But Corporate America has never been better, financially. Meanwhile workers, whose wages have largely been neglected in recent years, now enjoy a historically significant amount of bargaining power. That won’t always be the case.
“Workers are in the driver’s seat more than any time in recent decades,” says Aaron Sojourner, a labor economist and professor at the University of Minnesota’s Carlson School of Management.
This surge in labor’s bargaining power won’t last forever, however. The pandemic “scrambled everything,” Sojourner says, “and now people are finding better opportunities at different places.”
‘The Great Finding a Better Job’
The ratio of employees who quit to those who were fired or laid off is at its highest level in two decades, Sojourner says. In other words, workers’ options outside their current job are improving relative to their bosses’ options outside their current crop of employees.
The good news for the economy is that hiring is strong.
Corporations are flush
Of course, increasing wages can eat into profits, and not all companies will be able to adjust their margins to accommodate raises. For example, a daycare center may have trouble retaining and hiring workers in part because the in-person nature of the work raises the risk of exposure to Covid-19. And its owners likely have fewer options for raising revenue than a major corporation would.
Use your leverage
Workers should get a sense of how their company is faring before going in with a laundry list of demands, and keep in mind that money isn’t the only way to use their leverage, Sojourner says. Maybe it’s extra vacation days, more flexible hours, or better coffee for the break room — whatever would help keep you from leaving should be fair game.
“A lot of employers use their leverage when they have it, and I think workers should also,” Sojourner says. “It’s a professional relationship.”
Some learned that lesson the hard way in the spring of 2020, when employers laid off millions of people to protect the viability of their business, Sojourner says. “And that’s a sensible decision to make, to preserve the health of the enterprise and not go broke.”
But the power dynamic has shifted back to workers, at least for now.
“When workers have better outside options they should be asking for job quality improvements,” Sojourner says, in whatever manner makes sense for them.