With technology that can more closely monitor worker activity, will wages fall or not rise as much?

The Keynesians have come up with theories to explain why wages might be slow to fall in a recession. Here is one of them:

Efficiency Wage Theory-Companies set wages above competitive (that is, market determined) levels to increase labor productivity. This does two things:

1. It reduces worker turnover, since workers will want to keep this high paying job. This in turn reduces training and hiring costs. When that happens, productivity rises.

2. It reduces slacking since no worker will want to get caught not putting forth their best effort because the job pays so well. They would not want to get fired from a job that pays so well. The company cannot constantly monitor its employees, so the high wage prevents slacking.

The idea is that it was too costly to constantly monitor what all the workers were doing. But maybe things are changing now.

See Three Hours of Work a Day? You’re Not Fooling Anyone: Employers are arming themselves with new, more aggressive technology to measure how workers spend their time by Te-Ping Chen of The WSJ. Excerpts:

"It tracks the websites employees visit minute-by-minute, and has the ability to take remote screenshots of workers’ computers."

Hospitals are installing sensors to detect nurses’ handwashing practices and their location on the floor at all times. At AdventHealth Celebration in Florida, for example, more than 200 nurses’ whereabouts are tracked to gain a better idea of how to improve productivity and workflow.

“It’s just like a GPS where they can see where everyone is at any time,” says Patty Jo Toor, vice president of nursing and hospital operations. She says the technology can help coach nurses and isn’t used for punitive purposes.

Restaurants are using software to observe each of their waitstaff’s sales in real time. Drivers who work for United Parcel Service Inc. and Uber Technologies Inc. have their speed patterns tracked to boost efficiency and safety."

"Of companies based in the U.S., Europe and Canada, 22% of employers surveyed say they collect employee-movement data, 17% collect work-computer usage data, 13% collect employee fitness data and 7% keep tabs on the text in employee emails"

"Mr. Kropp thinks that so-called “nudge” technology, using data to gauge things such as time spent on tasks and encouraging workers to take breaks, can help boost productivity. But reliable conclusions can be hard to derive from the data, he says. For example, if office sensors detect that someone isn’t sitting in their desk chair, the takeaway might not be so clear: perhaps they have a standing desk, or are engaging with colleagues."

[at one company] "the amount of time employees spend on websites and apps classified as “productive”—have risen from about 60% to north of 85%."

"it lets managers spot patterns and praise employees who go above and beyond by detecting, for example, workers who take their laptops home and work after hours."

"When Sagar Gupta, executive vice president at Dallas-based Biorev, a 3D-visualization company, introduced the ActivTrak monitoring software in 2016, he was fed up with low work output. The software quickly revealed employees typically worked just three hours out of each eight-hour day. Since employees became aware their activities were being tracked, he says, statistics have dramatically improved."

"To encourage productivity, employees can log on to see their own productivity levels as well as that of their coworkers"