The United States celebrates Labor Day this week, a holiday that was created to commemorate the Haymarket massacre in Chicago on May 4, 1886. What began as a peaceful rally in support of an eight hour workday (most workers labored for eleven hours), as well as to protest the killing of four workers by the Chicago police, ended with a bomb being thrown into the crowd. The bomb killed seven police officers, four civilians and wounded dozens more. Eight “anarchists” were arrested, and seven of them were sentenced to death.
The event inspired May Day celebrations around the world and contributed to the rise of the Marxist and Socialist movements. In 1887, with the rise of the United State’s industrial might, President Grover Cleveland signed legislation creating Labor Day in September–not May to avoid the association with “socialists” and “anarchists.” The eight hour work day for non-exempt workers in the United States, however, would not become law until President Franklyn Roosevelt’s New Deal reforms in 1937.
Today’s US workforce is no longer primarily involved in manufacturing. Instead, it is centered on knowledge work, and those workers are facing a surge of change. Mighty economic and migration forces pull and tug at global and local economies. Demanding work schedules and technology keep workers constantly connected. Organizational, cultural and legal shifts are transforming almost everything about how work gets done.
While this week’s low U.S. unemployment rate of 5.1% is good news, the anemic job growth number of 173,000 is a concern. The US labor force participation rate is stubbornly low at 62.60%. That’s the lowest it has been since 1977 – down from the high of 67.30% in 2000.[i]
What is going on out there?
To be sure, some of this decline in labor force participation is due to baby boomers moving off to retirement, although they are doing so at slower rates than predicted. Some young workers are delaying entry into the labor market to pursue higher education. This is standard stuff.
What else is going on?
Jim Clifton, head of the Gallup polling agency, believes there is more going on. He has denounced the official unemployment rate as a “big lie” that largely ignores the continued prevalence of mass unemployment in the United States.[ii] The US participation rate for men, 69% in July, hit its lowest level ever on record, dating back to 1948 when it was 86%. Many economist blame the off-shoring of manufacturing jobs and cyclical construction work for this.
The men aren’t alone. Middle-aged women, who eagerly joined the workforce in the 1970s and 1980s, are now leaving it. While many countries in Europe and Japan also face similar demographic trends, it is only the US labor force participation rate that is declining.[iii]
Why? US wages have been slow to grow in spite of the recovery – wages are up only 2% this past year. Recent labor growth has primarily been in the retail sector, where most jobs are low paying.[iv] This trend has been watched by labor economists, such as Wharton’s Peter Cappelli, who says that there is slack in the US workforce because skilled labor remains on the sidelines until wages and working conditions improve.[v]
Will the rising contingent workforce fill the gap?
The contingent workforce in the US is growing and now stands at 31%.[vi] Some disgruntled workers have found happy refuge there. Maybe. Studies have shown that contingent workers have mixed satisfaction levels. Independent consultants are relatively happy, but temps, on-call workers, and part time workers generally prefer having full-time work, more stability and benefits.[vii] However, evidence for the rise of self-employed “gig” work or the “on-demand economy”, where workers provide their services through various apps just as Task Rabbit, Etsy or Uber, is fleeting as best. According to the U. S. Labor Department the percentage of self-employed and unincorporated workers has declined from 8.5% in the mid-1990s to 6.5% this year.[viii]
These contingent workforce numbers do speak to a churn in the workforce. Perhaps the binary notion of employed and unemployed does not apply anymore. Workers in transition, whether they are the unemployed, older workers in transition, artists, college students, or new immigrants are pursuing many alternative to work beside full time employment.
Other headlines from the past week point to more change
Ten years ago, you wouldn’t have expected to see this decision from once-benevolent and innovative Hewlett Packard: Redundant employees in its troubled Enterprise Services business are being offered independent contractor roles in a different company, or else face unemployment with no severance. Many of the eliminated jobs will be performed by automation and moved offshore.[ix]
Seven years ago, hailing a cab required a loud whistle and shout, not an app. While Uber and Lyft have created convenient technology that enables their customers to locate a ride, they have also challenged the definitions of employee versus contingent workers. Disgruntled drivers have taken Uber to court. A federal judge ruled this week that the legal case of three Uber drivers can be classified as a class action lawsuit.[x] There are large fines for companies that get worker definitions wrong. Are companies like Uber being innovative and pushing against outdated labor laws, or simply digital pirates?
Five years ago, female CEOs seldom made headlines – there just weren’t very many of them! And never did they make headlines for expecting the birth of twins. Yet, Yahoo CEO Marissa Mayer did this week by announcing that she would take only two weeks off for maternity leave rather than the customary six weeks for paid medical leave and twelve weeks of FMLA.
Mayer consequently received a deluge of criticism for the poor example she is setting for young women. I don’t think that is fair. We all have to make choices – men and women alike. Marissa Mayer is, after all, a CEO struggling to revive a brand. With the high income that goes along with her positon, she can afford nannies at home, a next-to-the-office nursery, and whatever other support she needs. For other women, life’s priorities may be different. Many new mothers may want to spend the first twelve weeks or twelve months with their baby to form a life-long bond. For some fathers, it may be the same.
What is in store for the future?
In a recent issue of The Atlantic, Derek Thompson argues that technology may erase millions of jobs and that it could be a good thing! Will we become a workforce of part time workers doing multiple part-time “gigs” with most of the work being done by robots, as Derek Thompson suggests?[xi]
What to do with all that free time? I personally love hiking along the ocean and on mountain trails, but I believe it would lose its charm if I did it every day. If I had the literary talent, I would love to write novels like Nobel Prize recipient Tony Morrison. For me, it is hard to image that leisure can replace the sense of accomplishment I get from work and the impact it has on others. Besides, our economy needs well paid consumers to buy stuff!
The fact is, most workers want more economic security and stability than they have right now, and a life that allows them to pursue their passions and to get paid fairly for it. If you don’t believe me, go to a Bernie Sanders or Donald Trump rally.
And, employers? What are they to do in these changing times?
We know that companies are most successful when their leaders create performance-based cultures. These leaders align their employees’ intrinsic motivators with their company’s purpose, provide clarity in fast-changing environments, lead with empathy and empower their workforces to succeed. They provide workers with constant feedback, a sense of achievement and opportunities for advancement.
Employers should explore the options of contingent work and technology platforms to obtain the expertise they need to complement the competencies of their regular workforces and manage long term costs. In doing so, they need to make sure contingent workers are aligned to their purpose and principles. They also need to be mindful of the legal definitions of regular employment and contingent work to avoid the public damage to their reputations and the costs of lawsuits and settlements.
Employers ought to use available technologies to provide knowledge workers with the flexibility to manage their work-life-integration. Research has consistently shown that these enlightened employers can design innovative work environments with more productive and loyal workers and can save $10k to $20k per worker per year.
Finally, employers need to stay close to their predictive indicators of employee engagement and market-driven compensation. As the labor market tightens, the best employees and contractors will leave for higher paying work and more engaging environments.
The impact on the labor force and our culture by future automation and artificial intelligence may have to wait for a few decades down the road!
On this Labor Day, in these changing times, I recommend we celebrate with friends and family, revisit our priorities, and integrate the vital pieces of our lives to create a meaningful whole.
Victor Assad is a strategic human resources consultant and executive coach who works with key decision makers and human resources leaders on talent management, accelerating change, leadership development, and other strategic initiatives, such as mergers and acquisitions, strategy implementation, and flexible workplace. Contact Victor for a free one-hour strategy session at firstname.lastname@example.org. Visit Victor’s website at www.victorhrconsultant.com to download his free HR whitepapers and read more of his blog posts.
[i] “United States labor Force Participation Rate, 1950-2015,” Trading Economics. Found at http://www.tradingeconomics.com/united-states/labor-force-participation-rate.
[ii] Andre Damon (July 3rd, 2015) “US labor force participation rate hits lowest level in nearly four decades,” Found at https://www.wsws.org/en/articles/2015/07/03/jobs-j03.html.
[iii] Stephen Gandel, (July 2, 2105, 11:18 Am EDT) “America’s biggest job market problem is uniquely American,” Fortune. Found at http://fortune.com/2015/07/02/us-labor-force-participation-drops/.
[iv] Andre Damon, (July 3rd, 2015) “US labor force participation rate hits lowest level in nearly four decades,” Found at https://www.wsws.org/en/articles/2015/07/03/jobs-j03.html.
[v] 2012. Peter Cappelli. Why Good People Can’t Get Jobs. Wharton Digital Press, Philadelphia.
[vi] Richard J. Reibstein (May 26, 2015) “New GAO Report on Contingent Workforce Shows 85% of Independent Contracts are “Contingent with Their Employment Type,” JDSUPRA Business advisor. Retrieved from http://www.jdsupra.com/legalnews/new-gao-report-on-contigent-workforce-10541/.
[viii] Josh Zumbrun and Anna Louie Sussman (July 26th, 2015, 1:42 PM ET), “Proof of a ‘Gig Economy’ Revolution Is Hard to Find,” The Wall Street Journal. Retrieved from http://www.wsj.com/article_email/proof-of-a-gig-economy-revolution-is-hard-to-find-1437932539-lMyQjAxMTA1NzI0NzgyNzc1Wj.
[ix] Julie Bort (August 27th, 2015, 3:09 PM) “HP layoffs are going on now and involve a new job offer…but no severance,” Business Insider. Found at http://www.businessinsider.com/source-hp-layoffs-going-on-now-include-an-alternate-job-offer-but-no-severance-2015-8.
[x] Mike Isaac (Sept. 1, 2015) “Uber Rebuffed by Judge in Ruling on Drivers’ Suit,” The New York Times. Retrieved from http://www.nytimes.com/2015/09/02/technology/uber-rebuffed-by-judge-in-ruling-on-drivers-suit.html?_r=0.
[xi] Derek Thompson (July/August 2015), “Technology will soon erase millions of jobs. Could that be a good thing?” The Atlantic.