Ever since the 2008 financial crisis, companies have commanded an upper hand in terms of decisions of pay raises and fringe benefits for their workers. But the table has turned.
Despite an unexpected slow job growth (only 235,000 jobs
were added) reported by the Labor Department, the U.S. economy is recovering. The
unemployment rate fell to 5.2% and wages across the nation rose at a 4.3% year-over-year
clip. As the economy steadily grows out of the pandemic recession, there has
been a spike in the shortage of workers in many industries, which results in gaining
leverage for union workers in negotiations with companies.
Many workers managed to negotiate a good pay rise. For instance,
the workers at Volvo, a multinational manufacturing company, were able to have
a 12% pay gain. Also, lower-paid workers who have been seen as supportive of a
middle-class lifestyle such as waiters and bartenders in the leisure and the hospitality industry were able to benefit from the labor shortage, and now they are a
step close to the middle-class lifestyle themselves.
Moreover, there has been an increase in interest in union
memberships recently. Although the scale of organized labor strikes and the size
of unions are still not comparable to its influential past, it is still significant
considering the fact that union membership has been decreasing for years.
The growing demand in the labor market is not the only reason that the union workers are gaining bargaining power and financial security. The long-been-growing frustration among working-class Americans over wages has come to a breaking point, which served as a stimulator for changes. In addition, the Biden administration has also made its contribution by appointing a more worker-friendly National Labor Relations Board to settle disputes with employers.
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4 comments:
I do not know if these pay increases will be sustained. Unions in the U.S do not have a lot of power and a big reason for the pay increases are due to labor shortages. At some point, people will start going back to work because the benefits from unemployment will run eventually end or be limited, when that happens I do not think companies will continue to pay the workers a higher wage. For the lower and middle class, I think it is of more value for more people to be working for less money than fewer people to be working for more money.
I think that due to the Pandemic and the shift to working from home, the labor market will continue to be in high demand unless changes to the workforce are made. There is a parallel to today's labor shortage and union increase to that of 100 years ago in the early 1900s. Workers then and now refuse to work unless they have higher pay, less hours, and solid job security. Unions are a helpful tool when negotiating for work benefits, and I think until changes are made the rise in unions will continue.
I wonder if the wage rate will fall back down when the unemployment rate reduces and what impact this would have on the people working. In the article you mentioned how low wage people are now living middle class lives because of the result in high wage rates. Will they go back to living lower class lives once the unemployment rate drops?
In my opinion, whether the pay increases will be sustained or not really depends on how much longer unemployed workers get to enjoy stimulus checks from the government. And the government decides to pull back the benefits "quickly", maybe the heyday of union workers would only last pretty shortly as there will be a spike of supply for lower-waged labor. However, if the government pulls back the benefits "slowly" enough that the economy has time to go through a structural unemployment cycle, then the current unemployed workers would either have to retrain themselves with more advanced skills or stay unemployed because the employers would have already found a way (eg: technology) to replace their job positions. On the other hand, the currently employed union members would most likely learn new skills through their jobs during a structural unemployment cycle. Therefore, they might still be able to enjoy and keep their raised pay and fringe benefits.
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