Study: To exploit workers, keep them in the dark about profits

July 6, 2012

When are companies most successful at exploiting workers? When their junior employees don't realize how much their managers are profiting from their work, according to a new study from the University of Heidelberg.


(Flickr/ToGa Wanderings)

Three economists set up a lab experiment with 2,500 volunteers to test the conditions under which senior workers attempt to exploit junior ones. Both are working on a project together, and the more effort that the junior worker puts in, the less the senior worker must contribute. The senior worker also has the power to punish subordinates by docking their pay. "He can use this power to try to ensure that the worker does not work less than he does, but he can also use it to coerce the junior worker into working more than him," the paper says.

The researchers find that exploitation happens frequently, whether or not the junior employees understand how their managers are profiting from their work. But the attempts at exploitation "are more frequent and pronounced" when junior workers didn't have the full picture, the paper's analysis shows.

Their proposed solution? "Greater transparency in these cases could limit the extent of exploitation, not only because workers will be more likely to resist exploitation, but also because managers may be less willing to act in a way that would be socially unacceptable," they write.

(h/t Chris Dillow)

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