We are now in the 4th act of the COVID 19 drama. We think the end is in sight, and we’re acting as if it’s ‘after-Times’. But it’s just the 4th act, and the Delta variant is offering plenty of potential for further plot twists within an explosive political environment that is its own drama.
As business scrambles to re-assemble the fragments of its ‘before-Times’ business plans, it is coping with a major dislocation of its labor paradigm for a variety of reasons that COVID did not create, but merely amplified and thrust to the surface. One of the ‘quick fixes’ is to pay higher wages to the ‘little people’* it has pissed on for so long to coax them back to the same work they performed before but now under more demanding circumstances.
By the way, the class of ‘little people’ includes a range from nursing home health aides and restaurant wait staff to junior bankers in prestige counting houses. Sorry, Harvard and Stanford grads, you too are in that class, no matter what you’ve been programmed to believe; higher pay grade, but equally disposable. There are more where you came from. And some day, there will be algorithms to replace some of you as they did aspiring attorneys before you.
Ironically, but not surprisingly, opinionators, pundits and the press have picked up on this eruption of the norm and rushed to the judgment that it is the ‘new normal’; that the ‘little people’ have at last gained bargaining power in the labor market. Silly pundits. Only for the moment.
One must ask where does this lead. The answer to the future is, once again, in the past. Over the past forty years management has persistently arbitraged labor when it could through offshoring and outsourcing, and substituted automation wherever possible, because bots don’t take vacations, sick time or have child care issues. (They just get hacked!) This trend was further accelerating before COVID-19, aided by cloud information technology, artificial intelligence, and organizational consolidation. COVID-19 will accelerate this process. Emergence of the Delta variant to Covid-19.v1 levels of lock-down response will kick the process into warp drive.
One of the consequences of COVID-19 is the drive to digitize everything that can be digitized, and automate the workflow that connects it all. It is critical to the concept of remote work in any economically sustainable manner. The expectations of certain financial titans notwithstanding, remote work is likely to remain a major and growing part of the business environment. I suspect that executive Neanderthals in their more cloistered thoughts are planning for that as well, even as they demand obeisance to their requirement for return to the office and restaurants.
So, what is the next shoe to drop? Quite likely a continued downsizing of organizational staffs as further automation kicks in. It is likely to be subtle and gradual over the next five years; difficult to detect in the overall churning of the labor pool, but accelerating and cumulatively significant. The result will be more of what we have observed and become apparently numb to: downward migration of the economic casualties to lower paying, lower skilled jobs, gig work, struggling self-employment and small business creation, unemployment, homelessness, depending on one’s skill sets and aptitudes.
This transition trauma is not without its offsets. COVID-19 also demonstrated the vulnerability of our supply chain in many crucial areas. A consequence of this realization will be an ‘unbundling’ of that which was previously consolidated in vulnerable environments, and a shortening of supply chains to reduce the number of points of vulnerability that can be disrupted by COVID-23, climate change, China, or those unidentified aerial phenomena that may decide to stop teasing us and get down to business. We are undergoing a major disruption of our operating assumptions and operating environment without a holistic understanding of the process or a master plan to deal with it. It will undoubtedly create unanticipated opportunities that will absorb many of the displaced, but the process will not be pretty or painless, and there will be much ‘breakage’ along the way.
The downside narrative is not inevitable, but it is probable in absence of a yet-to-be detected engagement on the part of the business community to deal with the consequences of labor displacement that it creates in pursuit of its disparate goals, and shared objective of profit at any cost, but theirs. The business community that creates the unemployment cannot continue to disparage the unemployed and the government that is left to pick up the tattered threads of the social fabric that business shreds. There are consequences for persistent irresponsibility, as we are now witnessing. It is in the interest of the business community to collaborate with government in dealing with labor displacement and transition because a displaced worker on the one hand is a displaced consumer / debtor on the other. In the end, nobody gains, but this logic appears to have escaped the business elite in their relatively sheltered cells.
So, ‘little people’, enjoy your raises in the moment, but understand the implicit cost that comes with the benefit, and pack your own parachute. Good luck.
- ’little people’ – for those readers of more recent vintage – a phrase made infamous by the late Leona Helmsley, a.k.a. the Queen of Mean, the female mirror persona of Donald Trump who opined that taxes were for the ‘little people’.
And for the record, ‘Ich bin ein ‘little person’.’ [with attribute to John F. Kennedy]
Onward
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