In "Managers Part III - Sources of Power" https://aesduir.blogspot.com/2016/07/managers-part-iii-sources-of-power.html I laid out four main ways that managers exert influence over their employees, one of these is by rewards and punishment that I expound upon in Part IV https://aesduir.blogspot.com/2016/07/managers-part-iv-reward-coercion-based.html one of those punishments, of course, is the threat of getting fired. The popular interpretation of the current dynamic is that employees no longer care about getting fired, since they can easily find another job that pays the same or better than the one that they have now. All sorts of theories are floating around regarding the "why" of all this, the most common being that employees have, after having their eyes open during the pandemic, finally set boundaries between their work and personal lives and are no longer letting management abuse them. Sounds about right...right?
The problem with this view is that people quitting jobs, in particular low wage jobs, is nothing new. What's new is that there isn't a similar flow of people looking for low wage jobs as there was ten years ago. Every job has a churn rate. "Churn" refers to the amount of turnover that a business might expect in certain positions. During my time as a manager with several companies over the decades, the need to hire people never went away. We never reached a lasting period of stability where we had a staff that we could depend on; people were always leaving and we were always recruiting replacements. There were always people who refused to work certain shifts, or would quit without notice, or just were unhappy with the requirements of the job. The difference was that we knew that there would always be someone else who would apply for the same job - in fact there was usually a backlog of applicants, always many more than we needed to fill a position. In most situations management had the upper hand in that the employee needed the job more than management needed that specific employee. One exception was people who didn't really need the job, for example, high school students, or someone who was working a second job, not to make ends meet, but to save up for some luxury purchase. Counterintuitively the situation got worse for employees the higher in rank and pay that they rose, since the availability of non-entry-level positions was even rarer, unless of course you processed unique skills that were rarer than the available openings where those skills were required.
So, what's the difference.
2% unemployment.
Yes, I know that the official unemployment percentage isn't a true reflection of the number of people who are out of work, but if the methodology is consistent it gives us a point of comparison. For instance, it was around 10% after the housing bubble burst in 2008. 5% is considered, statistically, full employment. Unhappy employees aren't any more unhappy than they were before Spring 2020, but the options are different. Terry Pratchett said in one of his Discworld novels that magic is simply knowing one extra fact, and in 2022 that extra fact is that if you quit your entry level job today, you'll be able to find another one before lunchtime. The extra fact that managers know is that if one of their people quits, it may be a long time before they are able to hire a replacement. And the second extra fact that employees know is the managers' extra fact: it's hard to find replacements. What we are left with is what I ended the first paragraph with: the power balance between management and labor shifted in many lines of work.
How has this shift in the power balance manifested itself? One manifestation is the increase in wages, especially at the lower wage levels. Companies who are competing for a scarce resources are going to be willing to pay more for that resource. This only kicks the can down the road, however. If everybody is having trouble hiring, and everybody is reacting by raising wages, then, while employees are benefitting by getting paid more (leaving inflation out of the picture for now, which if it continues will negate the wage increases) management is still in the same situation: unable to replace workers who quit due to low unemployment. So coercion based management just isn't going to work any more. (I'm not saying it was ever a good way to manage, but it was pretty common, and even among good managers, termination was a motivator of last resort) Now, the reward side of reward-coercion-based management is kicking in. A reward need not be a bonus, or an extra vacation day, or anything like that, but can take the form of tolerating behavior that, just a few years ago, would have been intolerable. Like looking the other way when employees socialize when there's work to be done, overlooking rudeness to customers or bad customer service, failure to adhere to any number of company standards and policies, refusal to work scheduled shifts, or just being incompetent at the job. The positive side of this is that bad managers, the egotistical little tyrants who revel in terrorizing and abusing their employees no longer have the upper hand. Employees no longer have to put up with abuse of any kind if they choose not to; they aren't required to allow customers to treat them like dirt; they don't have to sacrifice life for a job. Employees are less likely to be told "You don't like? Go ahead and quit" and more likely to be begged to "You don't like it? We'll fix it, please don't quit".
In upcoming posts I'll discuss both sides of this new dynamic.
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