Work: A Boiling Family Saga

Welcome to The Shift, a weekly newsletter where I provide thought-provoking ideas to help you think differently about your career and money.

Last Week + This Week = It’s All Connected

I’ll make this quick.

Last week I wrote about how to solve the tug of war between employer and employee. It was the end of my three week series on the topic. Read here, here and here if you missed it. This week I dig into the history of that relationship and what is really impacting it now.

A Good Drama

Is it just me?

I’ve been at this work thing for 20 years (yikes!), and I don’t think I can remember another time in my working years where the office environment felt so contentious. So I got curious…

I dug into the history of it all. The employer - employee dynamic. I know that doesn’t sound very exciting, but hang with me – it’s kinda like digging into the history of any good family.

I’ve debated (with myself) if I could compare this to HBO’s Succession… For now, I’ll just say: Like any relationship, there have been many ups and downs.

What follows is my overly simplified version of what has transpired in this family saga.

If you’re short on time skip to the “Social media, technology, shareholders: Oh my!” section. It’s my favorite part.

A Look Back

Let’s start this history lesson with the ball in the workers’ court.

Back in the early days of the industrial revolution there was a shortage of workers in the country. As a country we were focused on becoming self-sustaining to maintain our newly gained freedom. There were plenty of job opportunities.

The problem was that workers who immigrated from Europe placed greater value on owning land over receiving high wages from manufacturers. So they chose to farm on their own land, and live poorly, instead of working for the man. Workers didn’t know they had the upper hand!

But it didn’t last.

As the industrial revolution took off, corporate gained the upper hand. Profits expanded thanks to cheap labor and long hours. Enter unions.

Unions did more than boost pay. They are the reason there is a 5-day work week and safe work environments. They were a huge part of the American culture. So was manufacturing. Workers win.

Things started to change in the 20th century.

Corporations became less union friendly, with membership peaking around 1970¹ . More competition, increasing white collar work, and government policies (think unemployment benefits) were among the drivers for this change. Union power, at least for private corporations, began to erode.

You can see change brewing... More government involvement.

Change continues in the form of legislation.

As the 80s were taking off new tax law created the 401k, allowing for the shift of retirement responsibility from the employer to the employee. Participation in pensions began to steadily fall.

Sure, the golden handcuffs on the employee were released, giving them freedom. At the same time, that offered a boost to corporate profitability as the cost of the 401k is substantially less than a pension.

Compensation began to stagnate in the 80s and fringe benefits became a greater piece of the pie.

Policy and government intervention / regulation continues over the next several decades as demographics of the workforce continue to evolve and we become a more service driven workforce.

Cracks build.

Can we skip to the good part?

Or at least the part that pertains to most of us.

Let’s jump to a big catalyst in this game was the Great Financial Crisis.

The years leading up to the crisis were good. I often tell the younger kids I work with, you could feel the exuberance in the system back then. Most employees and employers were fat and happy.

That changed with the housing crash.

Companies had to get lean, fast. A lot of people lost jobs.

The economic recovery was slow.

Employers feared finding themselves in a position where costs were so high that would have to do mass layoffs again. They rebuilt slowly. Employees feared they might never work again given how long they were out of work. They held a grudge against corporations.

Everyone was scarred.

Social Media, Technology & Shareholders: Oh My!

That was just the economic story.

In the background there were several new developments that would impact the way we work and think. I’ll touch on a few broad trends: social media, technology, and shareholder power.

Social media

Social media has had a significant impact on more than just our social lives since launching in the early 2000s.

It has helped to foster the greater trends of transparency and individualism in the U.S.

Because of social media, and the internet, we are all armed with more information than ever about employer and employee. Social media has also led to the rise of the individual and self-promotion.

You can view these trends as good or bad. The main takeaway is that social media has cultivated very different ways of thinking than in the past. Think about the 80s and 90s – it was all about teamwork and corporate pride back then.

There’s lots to dig into on this topic, but I’ll leave it at this for now -- Social media’s impact on work has already been huge, and it is still evolving.

Technology

Love it and hate it, right? In work, technological advancements have helped boost productivity in all sorts of jobs.

It has also made us more connected than ever. I always like to point to the invention of the Blueberry phone – you know the blue one I’m talking about below – as the beginning of the overextension of being connected to work. I know there were pagers before that, but you could have a whole conversation on these BlackBerry devices!! I was tethered to mine, and hated it! lol

Technology was very helpful to keeping work working during the pandemic. Companies like Zoom and DocuSign made it easier for office workers to keep doing their jobs.

Now, we are connected 24/7. Ugh.

Next up, advancements in AI. I’m no expert on the topic, but I’m sure there will be many changes to work related to this.

We can’t avoid it, technology will forever have an impact on work.

Shareholder Power

Another powerful change, maybe the most powerful change I’ve noticed over the years is the rise of shareholder power.

The scars of the financial crisis left an unshakable commitment to essentialism by CEOs and CFOs. Companies were slow to hire after the crisis, which aided in the widening of operating margins. That can happen after a period of cost cuts, as management needs time to determine if growth is sustainable.

This time though, companies got used to operating flatter organizations and I think an addiction to the higher margins set in. I will admit companies were probably a little overloaded with people before the crisis, but margin expansion led to better cash flow.

Rather than reinvest that cash flow into the company via capital equipment purchases or higher wages, they returned it to shareholders in the form of buybacks and dividends.

This suggests the shareholder has gained more power.

Maybe at the expense of the employee?

Where Do We Go From Here?

Talk about a bunch of moving parts.

There is so much more to this story. Think changes in diversity, demographics, work-from-home, the re-evaluation of self, or the internet of opportunity (as I call it). They all are having impact on where we go from here.

Maybe I should write a book?? Ha.

I think this family saga is just heating up.

I stand by what I wrote last week. The simple equation of:

[time + service = compensation + community] is broken.

It needs to be fixed.

Let’s make The Shift!

Lindsey

Sources:

1. Peterson Institute for International Economics.

2. Congressional Research Service.