Technology that simplifies work can make a company far more productive and still leave its workers worse off. That is the argument of a new paper by economists Masao Fukui of Boston University and Emi Nakamura and Jón Steinsson of UC Berkeley, who say simplified jobs turn workers into interchangeable parts, or “commoditize” them.
The paper, The Commoditization of Labor, was released as NBER Working Paper No. 35815 on September 28, 2026.
Smith’s pin factory meets Marx’s warning
The authors set their idea between two classic views. Adam Smith praised the productivity gains of breaking work into simple steps. Karl Marx warned that the same simplification lets employers replace workers easily, which weakens their pay.
Fukui, Nakamura and Steinsson build a search model in which jobs are durable: when a worker leaves, the job stays and must be refilled. Each job consists of many tasks. Some are standardized, so the firm’s technology determines output and worker skill does not matter. The rest still depend on how good the worker is.
As the share of standardized tasks rises, firms become less picky about whom they hire. That makes vacancies easier to fill, improving the firm’s fallback option in any wage negotiation. Productivity goes up, but the gap between what a worker produces and what the worker is paid, known as the wage markdown, widens.
This is distinct from automation, the authors stress. Machines do not replace anyone in their model. Every task is still done by a person; it just no longer matters much which person.
What the numbers show for megafirms
The team calibrated the model to the rise of “megafirms” with 10,000 or more employees, whose employment share grew by 4.3 percentage points between 1980 and 2023. In the simulation, megafirms raise their degree of standardization from 0.5 to about 0.63, while smaller firms barely change.
The result: output per worker at megafirms rises by more than 25%, while their relative wages fall by about 8%. Hiring costs at megafirms fall by nearly 40% because they screen applicants less.
The model also reproduces the collapse of the large-firm wage premium. In the data the authors cite, megafirms paid almost 60% more than small firms in the 1980s and only about 20% more in the 2010s. The model’s premium drops from more than 50% to about 30%.
Cheap hiring in low-wage services
To test the model’s prediction that big firms hire cheaply, the authors turned to Society for Human Resource Management benchmarking surveys from 2022 and 2025. Median cost per hire falls steadily with firm size; at firms with more than 5,000 employees it is roughly one third of the cost at firms with 1 to 99 employees.
A second estimate, built from government data on HR costs and total hires, puts the cheapest industries at the bottom of the wage ladder: about $105 per hire in accommodation and food services, $132 in leisure and hospitality and $250 in retail, compared with $1,287 in private education and health services.
The authors note the SHRM data are a convenience sample of members and not representative of all firms. Their key results also depend on the assumption that jobs are durable and that creating new ones is costly; with free entry, the effect disappears.
One footnote grounds the theory in experience. Steinsson worked at McDonald’s in the 1990s and recalls that the only step needing any real skill or judgment was salting the hamburger.
Study Details:
- Title: The Commoditization of Labor
- Authors: Masao Fukui, Emi Nakamura, Jón Steinsson
- Journal: NBER Working Paper No. 35815
- Publication Date: September 28, 2026
- DOI: 10.3386/w35815