The Growing Worker Movement.

In this Advisory, we put forth that what’s coming on the horizon is The New Worker Movement, a growing uprising that will shift the power balance between today’s U.S. employers and employees. Since the Great Recession, the power has continued to reside with companies, but workers will start to rise up and demand more equity in the capitalist exchange between worker, employer, and consumer. And this doesn’t impact just blue-collar workers; this movement is one that will include and shape the environment for white-collar workers in kind.

Why will it happen?

• The widening income bifurcation and shrinking middle class over the last four decades are evidence that workers in the lower income brackets are struggling economically.
• Since the Great Recession, corporate profits are up and many corporations hold large amounts of cash on their balance sheets, while worker salaries in real dollars have stagnated.
• Americans are overworked—American employees work the most of almost all industrialized nations, yet are often not compensated for all the hours they work. This isn’t just for low wage job earners, some of who work in retail or in restaurants where they are asked to work off the clock. This also includes white-collar employees. Consider the norm in Silicon Valley to make food available all day and to provide services to help with managing all one’s life errands—some ask, is this a benefit for the employee or a benefit to the company in that such services get employees to work longer and to integrate their life fully with work?
• Long work hours often combined with long commutes can result in increased levels of stress and lack of sleep, which impacts not only our health but also quality of life.
• New workplace models are squeezing workers—be it the “Gig Economy,” companies using more contractors and consultants rather than hiring full-time workers, or cutting part-time worker hours so as not to be required to pay benefits. Some freelance platform companies even use surveillance techniques to justify worker compensation, yet many workers go unpaid for work that needs to be done but can’t be done on a computer that has monitoring software.
• All this, yet there is a worker shortage and an increasing battle for talent. Jobless claims in the U.S. are close to a 42-year low. In this environment, workers will start to push against unfairness in the exchange for their work contributions and gain more power.

What are the evidence points of the tide shifting?

• There’s been increased focus on the treatment of workers and its impact on the economy and society.
  • Last year, Walmart was called to the mat for the fact that many of its workers are not paid enough such that they have to take advantage of federal programs, costing taxpayers $150 billion dollars per year. That represents 30 percent of Walmart’s topline sales, but eclipses its net income of $16 billion. Yet, the company pays out dividends to its shareholders.
  • Uber’s been in the news for its many lawsuits challenging its drivers’ employment status, including a class action lawsuit that it continues to try to shutdown.
  • Last year’s New York Times’ article shed light and raised concerns about Amazon’s workplace practices, including the intensity of the hours and the aggressive culture. The reporting wasn’t focused on its distribution centers, but rather its corporate offices and more white-collar employees.
• People are starting to challenge conventional thinking about the value of “lower wage” workers.
  • Brittany Bronson wrote a great Op-Ed in The New York Times that brings to light the value of what so many deem is “low skilled work.” She eloquently argues that these types of jobs—such as being a waitress, bar tender, janitor, or housekeeper—actually require thought, energy, and mastery. We work is devalued both in how we label it (“low skilled”) and in the compensation (e.g., low wages, lack of benefits, non-full time schedules). We value service in an experience economy, yet apparently we aren’t willing to pay for it.
  • MIT business professor, Zeynep Ton, wrote “The Good Jobs Strategy,” in which she makes the case for paying retail workers more and giving them more accountability and control over their work, because “happy, productive employees often translates into higher profits.”
• Experts are speaking up, such as Robert Reich, former Secretary of Labor in the Clinton administration, Chancellor’s Professor of Public Policy at the University of California at Berkeley, and staunch activist for worker’s rights.
  • He often blogs about such topics as in this entry on “The Morality of a $15 Minimum [Wage]:” “A full-time worker with two kids needs at least $30,135 this year to be safely out of poverty. That’s $15 an hour for a forty-hour workweek. Any amount below this usually requires government make up the shortfall – using tax payments from the rest of us to finance food stamps, Medicaid, housing assistance, and other kinds of help.”
  • He also writes for Moveon.org, last year in particular speaking on “The Gig Economy” (if you aren’t familiar with this, it references “contractor” work facilitated by companies such as Uber, TaskRabbit, eLance, AirBnB, and many others). He shares that it is estimated that in 5 years almost 40 percent of Americans will be working in such jobs, yet he puts forth that we aren’t talking about what it means for the worker benefits that have been fought for over the years that will go away with this business model. Those include things like unemployment benefits, health insurance, worker safety, family and medical leave, social security payments, overtime pay, and more. Even with these benefits aside, many workers who are taking on such jobs worry if these jobs will really provide sufficient income to live.
• Employees across the globe, including in the U.S. are simply screaming for more balance in their lives. In an international survey by economists at Warwick University and Dartmouth College, they found that 70 percent of respondents in 27 countries said they wanted better work-life balance.

How is The New Worker Movement starting to take shape?

• There is a push to increase the federal minimum wage, which has become a key topic of the 2016 Presidential campaign. A dozen states have raised their minimum wage at the start of 2016. For example, California put in place a $10 minimum wage, one of the highest. According to Politico, many American mayors are backing a $15 minimum wage.
• Even Walmart is taking corrective action with a pay raise that will go into effect in February 2016, providing a $9-$10 hourly wage, even though some say this doesn’t resolve all ills.
• The Department of Labor is expected to announce an adjustment to the Fair Labor Standards Act that will raise the salary threshold for overtime work.
• There are actions being taken to explore a new legal employment status that better reflects the employment status created by the “gig” economy. One such proposal suggests an “independent worker” status as opposed to an employee or independent contractor arrangement.
• Some companies that were attracting investment perhaps by claiming to have a “gig” business model have started to switch gears acknowledging that people working as contractors doesn’t always lead to the best business outcomes. Having people as employees with structure, training, and the right incentives can actually lead to better consumer value propositions and experiences. For example, Munchery, a direct meal delivery service, and Instacart, a grocery delivery service, changed models and turned some contractor roles into permanent employees to improve the quality of the customer experience.
• Some workers are choosing more flexibility and more pay. According to an article in Bloomberg, some engineers who formerly worked at Google can actually get paid more working freelance and therefore are choosing this option.
• Knowing that they need to provide better benefits to retain workers, some companies are improving their perks. For example, a number of technology companies last year increased their paternity or parental leave benefits including Microsoft, Netflix, Adobe, Google, Amazon, and Facebook. Others have improved their offices and onsite services and offer sabbaticals to longer-term employees.
• In an effort to give employees back their time and limit non-paid working hours, companies have started to cut off access to emails after a certain time at night and on weekends. Ernst & Young has made it acceptable for U.S. employees to not check email and voicemail over the weekend. In Germany, Volkswagen, Puma, and BMW actually stop employees from sending and receiving emails outside of work hours. Even the famous TV producer and writer, Shonda Rhimes, today insists on not listening to voicemails or looking at emails after 7 pm on weeknights.
• There is increasing discussion that given the talent war companies need to think about their HR brand just as much as they think about their corporate brand.

Why does it matter?

A shift is coming. It simply isn’t sustainable to continue to have workers bear the brunt of the pain to return our economy to stability. There’s a long-term cost to companies in this equation, as well as a cost to society, our economic engine, and individuals and families themselves. Workers will start to demand better treatment, and companies will need to respond in kind with better pay, benefits, and workplace practices.

Companies should consider:

• Developing an employer brand with the required functional and emotional benefits that support its underlying promise.
• Revisiting employment strategies from hiring to retention.
• Meeting the needs of a flexible workforce—there are innovation and product opportunities lurking in this workforce change. Consider all the hard-fought benefits noted by Robert Reich—what new products and services can be created to fill the needs for these types of benefits in the 21^st Century new worker model?
• Associating your brand with this new tribe who are affiliated with the worker movement.
• Consumer research to understand how a more empowered workforce might impact your category and your company.

Sources:

Alba, Davey. “Many More Drivers Can Now Join the Class Action Suite Against Uber,” Wired, December 9, 2015. http://www.wired.com/2015/12/uber-class-action-suit-expands/

Bronson, Brittany. “Do We Value Low Skilled Work?,” The New York Times, October 1, 2015. http://www.nytimes.com/2015/10/01/opinion/do-we-value-low-skilled-work.html

Desilver, Drew. “America’s middle class is shrinking. So who’s leaving it?,” Pew Research Center, December 14, 2015. http://www.pewresearch.org/fact-tank/2015/12/14/americas-middle-class-is-shrinking-so-whos-leaving-it/

Dulaney, Chelsey. “Uber Ruling Adds More Drivers to Class-Action Suit,” The Wall Street Journal, December 9, 2015. http://www.wsj.com/articles/uber-ruling-adds-more-drivers-to-class-action-suit-1449699041

Frick, Walter. “The surprising power of being nice to your employees,” Boston Globe, November 10, 2015. https://www.bostonglobe.com/magazine/2015/11/10/the-surprising-power-being-nice-your-employees/yiEkkCB6hN3GSdKZOn2KyK/story.html

Gillespie, Patrick. “America’s companies are hoarding $1.4 trillion in cash,” CNN, September 25, 2015. http://money.cnn.com/2015/09/25/investing/us-companies-cash-hoard/

Harris, Seth D.; Krueger, Alan B. “A proposal for modernizing labor laws for 21st century work: The ‘independent worker,’” Brookings, December 8, 2015. http://www.brookings.edu/research/papers/2015/12/09-modernizing-labor-laws-for-the-independent-worker-krueger-harris

Honoré, Carl. “In Praise of Slowness,” Kinfolk, Volume 15, 2015.

Jacobs, Ken; Perry, Ian; MacGillvary, Jenifer. “The High Public Cost of Low Wages,” UC Berkeley Labor Center, April 13, 2015. http://laborcenter.berkeley.edu/the-high-public-cost-of-low-wages/

Kantor, Jodi; Streitfeld, David. “Inside Amazon: Wrestling Big Ideas in a Bruising Workplace: The company is conducting an experiment in how far it can push white-collar workers to get them to achieve its ever-expanding ambitions,” The New York Times, August 15, 2015. http://www.nytimes.com/2015/08/16/technology/inside-amazon-wrestling-big-ideas-in-a-bruising-workplace.html?_r=0

Knafo, Saki. “Good Wages Are Not Enough,” The Atlantic, June 11, 2015. http://www.theatlantic.com/business/archive/2015/06/zeynep-ton-workers-wages/395564/

Mishel, Lawrence; Gould, Elise; Bivens, Josh. “Wage Stagnation in Nine Charts,” Economic Policy Institute, January 6, 2015. http://www.epi.org/publication/charting-wage-stagnation/

“More Than One Million Walmart Associates to Receive Pay Increase in 2016,” Walmart, January 20, 2016. http://news.walmart.com/news-archive/2016/01/20/more-than-one-million-walmart-associates-receive-pay-increase-in-2016

Reich, Robert. “The Morality of a $15 Minimum,” RobertReich.org, October 19, 2015. http://robertreich.org/post/131476708345

Scheiber, Noam. “A Middle Ground Between Contract Worker and Employee,” The New York Times, December 10, 2015. http://www.nytimes.com/2015/12/11/business/a-middle-ground-between-contract-worker-and-employee.html

Sussner, Fran. “Who Owns Your Overtime?,” The New York Times, June 22, 2015. http://www.nytimes.com/2015/06/22/opinion/who-owns-your-overtime.html

Reuters, “Jobless Claims Near 42-Year Low as Labor Market Tightens,” The New York Times, December 24, 2015. http://www.nytimes.com/reuters/2015/12/24/business/24reuters-usa-economy.html

Scheiber, Noam. “Growth in the ‘Gig Economy’ Fuels Work Force Anxieties,” The New York Times, July 12, 2015. http://www.nytimes.com/2015/07/13/business/rising-economic-insecurity-tied-to-decades-long-trend-in-employment-practices.html

Wang, Selina. “Why an Ex-Google Coder Makes Twice as Much Freelancing,” Bloomberg, January 19, 2016. http://www.bloomberg.com/news/articles/2016-01-19/why-an-ex-google-coder-makes-twice-as-much-freelancing

Weller, Christian E. “Economic Snapshot: September 2015,” Center for American Progress, September 29, 2015. https://www.americanprogress.org/issues/economy/report/2015/09/29/122225/september-2015/

Wofford, Ben; Tobias, Manuela. “A Surprising Number of America’s Mayors Support $15 Minimum Wage,” Politico Magazine, January 25, 2016. http://www.politico.com/magazine/story/2016/01/mayors-survey-minimum-wage-213563