A Blog by Jonathan Low


Mar 27, 2023

Why the Leaders Still Aren't Back In Charge

There are two jobs for every person without one. Hiring remains strong as unemployment rates approach 50 year lows. Demand is driving the job market - and that is reducing the power of leaders who yearn for pre-pandemic authority. 

And the reality is this is likely to continue despite highly publicized layoffs in tech - especially as most of those laid off and want a new job can find one in days or weeks. Boomer retirements, Covid deaths, immigration restrictions and a smaller Gen Z demographic cohort are all contributing to the trend. Which means leaders are a long way from being able to crack the whip in a war for talent economy. JL 

Rani Molla reports in Re/code:

Just 14% of organizations said they were willing to implement a negative consequence for not meeting onsite requirements. Unemployment remains near 50-year lows, and people are still more likely to quit jobs — and less likely to be laid off — than they were before the pandemic. Even as headlines about downsizing surged at the beginning of the year, layoff rates were just 1.1% of all employment. There are still two open jobs for every unemployed worker. Wages continue to rise at a faster rate than they did before the pandemic, growing 4.6% in February. The trend is possible because hiring is still strong.

The pandemic sent American workers on a roller coaster ride, one that’s upended the state of worker power. A worker’s power has always been linked to their ability to demand change — change in pay, in benefits, in working conditions — at their job. Three years after lockdowns swept across the United States, people are no longer quitting at record levels, and some bosses are forcing workers back to the office. Yet workers still have more power than they did before the pandemic. And that’s not likely to disappear anytime soon.

How we got here — and even where “here” is — is complicated. At the start of the pandemic, companies laid off workers en masse, causing unemployment to jump to its highest rate since the Great Depression and leaving workers with few options and little leverage. Then, thanks in part to government stimulus, the economy came roaring back, and employers couldn’t find enough workers to staff their operations. That ushered in an era of worker power dubbed the Great Resignation, in which workers were readily able to quit their jobs in exchange for better offers, driving up wages and prompting employers to propose all sorts of perks. Extended unemployment benefits came and went, but worker power remained.


Beginning last year, however, fears of an economic recession caused many to speculate that that era is over. The economy shrank for two consecutive quarters, which is typically an indication of a recession, and in an attempt to stifle runaway inflation, the Federal Reserve raised interest rates, which presumably would have slowed the economy and job growth. But the country kept adding jobs, and the labor market has generally been considered very good. That’s not what you’d expect of an economy in the doldrums.

Then things got weirder still. The jobs market isn’t as tight now as it was last year, and some of the nation’s biggest companies, especially tech companies, are laying off tens of thousands of workers. Yet nationwide, unemployment remains near 50-year lows, and people are still more likely to quit their jobs — and less likely to be laid off — than they were before the pandemic.

It’s a confusing time, to say the least. And just how much power workers currently have is an open question that both employees and employers are grappling with. Some people say the bosses are back in charge. Of course, many of the people saying this are executives who want a return to the way things were, or have a stake in commercial real estate, which has taken a hit from the rise of remote work. But while the fundamental power dynamic between an employee and an employer inherently favors the latter, the last three years have represented a rapid rise in power — one that still exists today and is more than just a blip.

“The balance of power started drifting back a little bit toward employers, but broadly speaking, it’s still in the hands of workers,” Rand Ghayad, head of economics and global labor markets at LinkedIn, said.

We spoke to a dozen experts about the evolving state of worker power in the United States. They pointed to trends like continued wage growth and increased worker activism as evidence that worker power remains strong. There’s also the fact that, while many things have returned to their pre-pandemic “normal,” office occupancy has not.

What the future holds for American workers remains uncertain. An unpredictable economy, shifting conversations around the role of work in our lives, and a resurgent but challenged union movement could push worker power in one way or another.

The state of worker power

If the Great Resignation was emblematic of workers taking back their power, the extent to which workers are still willing to quit shows how enduring that power is. In January, nearly 4 million people quit their jobs — the monthly number was well over 4 million all last year — whereas the pre-pandemic baseline was closer to 3 million in a given month.

“There’s really strong demand for workers,” explained Nick Bunker, head of economic research at the Indeed Hiring Lab. “When there’s more competition for workers, that gives the person who’s selling their labor, the worker, more bargaining power than they would have otherwise.”

Correspondingly, rates of layoffs are lower than they were pre-pandemic, suggesting that employers are still having difficulty holding on to workers and are loath to lose the ones they already have. Even as headlines about downsizing surged at the beginning of the year, layoff rates were just 1.1 percent of all employment, matching the lowest rate in 2019, which already had abnormally low layoffs. There are still roughly two open jobs for every unemployed worker.

Workers are also illustrating their power by achieving higher wages, either through asking or through leaving their job for another — a practice that has caused employers to raise wages on their own. That has meant wages continue to rise at a faster rate than they did before the pandemic. Wages grew an impressive 4.6 percent in February, compared to the year earlier, while pre-pandemic growth was typically under 3 percent. Notably, though, most of that recent growth has been mitigated by inflation.

Additionally, when workers have been called back to the office, they have felt comfortable petitioning their employers — privately and publicly — to continue working from home. And when that doesn’t work, they’re simply refusing to abide by the return to office orders.

“As a lot of organizations start to put mandated returns to office in place, shortly afterward we’ve also seen them walk them back, partially because employees are just not willing to comply with them,” said Caitlin Duffy, a research director of Gartner’s human resource practice. Companies still don’t feel it’s in their power to force workers back, according to Duffy, who cited data that showed just 14 percent of organizations said they were willing to implement a negative consequence for not meeting those onsite requirements.

That willingness of employees to fight for what they want is also turning up in more organized labor actions. The number of strikes was up 52 percent in 2022, compared to a year earlier, and is still elevated, according to data from Cornell University’s Labor Action Tracker.

“People stopped banging their pots and pans at 6 pm or whatever, and now people are saying, wait a minute, we deserve more, and so they’re willing to continue to rise up and fight back,” said AFL-CIO president Liz Shuler.

Americans’ approval of unions, especially among young people — as well as a number of very public union campaigns and contract negotiations, like those at Starbucks and UPS and among teachers — could also make labor issues more central for more Americans. Already, union organizing and actions are happening in industries where such efforts had once been considered impossible.

“The people who are actually making the lattes and restocking the grocery shelves and shipping all those packages that enabled us to stay home are rising up and saying we’re not going to take it anymore,” Shuler said.

What’s behind worker power?

The reasons people feel empowered to quit or strike or ask for higher wages are myriad, but at its heart, the enduring trend is possible because hiring is still strong. The economy added more than 300,000 jobs in February. That was higher than analysts expected, given that the Federal Reserve has continued to raise interest rates in an effort to slow hiring, among other things.

“As long as there are unfilled openings, people still have a say in what they want, and employers have to compromise in order to fill these openings,” LinkedIn’s Ghayad said.

That imbalance is partly due to demographic changes that have contributed to fewer workers and lower workforce participation. The pandemic caused many baby boomers who were nearing retirement to retire early, making the looming crisis of an aging workforce happen earlier than expected, according to Glenn Spencer, senior vice president of employment policy at the US Chamber of Commerce. Also contributing to the tight US labor market were the lasting effects of lowered immigration rates earlier in the pandemic as well as ongoing child care concerns, he explained. And then there were more than a million deaths, many of which were among working-age people.

“You start to add all that together, and it predicts a worker shortage,” Spencer said.

There are also less tangible reasons workers feel empowered. For many, the danger and death of the pandemic caused people to reconsider work’s central place in their lives. If work isn’t the most important thing in your life, decisions around staying or leaving a job became somewhat easier in the past couple of years. Nearly 40 percent of workers said their work has become less important to them in the last three years. As Gartner’s Duffy put it, more and more Americans are “questioning the purpose of their day-to-day work.”


The pandemic also heightened the disparity between employers and employees, motivating workers to demand more, both on an individual level and through collective organizing like unions. Corporations are taking in record profits, while everyday Americans contend with dwindling savings, high prices, and wages that, despite their growth, are not keeping up with inflation.

“Workers are angry because the wealth gap has grown so great. They had been suffering, and during Covid, they were suffering acutely,” said Kate Bronfenbrenner, director of labor education research at Cornell University’s School of Industrial and Labor Relations. “Employers exploited the opportunity to make money and then didn’t share any of it.”

What’s next for worker power?

Just how long worker power remains this elevated depends in part on the health of the economy, and for now there’s little consensus around whether it’s doing well. As the Federal Reserve continues to raise interest rates to weaken economic growth and combat inflation, job growth could likely be a casualty. But just how extensive that is depends on whether the Fed is able to engineer a so-called “soft landing” that doesn’t trigger a recession.

While a severe recession would shift the balance of power more to bosses, the current situation has been a historical anomaly, so it’s difficult to tell how extensive that shift will be, according to Jim Link, chief human resources officer for the Society for Human Resource Management.

“What’s throwing our economist friends off a little bit is that this series of things, all coming together at once, is somewhat unique in the history of industrialized working,” said Link. “And therefore, we may not really know what to expect.” If layoffs do start happening in a meaningful way — that is, they expand beyond just the tech industry — and job openings dry up, workers could have less power than they do now because they’ll have fewer options. They’ll lack leverage when it comes to demanding change.

But that defeatist outlook ignores the idea that American workers themselves have changed how much value they place on work in the first place. Most Americans have to work for a living, but what they’re willing to tolerate to make that living isn’t what it used to be. When times are better, workers will leave bad jobs for greener pastures, according to Harvard Business School professor Tsedal Neeley.

“If your workforce strategy and your workforce culture is determined by the economy, then you’re doing something wrong,” Neeley said. “So in bad times, you’re going to impose your will, and in good times, you’re going to step back because you feel like you have to tolerate it. That is terrible workforce planning.”

This is all assuming we don’t encounter some revolutionary advancements when it comes to how we do work — something we may be witnessing now. New technologies like AI and machine learning have the potential to change work and, by extension, worker power. Coding projects that used to take weeks can be done in hours with this new tech. Work time-sucks like creating PowerPoint presentations and drafting emails supposedly can be outsourced to AI assistants. But it’s too early to tell whether tools like ChatGPT, AI software that generates responses a lot like a human’s, will invalidate or simply augment existing jobs by allowing workers to spend their time on something else.

“You always hear technology will replace workers — it’s the same story since the dawn of time,” Spencer from the US Chamber of Commerce said. “But it never quite plays out that way. Technological advances tend to enhance worker productivity, and that creates its own demand.”

It’s also possible that AI might actually be a boon for worker power, according to Harvard’s Neeley, since the young people most capable of implementing these new technologies at companies are also those most likely to want flexibility in where and when they work and how they’re treated.

“You need your tech people, you need your data scientists, you need people who can help you do that digital transformation,” Neeley said. “If you want more tech in your organization to meet the moment, you’ve got to be flexible.”

Worker power in the United States doesn’t mean just one thing, and it isn’t reliant on a single thing. It’s propped up by demographic trends and pandemic anomalies as well as changing ideals among American workers. That power has already outlasted expectations and defied what many thought possible for work.

None of this means that work is somehow fixed or that there isn’t much more that needs to change. What we know is that the possibility for employees to better their working lives is outlasting the worst of the pandemic.


Post a Comment