set by law, and allowing some employees to work more than eight hours a day might require payment of overtime.
Some studies have found a troubling bias against employees who request a later start to the workday. Managers may incorrectly regard people who prioritize an early start as more desirable employees and attribute a request for a late start to lack of motivation. Managers need greater supervisory skills to ensure flextime workers are using their time productively and to effectively manage teams in which some are working flexible hours and others are not.

### The Access Economy and Online Platforms

The access economy is essentially a resource circulation system in which consumers participate on both sides of a transaction, as both providers and obtainers of resources (the transaction is usually facilitated by a third party acting as a go-between). The model, sometimes called peer-to-peer (or P2P), is particularly popular when the asset is expensive to obtain and is not fully consumed by the user (such as a house or condo). In the traditional capitalist economic model, goods are bought and sold by businesses and individuals, but in the access or sharing economy, goods and services are traded on the basis of access rather than ownership.
In this business model, owners make money from underused assets. The global online hospitality marketplace is an example. Airbnb says consumer-hosts in San Francisco who rent out their homes do so for an average of about sixty nights a year, making almost $10,000 from such rentals. Car owners using the service RelayRides make an average of $250 a month from allowing others to use their cars. This helps consumers supplement their incomes or even finance the purchase of the assets they share. Many of the original sharing-economy businesses are now household names, including Airbnb, Uber, and Lyft; thousands more are part of the P2P decentralized markets.
Most sharing or collaborative economy business models use the Internet to facilitate transactions, so it might be more accurate to refer to them as part of the online platform economy. However, whereas some facilitate the renting of assets, such as real estate (think Airbnb), others are essentially selling labor (think Task Rabbit), and some bridge the two categories by offering a combination (think Lyft) (see ). The new business models all have something in common, however: a decentralized and democratized marketplace featuring broad-scale participation, with consumers serving multiple roles.
Online and digital business models allow almost anyone to start a business from scratch in what some call the democratization of free enterprise. An economy so open to new players is a significant step toward increased buyer access to goods and services at all levels, even as it raises legitimate questions about how to ensure trust between the transacting parties.
One issue facing the access economy is regulation. For example, should private individuals who rent out rooms be regulated like a Marriott hotel or perhaps a bed-and-breakfast operator, or simply be considered consumers allowing a guest to stay in their house? They are not only subject to income taxes on the money they earn but they are increasingly likely to be charged hotel or occupancy taxes. Some cities have passed ordinances to limit real estate rentals to minimum stays of a week or a month; shorter stays will be considered hotel rentals subject to regulations such as health and safety code rules. In the ride-sharing segment, some cities have said drivers must undergo the same scrutiny as taxi or limousine drivers, such as fingerprinting, commercial licensing, training, and background checks.
The access economy presents an ethical and regulatory challenge for all levels of government—balancing the need to have at least some rules to protect consumers with the desire to allow competition from new business models. Big businesses are lobbying legislative bodies to apply the same regulation to the access economy as to the traditional economy in an effort to reduce or eliminate the threat of competition. This, in turn, raises an ethical question for society as a whole. Traditional means of raising capital, whether through initial public offerings (IPOs) or venture capital, are often dominated by big players. Should access to capital remain limited to those who have influence, or should the government pursue policies aimed at facilitating access to capital by small businesses? In one sign of increasing acceptance of the access economy, traditional businesses are starting to invest in smaller, more nimble, platforms, as the following feature on Oasis Collections demonstrates.
As the Oasis case shows, getting access to funding is often a challenge for entrepreneurs. An IPO is essentially a method of funding a startup by selling its stock to the public at large, a process heavily regulated by the government. The Securities and Exchange Commission (SEC) oversees the applicable federal laws, which require the filing of a registration statement and a full disclosure of financial information, along with months of effort by accountants, attorneys, underwriters, and company executives. The cost and complexity of this process usually outweighs the benefit for entrepreneurs who want to raise a modest amount of capital ($10 million or less).
However, as a matter of business ethics, businesses of all sizes should be able to participate fully in the U.S. economy and not be shut out by the “gatekeepers of capital”—the investment banking community. Thus, in 2012, Congress enacted new legislation called the JOBS (Jumpstart Our Business Startups) Act, which amended U.S. securities laws to enable small businesses to use a variation on a technique known as crowdfunding. Crowdfunding is already in use as a way to give or lend money to consumers and businesses through web portals such as GoFundMe. But those sites do not offer SEC-compliant sales of securities in a business, as the JOBS Act now permits emerging growth companies (EGCs) seeking capital to do. This new type of funding should help level the playing field for EGCs; many view it as a way of democratizing access to capital. One entrepreneurial startup that used this new method successfully is Betabrand, a San Francisco–based retail clothing company that doubles as a crowdfunding platform. The company lets users of its platform crowdsource clothing concepts and develop prototypes into actual products.

### The Gig Economy

Opportunities for limited-term employment, sometimes referred to as “gigs,” have existed for decades in the music and entertainment industry; they have even been likened to the widespread small-scale self-employment typical of the pre-union and pre-Industrial eras. What is new about gig work today is that it is often made possible by technology, which frees workers from the need to travel to the employer’s workplace and allows them to work multiple jobs at once. This offers workers, and perhaps even managers, a new set of advantages and disadvantages in the employment equation.
The gig economy is an environment in which individuals and businesses contract with independent workers for short-term assignments, engagements, or projects, offering few or no benefits beyond compensation. A freelancer or contractor is a self-employed worker who may work with more than one client but who usually has a contract that covers the details of the job, including compensation. The terms freelancer and contractor are generally used interchangeably. However, if there is a distinction, it is that a freelancer is almost always self-employed and works for multiple companies, whereas a contractor may or may not be self-employed and may work for only one company at a time (). Some may be happily committed to their independent status; others are involuntarily self-employed while they search for more permanent or full-time positions. Gigs might be full- or part-time; they might be limited to a specific task or a specific time; and they may serve as the worker’s sole employment or as a “moonlighting” job. Regardless of the terminology, the trend toward a gig economy has begun.
A recent study by Intuit predicted that by 2020, a surprisingly large 40 percent of U.S. workers would be independent contractors, and according to the Freelancers Union, more than 55 million adults in the United States (that is, 35 percent of the U.S. workforce) already work as independent contractors and/or moonlighters. The nature of freelance work leaves some workers searching for the qualities of traditional full-time work, and the Freelancers Union has attempted to provide them by giving its more than 375,000 members a voice through policy advocacy and access to some group benefits.
Many people value the flexibility of freelance work hours. They work off premises (frequently at home), make their own schedules, and juggle assignments as needed. However, benefits such as health care and retirement plans are usually unavailable (unless an employment agency sponsors them for those it places in temporary work). Freelancers most often must establish their own retirement accounts and obtain their own health insurance through an employed spouse or partner or in a health care insurance exchange. Robert B. Reich, the former Secretary of Labor and professor at the University of California, Berkeley, says, “This on-demand economy means a work life that is unpredictable, doesn’t pay very well, and is terribly insecure.”
Unlike employees on the payroll, gig workers must also pay both the employee’s and the employer’s halves of the federal payroll tax (referred to as FICA [Federal Contributions Insurance Act], which funds Social Security and Medicare). This combined tax currently totals 15.3 percent of a freelancer’s earnings. Payroll taxes overall bring in about 24 percent of combined federal, state, and local government revenue,  making them the second-largest source of government revenue in the United States after individual federal income taxes. Here is one of the ethical issues employers face: Are they dodging their fair share of taxes and failing to offer benefits by forcing people who could be their employees into contract work instead?
Microsoft was one of the first companies to save huge amounts of money by hiring contract workers, avoiding paying benefits and payroll taxes and escaping a wide variety of employment and labor laws. However, the company found itself the object of legal action by both the Internal Revenue Service (IRS) and its contract workers on the grounds that a large portion of its contract workforce should have been classified as employees instead.
Microsoft ended up conceding the IRS position that the workers were de facto employees. It issued W-2s (earnings statements) for the workers’ past two years and paid its share of payroll taxes. It hired some of the workers as well, but others sued for fringe benefits they had been denied as freelancers. After lengthy litigation and appeals, in 2000, Microsoft agreed to pay thousands of plaintiffs a total of $97 million, the value of stock options they would have received if it had employed them. It was the largest settlement ever received by a group of temporary employees. Today, Microsoft has more 110,000 employees, and about 75 percent are temporary or contract workers. However, Microsoft says it now requires staffing companies to give temporary and gig workers it hires fringe benefits.
A particularly hazy work relationship exists between employers and interns. Many business or other professional-track students seek—indeed, are encouraged to find—internships while still in school. Sometimes these positions are paid, sometimes not; some carry academic credit and some do not. The tasks interns perform, and therefore the quality of the professional experiences they gain, can vary widely. However, many interns clearly function as a source of unpaid labor. Ethical boundaries are often crossed, even if students are willing to undertake these positions. Although state labor laws governing internships vary, responsible companies will insist that their interns are paid for their services or receive academic credit, or both.

### Summary

When undertaken with equity and fairness, job sharing and flextime can create flexibility for workers who need or want to limit their hours. These practices allow employers to recruit more diverse employees, help them meet employees’ need for work-life balance, and, in the case of job sharing, bring more than one person’s perspective to problem solving. However, employers must clearly spell out expectations and procedures for each employee to ensure success.
Given flexible hours and job-sharing arrangements, the traditional employment-based U.S. economy appears to be in transition toward new business models that offer many opportunities but also serious challenges. Ethical issues in the access economy include the responsibilities of each of the parties in a sharing transaction and the character of any regulation, including taxes, that may be passed. In the gig economy, they include workers’ insecure positions and lack of benefits, employers’ responsibility for paying their fair share of social insurance (payroll) taxes, and the fair treatment of interns.

### Assessment Questions

### Endnotes


# Changing Work Environments and Future Trends

## Robotics, Artificial Intelligence, and the Workplace of the Future

### Learning Objectives

By the end of this section, you will be able to:
1. Discuss the application of robotics and the workplace changes it will bring
2. Identify artificial intelligence applications in the workplace
3. Explain the ethical challenges presented by the use of artificial intelligence
As we have seen earlier in this chapter, general advances in computer technology have already enabled significant changes in the workplace. In this module, we will look at how future workforce demographics may be affected by existing and emerging technologies. The combination of automation and robotics has already changed not only the workplace but everyday life as well. It also comes with a host of ethical and legal issues, not least being where humans will fit in the workplace of tomorrow. Managers of the future may ask, “Does my company or society benefit from having a human do a job rather than a robot, or is it all about efficiency and cost?”

### Robotics and Automation in the Workplace

Advances in the field of robotics—a combination of computer science, mechanical and electronics engineering, and science—have meant that machines or related forms of automation now do the work of humans in a wide variety of settings, such as medicine, where robots perform surgeries previously done by the surgeon’s hand. Robots have made it easier and cheaper for employers to get work done. The downside, however, is that some reasonably well-paying jobs that provided middle-class employment for humans have become the province of machines.
A McKinsey Global Institute study of eight hundred occupations in nearly fifty countries showed that more than 800 million jobs, or 20 percent of the global workforce, could be lost to robotics by the year 2030. The effects could be even more pronounced in wealthy industrialized nations, such as the United States and Germany, where researchers expect that up to one-third of the workforce will be affected. By 2030, the report estimates that 39 million to 73 million jobs may be eliminated in the United States. Given that the level of employment in the United States in mid-2018 is approaching 150 million workers, this potential loss of jobs represents roughly one-quarter to one-half of total current employment (but a smaller share of employment in 2030 because of future population and employment growth).
The big question, then, is what will happen to all these displaced workers. The McKinsey report estimates that about twenty million of them will be able to transfer easily to other industries for employment. But this still leaves between twenty million and more than fifty million displaced workers who will need new employment. Occupational retraining is likely to be a path taken by some, but older workers, as well as geographically immobile workers, are unlikely to opt for such training and may endure job loss for protracted periods.
In developing countries, the report predicts that the number of jobs requiring less education will shrink. Furthermore, robotics will have less impact in poorer countries because these nations’ workers are already paid so little that employers will save less on labor costs by automating. According to the report, for example, by the same date of 2030, India is expected to lose only about 9 percent of its jobs to emerging technology.
Which occupations will be most heavily affected? Not surprisingly, the McKinsey report concludes that machine operators, factory workers, and food workers will be hit hardest, because robots can do their jobs more precisely and efficiently. “It’s cheaper to buy a $35,000 robotic arm than it is to hire an employee who’s inefficiently making $15 an hour bagging French fries,” said a former McDonald’s CEO in another article about the consequences of robots in the labor market. He estimated that automation has already cut the number of people working in a McDonald’s by half since the 1960s and that this trend will continue. Other hard-hit jobs will include mortgage brokers, paralegals, accountants, some office staff, cashiers, toll booth operators, and car and truck drivers. The Bureau of Labor Statistics (BLS) estimates that eighty thousand fast-food jobs will disappear by 2024. As growing numbers of retail stores like Walmart, CVS, and McDonald’s provide automated self-checkout options, it has been estimated that 7.5 million retail jobs are at risk over the course of the next decade. Furthermore, it has been estimated that as self-driving cars and trucks replace automobile and truck drivers, five million jobs will be lost in the early 2020s.
Jobs requiring human interaction are typically at low risk for being replaced by automation. These include nurses and most physicians, lawyers, teachers, and bartenders, as well as social workers (estimated by the BLS to grow by 19 percent by 2024), hairstylists and cosmetologists, youth sports coaches, and songwriters. McKinsey also anticipates that specialized lower-wage jobs like gardening, plumbing, and care work will be less affected by automation.
The challenge to the economy, then, will be how to address the prospect of substantial job loss; about twenty million to fifty million people will not be able to easily find new jobs. The McKinsey report notes that new technology, as in the past, will generate new types of jobs. But this is unlikely to help more than a small fraction of those confronting unemployment. So the United States will likely face some combination of rapidly rising unemployment, an urgent need to retrain twenty million or more workers, and recourse to policies whereby the government serves as an employer of last resort.

### Artificial Intelligence

Although some robots are remotely controlled by a human operator or a computer program written by a human, robots can also learn to work without human intervention, and often faster, more efficiently, and more cheaply than humans can. The branch of science that uses computer algorithms to replicate human intelligent behavior by machines with minimal human intervention is called artificial intelligence (AI). Related professions in which the implementation of AI might have particular impact are banking, financial advising, and the sales of securities and managing of stock portfolios.
According to global consulting giant Accenture, AI is “a collection of advanced technologies that allows machines to sense, comprehend, act and learn.” Accenture contends that AI will be the next great advance in the workplace: “It is set to transform business in ways we have not seen since the Industrial Revolution; fundamentally reinventing how businesses run, compete and thrive. When implemented holistically, these technologies help improve productivity and lower costs, unlocking more creative jobs and creating new growth opportunities.” Accenture looked at twelve of the world’s most developed countries, which account for more than half of world economic output, to assess the impact of AI in sixteen specific industries. According to its report, AI has the potential to significantly increase corporate profitability, double rates of economic growth by 2035, increase labor productivity by as much as 40 percent, and boost gross value added by $14 trillion by 2035, based on an almost 40 percent increase in rates of return. Even news articles have begun to be written by robots.
A report by KPMG, another global consulting and accounting firm, indicates that almost 50 percent of the activities people perform in the workplace today could be automated, most often by using AI and automation technology that already exist. The ethical question facing the business community, and all of us on a broader level, is about the type of society in which we all want to live and the role automation will play in it. The answer is not simply about efficiency; a company should consider many variables as it moves toward increased automation ().
For example, as AI programs become better able to interact with humans, especially online, should a company be required to inform its customers if and when they are dealing with any form of AI and not a person? If people cannot tell when they are communicating with an AI program and not a human being, has an AI-controlled computer or robot reached a form personhood? Why or why not? Although traditional business ethics can provide us with a starting place to answer such questions, we will also need a philosophical approach, because we also need to decide whether it is necessary to have consciousness to be considered a person. This issue is further muddied when a human employee largely is tapping AI i to serve customers or clients. Should this combination of human and AI assistance be made patently clear?
Another issue in AI and all forms of automation is liability. According to Reuters News, “lawmakers in Europe have agreed on the need for [European Union]-wide legislation that would regulate robots and their use, including an ethical framework for their development and deployment, as well as the establishment of liability for the actions of robots, including self-driving cars.” The legal and ethical questions in assigning liability for decisions made by robots and AI are not only fascinating to debate but also an important legal matter society must resolve. The answers will one day directly affect the day-to-day lives of billions of people.

### Summary

Initially, robots and AI inspire both intrigue and fear in most of us. Fear of losing jobs is a reality, but so too is intrigue about what the future holds. A key for companies is to help workers retrain to become part of that future.

### Assessment Questions

### Endnotes


# Epilogue: Why Ethics Still Matter

## Introduction

Even though they are business decisions, the choices we make at work can be personal in that they begin with our use of conscience. Just as the human body requires nourishment and care, so the conscience needs attention. Developmental psychologists have long understood that the formation of conscience, and the emergence of an individual in whom being and doing are comfortably aligned, take place over time. There are no shortcuts. Imperfection, self-doubt, and mistakes are part of the process. But what counts in life—including our choice of profession as well as the way we live our personal lives—is the manner in which we apply wisdom, education, and experience in forming the decisions we make and in becoming the person we wish to be.
Facing the right direction may be difficult at first, but with each decision toward wholeness, the path becomes a little easier to tread. The reverse is also true. When we neglect or ignore our conscience, it becomes more difficult for us to turn around. This final chapter explores the process of becoming a professional with an unshakeable ethical stance in a changing world. Where do you stand on your own path in life, and more important, which direction are you facing ()? In which direction will your choices regarding your work and career take you?


# Epilogue: Why Ethics Still Matter

## Business Ethics in an Evolving Environment

Not only does the world seem to have shrunk, but the twenty-first century pace of change seems to have sped up time itself. As the world becomes smaller and faster and companies adapt their practices to fit new conditions, the core of business ethics that guides corporate behavior remains the same, directed, as always, by shared values and morals as well as legal restraints. What happens when these are ignored? An example follows:
Rajat Gupta grew up in India, earned an MBA from Harvard, and prospered for years as managing director of McKinsey & Company, a preeminent management consulting firm. A respected business leader and cofounder of the Indian School of Business and the American Indian Foundation, Gupta served on many corporate and philanthropic boards. “Gupta was commended by people who knew him as a person who helped others. He was very active in providing medical and humanitarian relief to the developing countries. Born to humble circumstances, he became a pillar of the consulting community and a trusted advisor to the world’s leading companies and organizations.” According to the Securities Exchange Commission, however, in 2009, Gupta provided hedge-fund manager and longtime friend Raj Rajaratnam with insider information about investor Warren Buffet’s agreement to purchase shares in Goldman Sachs, an investment bank for which Gupta served as a corporate director. Gupta was convicted of felony securities fraud relating to insider trading (three counts) and conspiracy (one count) and sentenced to two years in jail plus $5 million in fines. He had chosen to violate both business ethics and the law, as well as breaching his fiduciary duty as a corporate director.
When corporate managers follow codes of conduct in a virtuous fashion, the outcome is positive but tends not to make the news. That is not a bad thing. We should value ethical behavior for its own sake, not because it will draw media attention. Unethical behavior, on the other hand, is often considered newsworthy, as were the crimes of Rajat Gupta. In discussing his case, the Seven Pillars Institute for Global Finance and Ethics (an independent, nonprofit think tank based in Kansas City, Missouri, that helps raise public awareness about financial ethics) said, “As a true professional, the good manager strives to achieve a moral excellence that includes honesty, fairness, prudence, and courage.” These are some of the virtues ethical players in the corporate world display.
Respected businesses and managers adhere to a well-thought-out vision of what is ethical and fair. The primary purpose of business ethics is to guide organizations and their employees in this effort by outlining a mode of behavior that proactively identifies and implements the right actions to take, ones that avoid lapses in judgment and deed. For instance, as we saw in Defining and Prioritizing Stakeholders, identifying the needs and rights of all stakeholders, not just of shareholders, is a useful first step in fair and ethical decision-making for any business organization. The box that follows describes what happened when General Motors forgot this.
At first glance, you might not see many parallels between the purchase of a flask of wine in an ancient Greek marketplace and your online purchase of a week’s worth of groceries with a single click. In both cases, however, and throughout all the generations in between, buyers and sellers would agree that customers are entitled to be treated with honesty and accorded fair value for their money. Business leaders should approach ethical issues with the same sense of the permanence of ethical values. Technological innovation has changed the business environment and our lives, but it does not change the basis on which we make ethical business decisions. It does however, cause us to expand the application of our ethical standards to new situations.
For example, ethical principles are now being applied to online business. One reason is so that managers can navigate the privacy issues raised by the wholesale collection and sharing (intentional and otherwise) of customer data.
Which values are at play on the two sides of this dilemma? Which stakeholders are priorities at companies like Facebook and Equifax?
Another ethical dilemma arises for managers when government policy collides with a multinational corporation’s global ethical standards. Although this clash can occur in many industries, the information industry offers a useful example. Google’s stated mission is to “Organize the world’s information and make it universally accessible and useful.” From its founding, says the company’s website, “our goal has been to develop services that significantly improve the lives of as many people as possible. Not just for some. For everyone.” This may not hold true in all Google’s markets, however.
In 2010, Google withdrew from China for a time, but it still wants to crack the huge market that country represents. It currently makes two applications available to Chinese users, but Gmail, YouTube, Google maps, and its search engine remain largely banned by the government. Does Google have an obligation to follow its own internal value of providing information to its users, or to respect China’s policy of censorship? Is its current strategy in China coherent, or does it open the door for ethical lapses?
Consider one more of the many general ethical challenges managers of global businesses now face. The Cheesecake Factory, the California-based restaurant chain that prides itself on large portions and sumptuous desserts, opened a restaurant in Hong Kong in May 2017. Since then, the restaurant has been overwhelmed by customers intent on having not just a slice of cheesecake but an “American” experience. The restaurant’s menu is the same in all of its two hundred stores around the world. Whether you are eating in Los Angeles, Hong Kong, or Dubai, you can order dishes with mozzarella, fontina, parmesan, cheddar, feta, or Swiss cheese, along with plenty of bacon, sour cream, and potatoes (). The interior decor is also the same wherever you go, guaranteeing a uniform experience.
Does it raise any ethical issues for the Cheesecake Factory not to tailor its offerings to local tastes and norms, as competing chains have done? People in Hong Kong, for example, normally eat a diet with fewer calories and dairy products and that is much lower in fat and sugar than is typical in the United States. As one young customer at the Hong Kong outlet exclaimed, “Chinese people just cannot handle this much cheese.”
Yet the company is offering a product the great majority of the public wants. Does it owe them anything in addition? That is, does the Cheesecake Factory have an obligation to give customers what they need, rather than what they want? In many parts of the world, there is pronounced desire for many things American, in particular, and Western, in general. Do Western companies have a primary mandate simply to meet this want, or do they have an obligation to deliver what is better for others? This is a core ethical consideration that has implications for companies far beyond simple marketing strategies and tactics. To impose certain products and services on other cultures because Western nations believe these would be best for them certainly would be a form of imperialism. However, for corporations to satisfy expressed wants could be applauded as an honorable response to customers identifying their own preferences. To preemptively decide what ought to be consumed by others—because it is for their own good—might be a form of paternalism. Ultimately, do customers or do companies have the right to make these decisions?
You might answer that it would depend on the company and its products or services, and you would be right to see it in this light. What is unmistakable, however, is that these truly are decisions fraught with ethical dimensions. Business leaders must become accustomed to considering them in this way.

### Endnotes