Why Leaders Should Pay Attention to the Rise in Organized Labor Disputes

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In 1919, the United States was gripped by two seemingly unrelated trends: a global pandemic (influenza) and a wave of labor unrest. Four million workers, or one-fifth of the labor force, went on strike that year.

Flash forward a century, and history appears to be repeating itself. In the wake of the COVID-19 pandemic and other multi-layered economic factors, labor strife has rocked a variety of economic sectors: automotive workers, nurses in multiple states, Hollywood writers and actors, and journalists all went on strike. Unionization movements within tech and other nontraditional sectors sprung up all at once. Could it all just be a coincidence, or is something more happening here?

Any broad shift in dynamics between workers and management has implications for the present and future of employment in the United States. A deeper understanding of the forces at work could be valuable for a variety of businesses.

In analyzing the commonalities and trends from these recent examples, three lessons stand out:

1. Rewarding labor for corporate success

When business is booming, executives who hold an equity stake in the company are rewarded. Workers lower on the food chain typically do not see a similar boost in their paychecks. This phenomenon is nothing new; however, many workers were hit disproportionately hard in the 2008-2009 financial crisis and again during the recession stemming from the COVID-19 pandemic. Now that the economy has improved in several sectors, employees are looking to recover lost gains and receive what they feel is their fair share.

Questions like this motivated the United Auto Workers (UAW), which accepted lower pay for newer workers after the Great Recession. Business results for auto companies have significantly improved, and the UAW looked to recapture lost benefits and increase wages for all levels of workers. Their members, motivated by rising inflation and leveraging their collective power, successfully navigated a significant step change in compensation and massive increases in benefits. Similarly, Hollywood writers and actors have recently struck significant deals to navigate changing business models and protect livelihoods. The question is: did it need to be this difficult?

The takeaway: today’s labor force is increasingly aware of how their companies are performing and has significantly more transparency into what their peers and superiors are earning. They also have more avenues to mobilize. Work diligently and proactively to understand and design systems in which business success can bring increased rewards for your workers to avoid the need for protracted negotiations.

2. Disenfranchised employees

When HBO’s streaming unit rebranded to “MAX” in 2023, it ceased crediting writers, directors and producers individually. That hit a nerve within the guild representing each faction. Fears of AI adoption — were addressed in the ultimate resolution to the writers’ strike.

The sense of disenfranchisement among workers upset with the direction of their companies or their industries wasn’t unique to the labor strikes in entertainment. Although the money at stake in Hollywood might have been greater, many fields of work run the risk of intrusion from AI in a way that threatens workers’ livelihoods.

The takeaway: Open communication from management about changes to company policies, practices and directions is essential. Businesses must evolve to stay afloat; the more transparent management can be about that evolution, the less likely workers are to feel disenfranchised. Engage with them directly in the process to think through how shifting technology can help, what concerns exist and how to navigate it together to retain key talent and keep engagement levels high. With AI in particular, consider what skills will be required as business models evolve and how you can properly support and train workers along the way so they can leverage these new tools to help your business grow.

3. Investors and owners can be disconnected from workers’ day-to-day reality

The increase in venture capital and hedge fund investments in healthcare and print journalism — to name two — drove pushes for increased efficiency and profits. This correspondingly made a number of employees, many of whom entered these careers with altruistic or public-service-oriented mindsets, feel like their companies were becoming increasingly disconnected from their day-to-day work and, in some cases, their values/reasons for working in the field. A number either left their careers or became disillusioned, feeling they had misaligned incentives between the purpose of their jobs and the processes they were now being asked to follow.

The takeaway: The more disconnected management is from its labor force, the more it invites the potential for misaligned incentives between the two parties. Bridging the gap is necessary as industries consolidate and pushes for efficiency continue. Narrow the knowledge gap between executives in the C-suite and workers on the ground. Understand what motivates employees to do their jobs well and involve them directly in designing more effective and efficient processes – it will drive improved results, engagement, and better change management as businesses evolve.

In summary

How can managers anticipate sources of labor unrest before they rise to the level of concern? The following practical considerations can help achieve one or more of the objectives outlined above.

Structure incentives and compensation models so everyone wins as business results improve.
Keep your employees informed about where business models are shifting (e.g., streaming, AI, etc.), and proactively think through potential employee concerns and how to address them.
Involve employees directly in designing more effective and efficient processes and more transparently share your goals. Listen to their concerns and find a way to improve business results, but employee engagement and alignment are a strong part of the equation.
Demonstrate the value of “walking a mile in the employee’s shoes” – have leaders spend time doing the day-to-day work better to understand their thoughts, areas of opportunity, etc.
Put in place a system of regular pulse checks with the entire organization to catch issues before they become significant.

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