As BusinessWeek chronicled recently, there has been a profound shift in the way that companies view their employees, and it’s not a change for good. The Great Recession has caused there to be millions more qualified people seeking work than there are positions available. This lopsided situation has given employers the power to make just about any rules they want with regard to employment. Let’s break it down. First, if they need to handle additional business, they’ll attempt to…
… not hire (U.S. workers, anyway) at all. How do they manage this trick? For one, they can use tools like the web and automated voice systems to handle the increased work load. If that doesn’t work, and they find themselves really needing a human being, they’ll likely look to countries such as India, where the workforce is educated and the pay is substantially less.
OK, so let’s say a company realizes it really needs an American to perform work. It will kinda-sorta hire him or her by treating the person as an “independent contractor” or “freelancer”. Essentially, the worker is considered his or her own business person responsible for performing tasks for a certain amount of pay.
The benefit of this approach is that it provides none of the obligations for the company that normally come with true employment. These include the right to participate in the company’s retirement and health insurance plans, the right to a certain number of paid sick and vacations days, and the expectation that should the employee need to be laid off down the road, he or she will receive a “severance” of a certain amount of money for each year of employment.
With no strings attached, companies can quickly jettison workers at the first sign of economic trouble. A generation ago, they would have been much more inclined to carry as many of their employees through business downturns as they could. This sad situation reflects the final disintegration of the “social contract”, an unwritten pact whereby employees would work hard and be loyal to their employers and in return, companies would continue to employ them.
How did things get so bad? We can start with the fact that competition is truly global. The compensation paid in the U.S. is often higher than that of other countries. Next, we should consider that corporations are run for the benefit of their owners, the shareholders. The best way to benefit these owners is to get the company’s stock price up! What’s the best way to make this occur? Raise the company’s profits. Let’s keep going. How are profits increased? By raising sales and/or lowering costs. When the economy falters, companies find it hard to increase their sales. So, they turn to … lowering their costs. What is one of the most significant costs? Workers.
We should also mention another sad development, and that is Wall Street’s pre-occupation with short-term profit improvements. Companies are required to announce their results every quarter (ie: three months). Analysts on Wall Street set companies up by announcing their expectations for ever-increasing profits. Knowing that their stock prices will get knocked down if they don’t meet these widely publicized profit expectations, company executives are more likely to think about what will help them in the short term, and throwing away unneeded workers certainly meets that description.
The implications for today’s teens are profound. It will be more difficult than ever to land a “real job”. High school and college students, work hard to secure internships that you can complete in your summers. It is critical that you get inside the door. Once there, work hard and make yourself indispensible.