How shadow work affects employment and the economy

February 17, 2023

Many of us are familiar with the concept of unpaid work: The labor people perform without compensation. This is usually in the context of household or domestic work such as cooking and cleaning. However, fewer people are acquainted with shadow labor, also known as shadow work. What exactly is it? What impact does it have on worker productivity? And, what implications does it have for business leaders, if any?

Defining shadow work

As the Financial Times explains, shadow work is "work that companies have been able to turn over to their own customers, via technology." In essence, this is unpaid labor that has been delegated to consumers. According to Management Study Guide, examples of shadow work include self-checkout machines and self-service gas stations — roles that human workers previously filled. In this case, customers have taken over the labor that cashiers and fuel pump attendants used to handle, with the help of technology.

It can also include booking holidays online, ordering food at self-ordering kiosks and performing financial transactions on a banking app. The decision to use machines in place of people is largely driven by business growth strategies. By having your customer perform certain tasks, you no longer need to pay someone to do them, nor do you have to pay associated taxes, reducing overhead expenses.

Ways shadow work impacts employment and productivity

While automation has undeniable benefits for revenue generation, customer satisfaction and supply chain efficiency, it also has its downsides. First and foremost, automation means fewer employees are needed. While this is good for business, it means that a degree of money is taken out of circulation as there are fewer people who earn and spend it.

Although employment levels are the highest they've been since the late 1960s, it's anticipated that shadow work will create considerable unemployment as machines advance and eliminate the need for many human employees. Furthermore, most of these historically low wage jobs were the only options for uneducated or unskilled workers, meaning a swath of the population is now faced with job scarcity.

Shadow work might also have potentially devastating consequences for productivity: These devices aren't infallible, and software and hardware often break or glitch. Because there are fewer human workers to turn to for assistance, customers sometimes have to spend hours battling with basic tasks which all too often cuts into their own working time.

It's indisputable that we need automation in an increasingly competitive, digitized world. However, business leaders and senior management would do well to augment human assistance with shadow work rather than replace it. Not only will this benefit customers, but it will also play a pivotal role in keeping the economy robust and productive, limiting unemployment and saving those precious hours spent struggling with offline platforms or defective machines.