Emerging Power Dynamics Between Employers and Employees

By Richard Berger

Labor in America is a complex beast, with working conditions, cost of living, gender parity, unionizing, and a litany of other factors contributing to that complexity. Then there’s COVID-19, which is still making the rounds: A year in, and this global pandemic is responsible for widespread layoffs, upended industries, stalled careers – especially for early career professionals – and a reversal of one of the lowest unemployment rates in decades. It has also forced a mass of employees to work from the solitude of home, while requiring essential workers to punch in in-person.

That said, not all of COVID’s effects have been negative. The world is now collectively looking at work/life balance; we’re discussing how working mothers have taken the brunt of homeschooling and have lost more jobs than their male counterparts; and then there’s the realization that many of us really can work from anywhere there’s a Wi-Fi connection. It has also resulted in business leaders seemingly becoming more empathetic towards their workforce, something that has traditionally been an exception more than the rule in this country.

The tension between pandemic angst and enlightenment has also played out in the relationship between employer and employee, which can be supportive, even empowering at best, and disheartening, sometimes toxic at worst. Interestingly, in a June 2020 research paper, S&P Global highlights the ways workforce power dynamics are shifting, and will remain changed even after the coronavirus pandemic is over. That got us curious about all manner of influences on the relationship between employers and employees.

If you’re curious, too, here are a few topics and trends that HighPoint Associates has been paying close attention to:

Virtualization due to COVID-19:

The pandemic has impacted just about every aspect of human existence, most not so great, some long overdue: On the one hand, we’ve had to distance ourselves from family, friends, and co-workers. Some of those family members and friends have been lost to this horrible and widespread virus; millions of jobs have been lost, too. On the other hand, vaccine innovation has been utterly impressive, while carbon emissions have dipped ever so slightly, and working remotely – a pandemic imperative for many – has become more culturally accepted and permanently rolled out by some major corporate players. While the latter is mostly exclusive to nine-to-fivers, it has provided many employees with more flexibility on the home front.

As discussed in a HighPoint Associates blog post, Glass Half Full: Driving Business in the New Virtual Environment, when virtualized organizations no longer need to seek out talent in a specific geographic location, it opens up the field to attracting top talent who may live in another city, across the country, or anywhere in the world. With geography no longer a factor in hiring/being hired, top talent will be a much more sought after commodity no matter where they are located, creating stiffer competition and tipping the balance of power in favor of candidates with highly desirable skills and experience. Talent will trump local okay skills and experience. Moreover, less distinctive employees may have less power and have less choice about where they work and the conditions under which they work.

Essential workers:

Has the increased reliance on essential workers given them more power? In a word, no. And with economic inequality running rampant in this country, that shouldn’t come as a surprise to anyone. Lower-wage employees, e.g. grocery store staff, have always struggled for livable wages, increased safety, more paid time off, and a modicum of respect. With the pandemic, they are now more essential than ever, but what do they have to show for it?

When we look at the impact of COVID-19 on these vital workers, it’s put many of them in a tight spot: People who refuse to report to work because they don’t feel safe in a work environment often lose their jobs and can’t fall back on unemployment benefits because they weren’t laid off. Those who do show up are at higher risk of exposure to COVID-19 and aren’t necessarily being compensated for that risk. Or, in the words of the Brookings Institute, “Workers with the least are risking the most.” It’s worth noting some big retailers (think: Amazon, Target, Costco, Walmart, Best Buy and a few others) are now at or quickly moving toward $15 per hour and, in some cases, higher – a precedent-setting step.

Remote worker salary adjustments:

If remote workers relocate to less expensive cities/states, will their salaries be lowered? This is a definite maybe. As business hubs across the country become massively unaffordable, employees have no choice but to hightail it to less expensive areas with approachable real estate markets and things like good schools, better quality of life, etc. But it’s not just employees hitting the road; there’s a rising trend of firms moving from California to Texas – a tax play that has the side benefit of a more affordable cost of living for employees. But nothing is free in this life, so salary adjustments may become another new reality for those leaving areas with a high cost of living for more affordable ones, leaving employees with some math do to before deciding if relocating makes financial sense.

The minimum wage:

The long-standing, highly politicized Fight for $15 rages on. The benefits of increasing the minimum wage to $15 per hour are many and should be obvious, starting with the humanity of it (can anyone anywhere live on $7.25/hour?). But the economic case for it is strong too. The more money more people earn, the more they spend. According to the Economic Policy Institute, “Raising the federal minimum wage to $15 by 2025 would lift wages for over 33 million workers.” This would include women, parents, and millions of workers currently living in poverty.

Those who oppose the increase fear companies will buckle under the financial strain of paying a (barely) livable wage and will be faced with mass layoffs. But if we look at Retail and its labor woes, a different story plays out: Pay a decent wage and people will show up to work, day after day. Check out this article in the Harvard Business Review: The Financial Case for Good Retail Jobs.

Unionizing:

With Amazon warehouse workers moving to organize, the highly eclectic  Retail, Wholesale and Department Store Union is getting a lot of attention these days. Employees of the retail giant are seeking more competitive pay and improved working conditions, and rightfully so.

Google employees have also moved to take collective action, forming the Alphabet Workers Union with pro-union workers citing ethical reasons for the creation of the progressive, values-driven organization.

Whether employees at the retail and tech behemoths have become emboldened by the U.S.’s heightened political environment and cultural shifts around Black Lives Matters is uncertain. What is certain is it is a sign of things to come: Employees from diverse industries have been focusing on their rights, and employers have no option but to pay attention.

Thankfully, many of us are beginning to see the light at the end of the tunnel; with each day, more and more of my HighPoint colleagues are getting their first or second vaccinations. But this pandemic is sure to have lasting and transformative impacts on both where and how we work, and on the relationship between employers and employees, and work itself.

What are you seeing, hearing, and thinking?

Richard Berger is a Partner with HighPoint Associates and runs the firm’s East Coast office. He joined HighPoint in 2008 and since has worked with clients across industries to solve problems, elevate conversations, and deliver breakthrough results. Prior to joining HPA, Richard spent nearly 20 years in a variety of consulting, operating, and start-up leadership positions. Richard is particularly passionate about helping clients improve and differentiate the customer experience.