Steve Levine writing in Axios Future of Work notes:
For many years, the economic rules were supported by both common sense and the data: When unemployment falls, wages rise soon after. But since the turn of the century and before, that relationship has broken down across the developed world, according to data from the OECD.
Stagnant wages aren’t just an American problem: Workers in the wealthier nations are facing similar headwinds, like declining union membership, increased competition from foreign workers in a global marketplace, and slow productivity growth. But no one knows precisely why economics are failing to observe the traditional supply-and-demand rules.
Gary’s descriptive take:
For years political and managerial attitudes have coalesced around the idea of driving down wages. Levine mentions declining union membership, for example. The political aspect was to break union power in elections toward electing Democrat candidates. Reagan recognized in the 80s (and Trump capitalized in the last election) that white male union members would vote conservative for social reasons.
I keep watching elections for years and seldom see a definitive correlation of votes and economic benefit. People surprisingly often vote against their economic benefit in favor of voting for emotional, social causes.
Twice this month I have been at technology conferences (Emerson Automation and Dell Technologies) where a top executive pronounces that the era of using technology for efficiency is over. We have likely achieved as much reduction in the workforce that will allow us to remain viable.
But I believe the mindset in top management ranks remains, “How can we ‘contain’ or drive down wages and salaries.”
Emotions and mindsets change slowly. The mechanistic law of supply and demand is powerful, but the emotional law of squeezing every last penny of cost has been bred in management DNA for 30 years. It won’t go away soon.
Gary’s prescriptive take:
I’m looking for leaders who see growth in more holistic ways. The “rising tide floats all boats” point of view. Better—the idea that all people in the organization contribute to the success of the organization and should share in the rewards.
There are leaders like that. Just too few