Pluralistic: How workers get trapped by "bondage fees"; Red Team Blues Chapter One, part five (21 Apr 2023)

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Originally published at: Pluralistic: How workers get trapped by “bondage fees”; Red Team Blues Chapter One, part five (21 Apr 2023) – Pluralistic: Daily links from Cory Doctorow


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A uniformed doorman standing in front of a luxury building; the image is cropped to cut him off at the neck. He has a ball and chain around one ankle. In the lobby stands a business-suited figure with a dollar-sign-emblazoned money-bag in place of his head.

How workers get trapped by "bondage fees" (permalink)

Growing up in Toronto, I naturally held NYC in awe. As the joke goes, it takes two Torontonians to change a lightbulb: one to change it, and one to go to New York and make sure lightbulbs are still cool. When I went to New York, I had a great place to stay: my cousin Maxine's rent-controlled apartment in a midtown doorman building off 23d and Lex.

If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2023/04/21/bondage-fees/#doorman-building

Max was impossibly glamorous: a perfectly coiffed office manager at Colgate-Palmolive who earned an anthropology degree at CUNY, volunteered at the Brooklyn Zoo, and knew every trick for getting cheap tickets for museums, galleries and shows, and had an encyclopedic, up-to-the-minute knowledge of all the culture New York had to offer. Staying with cousin Max was fantastic and I went to New York as often as I could.

I went so often I even got to know Max's doormen, who didn't just know everyone in the building, but also all their regular visitors and guests. I'd get off the subway with my suitcase and lug it over to Max's place and the doorman would greet me by name and hand me the spare keys to 11-J and ask me how my trip had been.

The jobs in the apartment buildings in big northeastern US cities – superintendent, janitor, doorman, gardener, etc – were once union jobs, with benefits and a pension. Over the years, tenants' associations, homeowners' associations and condo boards switched out these union employees with long-term workers hired in from staffing agencies that promised lower costs.

Now, if you think about it for even a second, it's obvious that there's only one way that hiring a doorman through a staffing agency could be cheaper than just hiring the doorman: the staffing agency has to pay the doorman less. A lot less, because the staffing agency is making money here, too – so the doorman is splitting that lower payment with the agency.

The staffing agencies are platforms – just like Facebook, Google, Apple, and Tiktok. They have end-users (apartment dwellers) and business customers (workers who staff apartments), and they intermediate between them, selling one to the other and making money on both sides.

Like any platform, the staffing agency play is enshittification: first, making things good for end-users and business-customers, locking both in – and then withdrawing all the surplus from both sides of the two-sided market and pocketing it. Think of how Uber lost 41 cents on every dollar for more than a decade, until public transit investments had stagnated and yellow cabs had disappeared, allowing the company to double the cost of a ride and halve the compensation for drivers:

https://pluralistic.net/2023/04/12/algorithmic-wage-discrimination/#fishers-of-men

When it comes to enshittification, digital platforms like Uber had an advantage over analog systems like apartment buildings. Digital enshittifiers have lots of sliders and knobs they can endlessly twiddle, changing the rules of the platform so fast that neither end-users nor business customers can develop stable strategies for wrestling value back to themselves. As with any shell game, it's the quickness of the hand that deceives the eye:

https://doctorow.medium.com/twiddler-1b5c9690cce6

But digital platforms' ability to twiddle merely improves enshittification. Digital enshittification is just the usual parasite's game of creating chokepoints between market actors and extract rent from anyone who wants to hire workers – or who wants to work.

Apartment workers who work through staffing agencies have seen declining wages and worsening benefits for years – which is another way of saying that apartment workers got more from the agencies at the beginning, but as the agencies locked up more apartment buildings and reduced the alternatives for workers, they clawed back their workers' wages and kept it for themselves.

Naturally, this is terrible for morale. It's hard to be that cheerful, deeply knowledgeable doorman or cleaner or super when you can't afford your own rent. For the end-users – HOAs, condo boards, tenants' associations – the natural play here would be to cut out the middleman. They could fire the agency and hire the workers direct.

Except they can't. It turns out that the staffing agencies negotiated secret "No Hire" agreements with the buildings. Under these deals, if a building hires any former agency worker, it has to pay the agency a penalty equal to three months' wages for every other agency worker in the building. This keeps low-waged workers locked to the agencies, because the employer most likely to make them a better offer is the apartment building they've worked in for years and know like the backs of their hands, and the employer has to pay a massive fine if they hire the worker direct.

It's no wonder that these workers – and their newly voted-in union, SEIU 32BJ – have a blunter name for these "agreements": they call them "bondage fees." In an excellent piece for The American Prospect and Workday Magazine, Sarah Lazare describes how these bondage fees are driving the immiseration of a group of workers who once earned a living wage for work that made life easier for people like my cousin Max:

https://prospect.org/labor/2023-04-21-bondage-fees-trap-contracted-workers/

Recall that the key to enshittification is lock-in. Platforms subsidize the arrangement between workers and customers at the start, and then they make it back by squeezing both. The easier it is for either to leave, the less it can squeeze. The more it hurts workers or customers to leave, the more pain the platform can inflict on both without losing their business.

Economists have a name for the penalties that platforms inflict on disloyal customers and workers: "switching costs." Digital platforms have elevated the inflation of switching costs to a fine art, from Facebook and Twitter holding your friends hostage; to Apple holding your media and apps hostage:

https://www.eff.org/deeplinks/2021/08/facebooks-secret-war-switching-costs

Switching costs are at the heart of the staffing agencies' ripoffs of apartment workers. While the general skills of a building super, cleaner or doorman can transfer well to any jobsite, these workers have incredibly specific knowledge of their buildings. The super knows how to fix the balky furnace extractor fan. The cleaner knows just how to reach that awkward corner behind the plant in the lobby. The doorman knows the kid from Toronto whose cousin lives in 11-J.

This means that these workers are especially valuable to the people who live in these buildings, which means that – all things being equal – these workers could bargain for higher wages, especially through their union. That's why the staffing agencies are so horny for bondage fees, because that's how they make sure that all things are not equal.

As Lazare points out, bondage fees are basically just a wrinkle on an existing scam: noncompete agreements, which bind one fifth of the US workforce, prohibiting workers from switching to a competitors' shop. While noncompetes are lauded as a way of protecting the assets of "knowledge" firms, the vast majority of workers chained to their jobs with noncompetes are low-waged workers in the fast-food sector. Do we really think that there's a major trade secrecy issue in play when a McDonald's cashier switches to a Wendy's down the block for a $0.25/hour raise?

https://pluralistic.net/2022/02/02/its-the-economy-stupid/#neofeudal

Even in those "knowledge" shops, the argument for noncompetes collapses in the face of evidence. In California, noncompetes are illegal under the state constitution. That means that every single tech company in Silicon Valley has always operated in an environment where employees were free to leave a bad job for a better one.

Indeed, the reason we call Silicon Valley "Silicon Valley" is intrinsically bound to this workers' freedom to change jobs. The first "silicon" company in Silicon Valley was Shockley Semiconductors, whose founder, William Shockley, got a Nobel prize for helping to invent the silicon transistor. Shockley was also a delusional racist paranoiac who offered his Nobel money as a bounty to any Black woman who'd get sterilized in the name of "improving the gene pool." He wasn't just an evil fuck, he was also impossible to work for, wiretapping his employees and even his family members, and creating a chaotic environment that failed to produce the microchips that his transistors promised.

Luckily for everyone who uses anything with a transistor (e.g. everyone), California bans noncompetes. That meant that his eight top employees could quit and start their own company. You may not have heard of Fairchild Semiconductor, the company that the "traitorous eight" founded, but you've definitely heard of the company that two of Fairchild's top employees quit and founded: Intel:

https://onezero.medium.com/a-the-traitorous-eight-and-the-battle-of-germanium-valley-86c455967d43

If it wasn't for California's guarantee of a worker's right to quit a bad job and get a better one, we might be stuck with "Germanium Valley."

Noncompetes epitomize MLK's "socialism for the rich and rugged individualism for the poor." They're a way for employers to operate in a command economy where the power of the state can be mobilized against uppity workers who dare to seek a better deal, and leave workers to sell their labor in a buyer's where the bidders have all the power.

Noncompetes are so manifestly unfair that the FTC has proposed a nationwide ban on them as an "unfair method of competition":

https://www.ftc.gov/news-events/news/press-releases/2023/03/ftc-extends-public-comment-period-its-proposed-rule-ban-noncompete-clauses-until-april-19

But, as Lazare points out, bondage fees are just noncompetes by another name. The major player in bondage fees is (ironically) a Toronto-based company called Firstservice, who operate through their subsidiary Planned Companies to enshittify apartment buildings on a massive scale. The workers organized by SEIU 32BJ have filed a complaint against Planned over these bondage fees:

https://www.seiu32bj.org/wp-content/uploads/2022/04/32BJ-Complaint-Regarding-Planned-Companies.pdf

Planned employs nearly half of the doormen and conceirges in the northeast; that's called a "monopsony." Monopsonies are the less-well-known twin brothers of monopolies, markets in which buyers (rather than sellers) have power. Monoposony may be an obscure concept – unlike "monopoly," there's no family-destroying board-game to get us familiarized with the term. But monopsonies are just as toxic as monopolies, especially for workers, where an employer's ability to restrict the places where you can sell your labor can force workers into dangerous, miserable conditions. Maybe if Tennessee Ernie Ford had figured out how to rhyme "company store" with "monopsony," we'd be more alive to this danger:

https://genius.com/Tennessee-ernie-ford-sixteen-tons-lyrics

Though Pearson's workers organized under SEIU in 2019, they still don't have a contract. Among their top demands: an end to bondage fees. The staffing agencies say that these fees are necessary to recoup the costs "associated with recruiting and referring temporary workers." But we're talking about workers with years – decades – of experience. Those costs were recouped many times over:

https://go.gale.com/ps/i.do?id=GALE%7CA639809660&sid=googleScholar&v=2.1&it=r&linkaccess=abs&issn=15385876&p=AONE&sw=w&userGroupName=anon%7E2f553b8b

Bondage fees are closely held secrets. Planned's workers can hold their jobs for years without knowing of their existence. But the Prospect got ahold of some of these secret agreements, finding one- and two-year noncompete clauses hidden in them. As more Planned/Firstservice workers try to form unions, the company has begun illegally firing the organizers, like Kevin Borowske. Borowske was a live-in caretaker at Minneapolis's Centre Village, and when Firstservice fired him for trying to start a union, he didn't just lose his job, he lost his home, too.

For bosses using bondage fees to lock in workers, secrecy is vital. Without a good record of where these agreements exist, let alone their specifics, it's hard for state and federal enforcers to take them on. There's no better way to drag these dirty secrets into the public than through strong unions.

(Image: crystalsquare apts, CC BY-SA 2.0, modified)


A squared-off version of Will Staehle's cover for the Macmillan edition of 'Red Team Blues.'

Red Team Blues Chapter One, part five (permalink)

My next novel is Red Team Blues, a grabby thriller about how finance curdled the dream of tech as a force for human thriving. It comes out in a matter of days, and to get you ready for that release, I've been serializing the first chapter all week – and today, I wrap up the series.

If you've enjoyed this serial, I hope you'll pre-order the book – or, better yet, come to one of my tour stops!

http://redteamblues.com

Here's the previous installments:

Part one:

https://pluralistic.net/2023/04/17/have-you-tried-not-spying/#unsalted-hash

Part two:

https://pluralistic.net/2023/04/18/cursed-are-the-sausagemakers/#henched

Part three:

https://pluralistic.net/2023/04/19/whats-wrong-with-iowa/#henched

Part four:

https://pluralistic.net/2023/04/20/links-arent-performances/#henched

Here's where US readers can pre-order the book:

https://us.macmillan.com/books/9781250865847/red-team-blues

Here's pre-orders for Canadians:

https://services.raincoast.com/scripts/b2b.wsc/featured?hh_isbn=9781250865847&ht_orig_from=raincoast

And for readers in the UK and the rest of the Commonwealth:

https://uk.bookshop.org/p/books/red-team-blues-cory-doctorow/7225998?ean=9781804547755

And now, here's today's concluding serial installment:

“I mean, what do I get?”

The transformation was incredible. One minute, he’d been a scared old man, desperate, literally pleading for his life. In a flash, he was calm, back in the realm of numbers, and I was making a deal with a guy who’d eaten ramen for twenty-­two years rather than surrender any more of his future fortune than was absolutely necessary.

“Well, a twenty-­five percent commission is obviously out of the question. We’re talking about a billion dollars here.”

“That’s if I recover the keys before they exfiltrate any of that money. My commission is based on value at recovery, not initial value. So if any of this goes public and the value of a Trustlesscoin falls to zero, then I get twenty-­five percent of nothing.”

He looked sour. “If that happens, you won’t have anywhere to send your invoice for your twenty-­five percent, either. But, Marty, you can’t seriously expect a two-­hundred-­and-­fifty-­mil upside here.”

“Daniel Moses Lazer, you just got through lecturing me on the trillions in downside if those keys aren’t recovered. Note that I did not say that I expected any share of the positive externalities a successful recovery would generate. Just the direct benefit to my client.” I nodded at him.

“But a quarter of a billion dollars—­”

“Or maybe it’s nothing. Or maybe I’ll find myself face-­to-­face with these killers you say you’d have to cower in a bunker over until the end of your natural life. Danny, I’m surprised at you. You know who I am. You know what I charge. You know I don’t haggle.”

He smiled, and I saw a little of the happy, well-­fed, successful second act that he’d projected when he answered his door. “Yeah, I know. But I had to try. Two hundred and fifty mil is two hundred and fifty mil.”

“A quarter of a billion dollars here, a quarter of a billion there—­”

“Yeah, yeah. Pretty soon, we’re talking real money. You think you can do it?”

I shrugged. “Can’t say. I have some ideas about how to start, covering the bases, being my normal, meticulous self. You’d be surprised how often that works. If there’s a fast resolution to this scam, it’ll be because the people on the other side of it forgot to dot an i or cross a t. They have to make zero mistakes; I just have to find one error. They have to be perfect; I just have to be systematic. It’s why I play the red team. Advantage to the attacker, as always.”

“As always.” He checked his watch. “Shit, I got to get my phone for a second here. Can you give me a minute?”

“Sure,” I said as he grabbed his phone and mine, giving me mine back absently as he powered his up and logged in to it even as he slid through his sliding doors and into that picture-­perfect living room.

I didn’t power up my phone right away. First, because it was a game I played with myself: How long could I go without ramming its phosphors into my eyeballs? Second, because I wanted to mull over this job. And third, because I had a sense from Sethu’s body language that she wanted to have a word with me.

She stepped away from the painting. She really was very good. Whatever she’d done to it while Danny and I had been talking had brought it to life in a way I couldn’t exactly articulate, making it seem energetic, hinting at all the feverish activity in the home offices and garages and cars in that impressionistic landscape. She gave it hustle.

“Danny tells me you’ve done this work before,” she said, hanging her smock on the easel and wiping her hands with an oily rag.

“Since the earliest days,” I said. “Most accountants saw the spreadsheet as a tool for making their lives easier. A smaller group realized its potential for covering up financial crimes. I think I was the only member of that second group that wanted to prevent the crimes, rather than creating them.”

“So there were three groups,” she said.

“I guess so,” I said. “The bean counters, the crooks, and me. Pretty sure we used to all hang out in the same Usenet support group for advanced Lotus 1–­2–­3 users.”

“You’ve solved a lot of cases?”

“You make me sound like a detective. Yeah, I’ve made some of my clients pretty happy.”

“Danny said you just had a big victory?”

“Rearden Factoring. They’re financial engineers, leveraging supply-­chain desperation. If you’re a big blue chip, you tell your suppliers that you’re paying them on one hundred and eighty days net unless they sign up with Rearden, which will process their invoices in thirty days in exchange for a two percent commission. Rearden doesn’t charge the buyers anything for this; it just leverages up that free cash flow, turning it into capital for big bets in the capital markets, rotating its positions with every billing cycle. It’s a lucrative business.”

“It sounds like a dirty business,” she said.

“No dirtier than any monopoly scam. The bigger the bigs get, the better the terms they can extract from their supply chain. It’s the golden rule: they have the gold, they make the rules.”

“And you helped them?”

“I did. Insider job, but he made a mistake. I caught it.”

“That is a lucky break. Why would someone so competent in one domain be so foolish in another?”

“That is a mystery that I have pondered since I first figured out my old man was a brilliant mechanical engineer and a dribbling idiot when it came to politics, Sethu. If I ever figure out the answer to that question, I’ll be sure to let you know.”

She and I exchanged a look that meant something, though I couldn’t have said what. If Sethu was a gold digger who’d tricked Danny into having something to live for, I wasn’t going to fault her for it or begrudge her any of Danny’s holdings, assuming he had any holdings in a week or two. Teaming up with a young, beautiful, devastatingly intelligent woman wasn’t a lapse in Danny’s brilliance as far as I was concerned—­it was his smarts carrying over from one domain into the next.

“Thanks for the history lesson,” she said. “Always fascinating to hear these tales from the electronic frontier.”

“Anytime,” I said as she picked up the easel and went back indoors, passing Danny in the doorway as he came out to me.

“Did she grill you?” he asked.

“Just a friendly chat,” I said.

“Well, then, you got lucky. She’s my equal partner in Trustless, and she’s also the beneficiary of my estate. She has as much at stake as I do here. Even before this incident, she told me I was too trusting. Me! If she’s willing to trust you, you should take it as a standing ovation in your little one-­man show, Martin Hench: Stand-­Up Guy.”

“It’s a performance that’s wowed ’em for a generation,” I said.

“Well, maybe this will be your grand finale. An old player who happens on a quarter billion dollars doesn’t need to perform for his grubstake anymore.”

“But you didn’t quit when you had the chance,” I said, before realizing with a wince that he had quit, quit everything and made ready to quit life itself.

He saw the wince, and his eyes and voice softened. “I nearly did. Maybe I should have.”

Hey look at this (permalink)


A Wayback Machine banner.

This day in history (permalink)

#20yrsago Madonna diluting own trademark https://memex.craphound.com/2003/04/21/madonna-diluting-own-trademark/

#20yrsago Teresa’s remedial Don’t-Burn-Libraries 101 https://nielsenhayden.com/makinglight/archives/2003_04.html#002590

#10yrsago No, universal daycare doesn’t destroy the national character https://www.theguardian.com/money/2013/apr/21/childcare-expert-jonas-himmelstrand-tories

#5yrsago The world is no longer willing to tolerate the plague of bullshit “agreements” https://www.bloomberg.com/news/articles/2018-04-20/uber-paypal-face-reckoning-over-opaque-terms-and-conditions

#5yrsago Family-owned Smugmug acquires Flickr, rescuing it from the sinking post-Yahoo ship https://www.usatoday.com/story/tech/2018/04/20/smugmug-buys-flickr-verizon-oath/537377002/

#5yrsago World Bank recommends that countries eliminate minimum wage, dismantle wrongful dismissal rules and contractual protections for workers https://www.theguardian.com/money/2018/apr/20/world-bank-fewer-regulations-protecting-workers


Colophon (permalink)

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  • Vigilant, Little Brother short story about remote invigilation. ON SUBMISSION

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  • Red Team Blues: "A grabby, compulsive thriller that will leave you knowing more about how the world works than you did before." Tor Books, April 2023

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  • The Lost Cause: a post-Green New Deal eco-topian novel about truth and reconciliation with white nationalist militias, Tor Books, November 2023

This work – excluding any serialized fiction – is licensed under a Creative Commons Attribution 4.0 license. That means you can use it any way you like, including commercially, provided that you attribute it to me, Cory Doctorow, and include a link to pluralistic.net.

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