Forget the Age of Aquarius, thanks to the coronavirus pandemic, 2020 is the dawning of the Age of the Employer.
Already we’re seeing the signs. Microsoft, LinkedIn, GE, Delta and others have announced layoffs. There will definitely be more to come. Are these layoffs truly necessary? Not at all. In fact, many of these companies would continue to show profits even if they kept these people employed. But let’s face it, payrolls have ballooned over the past few years of growth, and now – an economic downturn caused by a global pandemic – is a perfect time to trim the “fat”.
Because of the economic downturn the employment market has flipped. Just a few short months ago the biggest headache for any business owner or manager – big or small – was finding good employees. Workers ruled the roost. They demanded more benefits. They ghosted interviews. They played one employer off against another. They publicly shamed their employers for their perceived bad actions. They argued for higher wages, more protections and greater flexibility.
And what could employers do but respond in the best way they could? Many small businesses found themselves doling out higher minimum wages. Others had to come up with creative perks – like time off to take care of a new dog, free haircuts and oil changes, educational funding and catered lunches – in order to keep their employees from leaving their company for a bigger competitor offering more lavish benefits. Demand for good workers was high in a growing economy. But good workers were increasingly in short supply. You know what happens to prices when that situation occurs.
But now things have abruptly, quickly and brutally changed. The supply/demand curve has flipped. There are millions of unemployed workers, and the ones who have their jobs are nervously keeping their heads down and working even harder in order to keep them. People who are lucky enough to get interviews actually show up. Employees who have been quick to criticize or make public demands of their employers are now keeping their mouths shut. They see reality. They know that they could be the next economic victim of Covid-19. They don’t want that to happen.
Of course I exaggerate a little. People work hard and deserve good pay and benefits. Some businesses in the past – even in a tight job market – treated their employees poorly and those are the ones that deserve to go out of business in times like these.
For the rest of – particularly those small business owners that still have a little cash in the bank – there’s an enormous opportunity. The massive labor disruption that took place over the past few months has freed up many workers that we’ve been pursuing for years. Many smart business owners I know are hunting for cheap asset and real estate deals from other, more distressed business owners. But the smartest ones are hunting for good people to hire.
But just because we have a leg up doesn’t mean we should take economic advantage. We have the chance now to find good employees and when we do it’s important to treat them well. Many small business owners will see today’s Age of the Employer as a chance to take advantage of these people by paying them less or cutting benefits. That’s a bad idea. My best clients know that treating and paying your people well is the best long-term financial decision you can make, regardless of today’s economy.