My grandmother used to have a favorite response to rosy predictions: “From your mouth to God’s ears.” In other words, “I sure hope so, but whether God is listening remains to be seen.”
That was my reaction to a recent column by David Brooks in the New York Times.In a very real way, Brooks column–titled “The American Renaissance Has Begun “– put flesh on President Biden’s frequent assertion that “America is back.”
He began the analysis by harkening back to the post-World War Two period, when West Germany and Japan emerged from widespread devastation to experience “miraculous” economic growth, while Britain, with its institutions more intact, entered a period of slow economic growth.
Brooks cited a 1982 book by Mancur Olson, which offered an explanation:
“The Rise and Decline of Nations,” Olson concluded that Germany and Japan enjoyed explosive growth precisely because their old arrangements had been disrupted. The devastation itself, and the forces of American occupation and reconstruction, dislodged the interest groups that had held back innovation. The old patterns that stifled experimentation were swept away. The disruption opened space for something new.
Brooks hypothesizes that the pandemic may have ushered in similar disruption, and he bolsters that argument with a number of data points: the 4.4 million new businesses that were started in 2020 represent a modern record. The 38 percent of workers who took some additional training during 2020 was a substantial increase from the 14 percent who did so in 2019. U.S. start-ups raised $69 billion dollars, which was a 41 percent increase over the previous record, set in 2018. Productivity is up. Perennially low savings rates increased.
After decades in which consumption took preference over savings, Americans socked away trillions of dollars in 2020, reducing their debt burdens to lows not seen since 1980 and putting themselves in a position to spend lavishly as things open up.
Brooks says these and other data points are signs of three major shifts–growing worker power, a “rebalancing” of population between urban and suburban America, and a similar rebalancing of work and domestic life. I think the latter two predictions are “iffy”–it remains to be seen how many businesses will institutionalize remote work and how, and those decisions will affect workers’ need–and willingness–to relocate and commute.
If population dispersal does occur, our political polarization might ease; Brooks quotes a professor of urban studies who predicts such movement and as a result, forecasts a decline in the economic and cultural gaps between coastal cities and inland communities.
It remains to be seen whether these predicted population movements and changes in the culture of work will materialize, but the shift of power from employers to workers is clearly underway, and just as clearly overdue.
Power has begun shifting from employers to workers. In March, U.S. manufacturing, for example, expanded at the fastest pace in nearly four decades. Companies are desperate for new workers. Between April 2020 and March 2021, the number of unemployed people per opening plummeted to 1.2 from 5.
Workers are in the driver’s seat, for now, and they know it. The “quit rate” — the number of workers who quit their jobs because they are confident they can get a better one — is at the highest in two decades. Employers are raising wages and benefits to try to lure workers back.
This is a “rebalancing” that matters. Unions were formed originally to counter the disproportionate power of employers. Over time, in some industries, unions then became dominant–more powerful than employers. Over the past decades, however, as technology and gig work and successful corporate lobbying eviscerated union power, employers once again gained the upper hand–and a number happily exploited both their regained advantage and their workforces.
The operation of supply and demand, referenced by Brooks, is returning a measure of power to workers. (The recent Supreme Court decision upholding Obamacare will also help with that “rebalancing.” Employers’ positions were substantially strengthened by America’s insistence on tying health insurance to employment –workers with pre-existing conditions were effectively precluded from quitting and losing their coverage.)
The next few years will tell the economic story. But we also need to recognize that America won’t truly be “back,” let alone “better,” unless we repair our infrastructure–physical and social–and protect our democracy.
If there’s a God, I hope she’s listening…..Comments