Management, take notice — employees have the upper hand
Your boss would probably rather you didn't know this, but workers have a lot of leverage right now.
Why it matters: From highly paid AI engineers to teachers, delivery drivers and autoworkers, employees are getting what they want — thanks in part to a very tight labor market.
By the numbers: The U.S. unemployment rate has been below 4% for 21 straight months — the longest stretch since the late-1960s, as former Fed economist Claudia Sahm wrote this weekend.
- The share of prime-age workers (those 25-54) who are employed is hovering at a 22-year high.
- Meaning: There aren't many folks left out there who businesses can hire.
- And demographics may keep things tight for the long haul, as the population ages and messy politics hold back strategic immigration growth.
State of play: With fewer workers available, companies have less leverage over employees — they can't necessarily rely on an unlimited pool of labor to keep things running. That's why you're seeing growth in real wages this year. Workers in many fields can demand raises.
- It also helps explain why, despite the bluster of many a CEO, offices aren't all filled back up with workers. Many of those working remotely have the power to just ... not go back in five days a week.
- The tight labor market is the backdrop to all the union action we've been reporting on for the past year or so — why UPS drivers got a great deal without striking and UAW workers just ratified the best contract they've seen in decades.
- Workers are even getting what they want in the public sector — after a strike that lasted more than three weeks, teachers in Portland got the raises they asked for at the work stoppage's outset.
- "Workers have more power than they ever have," said Catherine Creighton, who worked for decades as a union-side labor lawyer, at a talk about the UAW contract on Monday.
Yes, but: Not all workers. In sectors that are shrinking (media, for example), workers have less leverage to make demands, as companies are looking to cut costs.
- And, workers don't get everything they want — the UAW did not get the pension benefits it was seeking or a four-day workweek, for example.
Zoom in: At the high end of the pay scale, take a look at the wild drama at OpenAI last week.
- A few days after the company's CEO Sam Altman was fired, nearly all of OpenAI's employees threatened to quit if he wasn't reinstated.
- Part of the reason for the employees' uprising may have been that their expected payday — a lucrative opportunity to sell their stock — was jeopardized by the firing.
- They got what they wanted. And fast. Altman was reinstated just one day after the letter was made public — it was the "key moment" in the crisis, Axios' Ina Fried writes. (And that stock sale is likely still a go.)
Between the lines: Workers are the crown jewel assets at a knowledge company, especially a startup like OpenAI. They understand the product and can innovate and improve it, and without them, there really isn't a business.
- At an AI company, workers are even more valuable because they're the most in-demand tech workers in the industry — with supply outstripping demand.
- AI is supposed to make workers obsolete; instead, at OpenAI, it's made them more powerful.