A Steady Job Beats a Higher Paycheck

Workers feel good about the economy because they value stability over wage growth.

 

One of the anomalies of the current U.S. economy is that workers seem more satisfied with it than economists are. It comes down to their view of the labor market: Workers are right to welcome its stability, and economists are right that wage growth is lacking.

Economists have two main data points in their favor. Wage growth is currently at about  3 percent, compared to 4 percent during the strong parts of the past two cycles. And the employment-to-population ratio for workers aged 25 to 54 still hasn’t returned to its high from the last cycle, let alone the all-time high from 2000.

Despite this “hard economic data,” the “soft economic data” — public sentiment — shows that the economy and labor market are perceived to be about as good as they’ve ever been. Gallup has been asking the public every month since 2001 what it considers the nation’s most important problem, and in November only 13 percent responded with an economic problem. The just-completed midterm elections were largely a referendum on health care and President Donald Trump, not on the economy.

Job market sentiment continues to outpace the hard economic data as well. The Conference Board’s monthly consumer confidence survey in November showed that 46.6 percent of respondents say jobs are “plentiful,” compared to only 12.2 percent who say that jobs are hard to get. The last time that differential was so great was during a two-year period from 1999 to 2001.

Given the choice between today’s labor market and 1999’s, I would take today’s. The labor market of the late 1990s was hot, but it was also unstable, fueled by speculative technology companies and investments. Today’s labor market may not be quite as robust, but what it lacks in strength it makes up for in stability.

As a worker, I’d rather be in a labor market with lots of job postings, a low level of jobless claims and a sustainable level of wage growth. It’s certainly preferable to being in one fueled by speculative excess, where I have to constantly worry about when the mania is going to collapse. I’ll take 3 percent wage growth today with good prospects for being employed tomorrow over 4 percent wage growth today and unemployment tomorrow.

There remains an unresolved debate about what central banks should have done in response to the dot-com boom of the late 1990s and the housing boom of the mid-2000s, two cycles marked by excessive speculation but acceptable levels of inflation. Were there ways to curb the excesses without harming the labor market or the economy at large? Given the lack of above-trend inflation, should the Federal Reserve have run looser monetary policy, supporting the labor market even if it meant even wilder, potentially destabilizing levels of speculative excess? In cycles like that, policy errors may have been unavoidable.

The good news for workers today, and perhaps why their optimism is higher than some economic data might suggest, is that there’s no reason why this labor market can’t continue for at least several more quarters. The excesses of the past couple years have been in financial markets, not in the real economy. Bubbles in cryptocurrencies, cannabis and private technology companies should not lead to a heavy-handed response from the Fed. Household leverage remains low, and business investment remains modest.

In 2019, a labor market with an unemployment rate below 4 percent and slightly higher wage growth may not be enough to satisfy those who are fixated on the economic performance of 1999. But most workers would probably take it.

Gen Z Is Coming and They’ll Be Changing Your Culture Forever

There are numerous articles discussing millennials and employee engagement. Some people bemoan millennials and others tout them as invaluable additions to the workplace.

However, it’s up to all of us to foster employee engagement. Any energy we expend complaining about one generation, or comparing them to another is simply a waste of resources. One of my best lessons in learning to appreciate cultures I am not accustomed to, presented itself with my teenage son. My son is not a millennial; he would actually be considered Generation Z, which includes those born in the early 2000s.

Regardless of how one slices up the generational chronology in the U.S. population, the fact of the matter is each generation brings something unique to the table. If, as HR professionals and business managers, we have an issue with millennials, then what is going to happen in the next few years when Generation Z hits the workforce in numbers? We as leaders today, need to fully appreciate culture and how culture differs between generations.

As I mentioned, my son, along with the prompting of my wife, helped me discover the importance of culture. Like all Gen Zers, my son grew up a true digital native. He never knew what it’s like to be “out of touch” or what dial-up sounds like or understand the meaning of “Please be kind and rewind.” Although he is lacking in awareness of the past, which is totally acceptable, he is fully engaged in the digital world.

A digital culture

He would share with me the frustrations of gaming — how some people were rude, curt or downright bullies. At the time, I casually dismissed his complaints because I viewed his digital happenings as only games. My wife gently reminded me, after a particularly frustrating day for him, that these are more than games with him. The people he is friends with online, are real to him, even if they are only digital. Point of fact that is his culture.

What I learned was that if I wanted to be in to my son’s life, then I needed to take time to learn his digital “customary beliefs, social forms, and material traits of a racial, religious, or social group” of the people he gamed with online. I made an effort to learn more about online gaming including the terminology, and during my research learned the virtually unreported impact that massive multiplayer online games (MMOG) have on America.

Due to the popularity of online games like Overwatch, which gained 30 million players in just one year, it was clear my son’s digital culture was in full swing. If you as a leader are having issues relating to or understanding millennials today, then you are already behind. Generation Z will likely baffle you, with their regular use of social media platforms like Slack, Snapchat, Instagram, Facebook, and KIK as primary forms of communication.

Now is the time to get ready

Today is when your organization needs to start incorporating social media to communicate with employees and prospective job candidates. That will give your company a strategic edge when the job applications from Gen Z start rolling in. Additionally, as HR professionals we need to not only learn about digital natives, but also join them.

We live in a globalized society without digital borders. To ensure our organization’s success and competitive advantage we need to adapt to and become adept at what our current and future employees’ digital culture will look like.

For those of you who think that video games are still just “games” and not a burgeoning digital culture, I have some bad news for you. According to a 2015 Entertainment Software Association (ESA) report, almost half the population of the United States plays video games. Culture, whether personal or digital, will be a factor in successful organizations as the next generation joins the workforce.

This article, written by Stewart Simons, was originally published here.