Greg Ip, WSJ: For Lower-Paid Workers, the Robot Overlords Have Arrived

It’s time to stop worrying that robots will take our jobs—and start worrying that they will decide who gets jobs.

Millions of low-paid workers’ lives are increasingly governed by software and algorithms. This was starkly illustrated by a report last week that Amazon.com tracks the productivity of its employees and regularly fires those who underperform, with little human intervention.

“Amazon’s system tracks the rates of each individual associate’s productivity and automatically generates any warnings or terminations regarding quality or productivity without input from supervisors,” a law firm representing Amazon said in a letter to the National Labor Relations Board, as first reported by technology news site The Verge. Amazon was responding to a complaint that it had fired an employee from a Baltimore fulfillment center for federally protected activity, which could include union organizing. Amazon said the employee was fired for failing to meet productivity targets.

Perhaps it was only a matter of time before software was used to fire people. After all, it already screens resumes, recommends job applicants, schedules shifts and assigns projects. In the workplace, “sophisticated technology to track worker productivity on a minute-by-minute or even second-by-second basis is incredibly pervasive,” says Ian Larkin, a business professor at the University of California at Los Angeles specializing in human resources.

Industrial laundry services track how many seconds it takes to press a laundered shirt; on-board computers track truckers’ speed, gear changes and engine revolutions per minute; and checkout terminals at major discount retailers report if the cashier is scanning items quickly enough to meet a preset goal. In all these cases, results are shared in real time with the employee, and used to determine who is terminated, says Mr. Larkin.

Of course, weeding out underperforming employees is a basic function of management. General Electric Co.’s former chief executive Jack Welch regularly culled the company’s underperformers. “In banking and management consulting it is standard to exit about 20% of employees a year, even in good times, using ‘rank and yank’ systems,” says Nick Bloom, an economist at Stanford University specializing in management.

For employees of General Electric, Goldman Sachs Group Inc. and McKinsey & Co., that risk is more than compensated for by the reward of stimulating and challenging work and handsome paychecks. The risk-reward trade-off in industrial laundries, fulfillment centers and discount stores is not nearly so enticing: the work is repetitive and the pay is low. Those who aren’t weeded out one year may be the next if the company raises its productivity targets. Indeed, wage inequality doesn’t fully capture how unequal work has become: enjoyable and secure at the top, monotonous and insecure at the bottom.

At fulfillment centers, employees locate, scan and box all the items in an order. Amazon’s “Associate Development and Performance Tracker,” or Adapt, tracks how each employee performs on these steps against externally-established benchmarks and warns employees when they are falling short.

Amazon employees have complained of being monitored continuously—even having bathroom breaks measured—and being held to ever-rising productivity benchmarks. There is no public data to determine if such complaints are more or less common at Amazon than its peers. The company says about 300 employees—roughly 10% of the Baltimore center’s employment level—were terminated for productivity reasons in the year before the law firm’s letter was sent to the NLRB.

Mr. Larkin says 10% is not unusually high. Yet, automating the discipline process, he says, “makes an already difficult job seem even more inhuman and undesirable. Dealing with these tough situations is one of the key roles of managers.”

According to Amazon, the Adapt system sends a termination notice to a manager and human resources, who then meet with the employee to outline their options—which includes an appeal—before a final termination is given. “No one is terminated, coached or developed by a system,” a spokeswoman said. “Managers make final decisions on all personnel matters. The [Adapt system] simply tracks and ensures consistency of data and process across hundreds of employees to ensure fairness.” The number of terminations has decreased in the last two years at the Baltimore facility and across North America, she said.

Companies use these systems because they work well for them.

Mr. Bloom and his co-authors find that companies that more aggressively hire, fire and monitor employees have faster productivity growth. They also have wider gaps between the highest- and lowest-paid employees.

Computers also don’t succumb to the biases managers do. Economists Mitchell Hoffman, Lisa Kahn and Danielle Li looked at how 15 firms used a job-testing technology that tested applicants on computer and technical skills, personality, cognitive skills, fit for the job and various job scenarios. Drawing on past correlations, the algorithm ranked applicants as having high, moderate or low potential. Their study found employees hired against the software’s recommendation were below-average performers: “This suggests that managers often overrule test recommendations because they are biased or mistaken, not only because they have superior private information,” they wrote.

Last fall Amazon raised its starting pay to $15 an hour, several dollars more than what the brick-and-mortar stores being displaced by Amazon pay. Performance tracking is how Amazon ensures employees are productive enough to merit that salary. This also means that, while employees may increasingly be supervised by technology, at least they’re not about to be replaced by it.