Are Fed-Up American Workers Getting Their Gumption Back?

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As companies cut a higher-than-expected 131,000 jobs in July, you can't blame the American worker for seething. Wages remain stagnant and unemployment is at 9.5 percent, even as employee productivity is at levels not seen since 2002. Much of the workforce has endured pay cuts, furloughs, and a loss of benefits. During the same time frame, corporate profits have rebounded, according to the Standard & Poor's 500 Index. Main Street may not be adding jobs, but Wall Street went on a hiring binge, and according to a recent report by Obama's executive-compensation czar, banks paid $1.58 billion in bonuses at the end of 2008, just days after receiving federal bailout money and dangerously close to the nexus of the financial collapse.

Is it any wonder the average employee is in a bad mood? "There's more of a divide in terms of compensation between senior executives and the average worker now," says Thomas Kochan, a professor of management at MIT. "This will have a lasting effect and lead to lower trust and lower confidence in management." If this environment lingers, it could lead to a profound cultural change in the way Americans view work.

Could this signal the return of workers' confidence and attitude—enough to ask for long overdue raises or the return of benefits that were taken away? New Yorker Ilana Arazie feels this change, even as she searches for a new full-time job. The 35-year-old lost her position in digital marketing at the Associated Press in November 2009. Since then, she survived through a mix of freelance writing and unemployment checks while launching a blog called Downtown Dharma. Five years ago, she dreamed of climbing the corporate ladder. Now she dreams of finding a position that does not consume her life. "I think people are less apt to take jobs that stick them in a cubicle," she says.

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As the recession drags on, academics and executive coaches say workers have become disconnected from companies. Eighteen percent of large companies recently surveyed by Towers Watson said they had cut or eliminated the matching money they contributed to employees' retirement plans, starting in September 2008. Even when profits came back, those benefits often have not. Companies have been slow to hire new workers, even though corporations, apart from financial firms, have $837 billion in cash, an increase of 26 percent since last year.

Nearly 48 percent of Americans say they planned to look for a new job once the economy stabilizes. Roughly half of those surveyed say they no longer trust their companies or feel like they treat workers fairly, according to Deloitte's 2010 Ethics & Workplace Survey. "When you consider this, it has huge implication for companies' bottom lines," says Sharon Allen, chairman of Deloitte. "It costs money to replace workers, and it's very costly in terms of the loss of institutional knowledge."

After enduring grueling work schedules for several years, many people, for the first time in several years, feel empowered to ask for more—be it money, time off, stock options, bonuses, promotions, or the ability to work from home. The CEO of an outplacement firm says he has seen this firsthand. "It's not that workers feel entitled. It's that they feel like they've earned it because there's a little more room out there," says John Challenger of Challenger Gray & Christmas Inc. And, if employees feel like companies are not responsive, the high performers eventually will leave. "A lot of it will be psychological, like they need to get away," says Virginia Mathis, an organizational-development consultant.

But will asking for more actually get employees anywhere? The recession has irrevocably shifted the labor market. While top performers and those in hot industries such as tech or finance may still be able to negotiate generous compensation packages, ordinary workers may not see the cash. Employees may change jobs, only to find out that the same problems exist at new offices. Worse, workers will simply become accustomed to this new reality and feel a dampening of ambition: a sense of gratitude for any job. "It just becomes a way of life," says Robert Sutton, a professor of organizational behavior at the Stanford Graduate School of Business. For employees to really gain the upper hand again, they may need to wait until unemployment drops back to the 5 to 7 percent range. Unfortunately for everyone, that isn't expected any time soon.