Is a budding revival in organized labor happening at the dawn of the artificial intelligence-driven path to human obsolescence? Wouldn't that be ironic?
The post-financial crisis period of 2009-2019 marked a sluggish and stubborn recovery for the labor market. The unemployment rate peaked at 10% in 2010, taking six long years to return to pre-crisis levels. When factoring in discouraged workers, dropouts from the labor force, and part-time employment due to necessity, the unemployment rate reached a staggering 17%.
During this time, workers seemed to be abundant, especially at the lower end of the wage spectrum. The economy bore deep scars, and companies that survived the crisis were cautious about increasing wages, focusing instead on cost-cutting, efficiency improvements, and reducing debt.
The aftermath of the financial crisis left millions unemployed, and companies prioritized efficiency above all else. The job openings per person ratio hit a record low of 0.15 job listings per unemployed individual, translating to 6.5 unemployed individuals competing for each job opening. The power dynamic heavily favored hiring managers, leaving wage negotiation almost entirely in their hands.
However, as you've undoubtedly noticed, there has been a monumental shift in recent times. Record lows and highs from the crisis era have given way to record highs and lows in the post-pandemic landscape. Workers, much like the Somali pirate in "Captain Phillips," have seized the helm, asserting their newfound influence.
Whether driven by concerns about inflation, a shortage of skilled workers, or a realization of life's brevity, the dynamics of power have unmistakably reversed. And with empowered workers come renewed interest in unionization—a trend that's hard to ignore.
Regardless of personal opinions about unions, the surge in activity is evident, even though current membership figures pale in comparison to the 1980s. Each day's news feed features negotiations, pending strikes, active strikes, and the formation of new unions. Amazon and Starbucks have seen efforts to unionize their facilities, suggesting a shift beyond traditional sectors like public services, transportation, utilities, and construction. However, the foodservice and retail sectors lag behind the national average in union representation.
This trend is further accentuated by regional variations in union membership, largely influenced by the 'right to work' laws and political landscapes across the United States.
Yet, the sustainability of this budding labor movement remains uncertain. Navigating collective bargaining laws is a complex task, and the Federal Reserve's determination to combat inflation might inadvertently hinder economic growth and the short-lived strategic advantage workers have gained. Moreover, the looming threat of automation and artificial intelligence casts a shadow over the need for specific jobs and tasks.
When it comes to the impact of AI on organized labor, even ChatGPT 3.5 takes a diplomatic stance. The future is uncertain, and opinions vary widely. While public companies are embracing the AI buzzword and envisioning financial gains, the true impact remains to be seen.
In the financial services industry, automation and natural language processing have already found their place, streamlining creative and analytical processes. These technologies enhance client engagement and efficiency in investment management, making the future all the more intriguing.
As developments unfold, we'll continue to explore this captivating realm and its implications for the workforce in upcoming newsletters. The interplay between labor and artificial intelligence is shaping the future, and we're excited to be on the forefront of these transformations in the financial world.