Steve Bain

The Division of Labor & Specialization

The division of labor is a concept in economics that is almost as old as civilization itself, and with good reason. It is one of the most effective means of immediately, and substantially, improving the productivity of a workforce. Dividing labor into groups that each perform simple specific tasks is well known to produce much better results than requiring workers to undertake multiple tasks at various stages of the production process.

Whilst the practice of labor division is ancient, the process itself was only formalized in the 18th century by the father of modern economics Adam Smith. In the sections below I will explain Smith's insights with his famous example of the 'pin factory'.

While the division of labor unquestionably comes with very significant increases in the production of goods and services, those gains do not come without a cost. The work that results can be tedious, and certainly repetitive. This and other criticisms will also be covered in the sections below.

The Innovation of Division of Labor

In 'The Wealth of Nations', Adam Smith developed the blueprint for modern economics by laying out the arguments in favor of free-markets, and the benefits for all would arise by letting them determine what to produce, how to produce, and for whom to produce. Only with free-markets are private entrepreneurs able to innovate and redirect resources into the production of those things that are most in demand relative to their supply.

We tend to think of the free-market as only applying to the end product that is supplied to consumers who then demand which products they prefer with the limited funds they have. However, the free-market also applies to the factors of production, and successful entrepreneurs will innovate new methods to optimize the output that those factors produce at the lowest average costs.

In so doing, production efficiency is increased, and total output increases. Nowhere in economics are the benefits to productive output more abundantly demonstrated than with the division of labor, and Adam Smith famously described this with his 'Pin Factory' example.

Adam Smith Pin Factory Example

Smith notes in his most famous work that the biggest improvement in the productivity of labor comes from the benefits of dividing labor into as many unique tasks as is feasible for any given product, rather than having each worker conduct all of those tasks individually.

The pin factory is given as an example because pins are such a simple and basic item that it is not immediately obvious how such an item could have many significant distinct operations in its production. Here is what Smith had to say about that:

One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head; to make the head requires two or three distinct operations; to put it on, is a peculiar business, to whiten the pins is another; it is even a trade by itself to put them into the paper; and the important business of making a pin is, in this manner, divided into about eighteen distinct operations, which, in some manufactories, are all performed by distinct hands...
Adam Smith, The Wealth of Nations, 1776

Smith points out that were 10 men to each carry out all of these distinct operations then they could perhaps produce 200 pins per day. But, if each man were to specialize in one or two operations, they could produce 48,000 pins. That's an impressive increase in productivity!

Whether or not the division of labor is still the single most important driver of labor productivity today is debatable given that many industries today require much higher levels of education before any production is possible e.g., surgeons, programmers, researchers etc. That, however, is a moot point since the fact that massive productivity benefits are still available is undeniable.

Specialization of Labor, Pros and Cons

The main reasons for the increased speed and efficiency in production are attributed to the following advantages of labor specialization:

  • Workers will more quickly and easily learn how to perform their tasks
  • It reduces transition time between different tasks
  • Specialist equipment can be developed to assist with task repetition
  • It helps to create uniform quality standards

On the first point, the importance of learning and the skills gained from repeatedly performing the same tasks can easily be underestimated. However, just as the famous 10,000 hour rule suggests, workers really do continue to get better and better at simple tasks for many months and even years. During that time, as they get faster, they will increase their productivity very significantly.

The reduction in transition times between tasks as division of labor is implemented is another huge benefit. Transition time includes more than just walking from one workstation to another, it also includes setting up time and time taken to clear away the remnants of the previous task. Depending on the industry this can eat away at valuable production time.

The specialist equipment that can be developed to assist with repetitive tasks may range from simple tools to complex machinery. Consider, for example, how a simple sewing machine increases the productivity of workers in the clothing & textile industry. With division of labor, some workers who focus only on sewing can become highly proficient in the use of sewing machines.

Other workers will then specialize in cutting cloth, and become highly proficient at that. Yet others will specialize in packaging, quality control and so on. If all workers were to carry out all of these tasks, none would develop the skills necessary to become fully proficient in the use of sewing machines or any of the other specialist equipment used in the clothing & textiles industry.

Uniform quality standards are a trait of mass production, and it helps to build brand recognition. Individually crafted products may or may not be preferred when buying certain items, like artwork or pottery for example, but it is more typical that customers will want to buy products that they know and trust. 

The disadvantages of division of labor are, sadly, also significant. They can be categorized into the following types of negative effects:

  • The work can become extremely tedious, with negative mental health consequences
  • Repetitive strain injuries become more prevalent
  • The specific skills learned are more prone to becoming redundant
  • Increased worker absenteeism and reduced employee retention
  • Bottlenecks on a production line may appear

The tedious nature of repeating a small number of tasks throughout an entire working day, day after day, week after week, can lead to mental stress through boredom. This is not true of every job, there's no boredom associated with specializing as a striker for a world class soccer team, but historically many specialized jobs on production lines and so on have been extremely tedious. Of course, automation with machines is replacing many of these types of jobs, but division of labor will still tend to make many jobs that bit more tedious.

Repetitive strain injuries occur for workers in many specialized jobs, and they can be serious. Jobs that require a lot of bending and lifting can cause long-term back problems. Handlers of machinery can suffer damage to the blood circulation in their hands e.g. 'white finger'. There are many other examples.

As indicated above, machinery is increasingly used to perform many of the repetitive tasks in the workplace, meaning that the workers that previously performed them were replaced. Going forward, with artificial intelligence and advanced robotics, this will apply to many other types of jobs that were previously thought to be safe.

Lack of job satisfaction and increased boredom is another obvious problem with the division of labor, and increased absenteeism is a direct consequence. Difficulty retaining employees at all is a related problem, and staff turnover rates can be high.

Temporary bottlenecks in production can occur with the division of labor when one stage of production is disrupted. For example, in the automotive industry an entire production line will stop if any of its specialized tasks are stopped.

Emile Durkheim, Axel Honneth & Karl Marx on Division of Labor

The fundamental role of work within our societies, and of each person's contribution to society through that work, has sparked a great deal of thought beyond that of how to organize the most efficient means of production. 

Durkheim writes about the division of labor and its effects on the solidarity of society, Marx writes about labor in terms of its vital contribution to building community and self-realization among people. In contrast to these two, Honneth downplays the significance of work in its own right, and sees it  as one of many reflections  of a more general struggle to achieve respect and recognition (albeit an important one).

I won't get into these broader discussions here as it falls outside the scope of economics alone, but for interested students I've provided a link to an article that summarizes these thinkers' writings on the division of labor. To read it, click the De Souza link below.

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