It is not just the changing of how we work for companies that has changed during Covid.  It is not just about Zoom creating the work from home movement.  It’s not about the Great Resignation.  The current massive quit taking place globally is an incredible event which will likely go down in history as a major turning point.

The unintended consequence of government policy worldwide is a reversal of the economic relationship between those who own assets and balance sheets, and those who are a labor expense line on their profit and loss statements.

The current problem some businesses are having getting workers to replace those quitting their jobs did not happen overnight.  After many years of a low growth wages compared to the growth rate of productivity and corporate profits, millions of lower paid workers are simply not returning to low paying businesses.

During Covid, low wage workers reconsidered their careers.  As people making low wages were put out of work by government policy, or decided the risk of facing the virus was not worth their low pay, people quit work.  While forced to not work by government Covid lockdowns and stay at home orders, people re-discovered their love of family, hearth, and home.  They realised work-life balance is a myth.  Being locked up in homes against their will caused them to invest in their homes, home-based business, and mothers who want to homeschool.

In the post war period, government social engineering fuelled the idea that women are treated as equals and should go to work.  Double incomes produce double taxes for government coffers.  Women left their children with daycares and government run schools to pursue careers.  Covid lockdowns caused a great awakening.  Mothers love their children, they love mothering, and they have had enough with fuelling government tax coffers at the expense of family.

The first chart shows those at the lower end of the income scale will no longer work for low wages.  The second chart shows that white collar, professional and business service jobs, are not quitting.  Companies with a business model requiring low wage workers are having a very hard time finding workers.  This is permanent, not temporary.  When governments around the world picked winners and losers, the unintended consequences of putting health over the economy created an 18-month mega shift they cannot control.  

People have decided enough is enough.  While some protest in the streets, others have decided to no longer be in the lower class.  While governments played with their lives, those suffering decided to upskill, get certified, pursue degrees, find new fields to work in, launch new apps, and decide to build their own businesses.  They shrugged at government, and kissed work as it was goodbye.

I did quite a bit of reading about the 1918 flu pandemic.  As the world cautiously emerged from The Spanish flu, a worse pandemic than Covid, The Roaring Twenties followed.  The Flapper did away with the Victorian values of restraint.  All signs already point to a new roaring twenties!  An economic boom is brewing.  Widespread prosperity, shifting social values, and a changed global world are likely.  New technologies such as radio, the car, and indoor lighting changed the world after the 1918 H1N1 flu pandemic.  Now we have Zoom, mRNA technology, the further growth of ecommerce into many industries, and much more that has been created during the Covid years.  A new world emerged after the Spanish flu.  I agree with Yale University professor Nick Christakis–a new world is emerging already as a result of Covid. 

In her comments on career plateauing, the late Judith Bardwick put it this way back in this 2013 interview with The Worcester Polytechnic Institute’s Robert A. Foisie School of Business:

After World War II, Bardwick said, career advancement seemed limitless, as American industry grew, the birthrate was still fairly low and “those who were committed to success, walked into the most expansionary period of corporate growth in history.  “Few people at the time had college degrees, until the federal GI Bill created an opportunity for many, especially men, to graduate from college. At the same time, “companies developed the desire to prevent unionization by employees,” Bardwick said, “and the idea developed that if you treated your employees marvelously well, they would make a commitment; productivity would increase and employee retention would be high.”

So companies gave employees a lifetime commitment and “employees formed the fundamental expectation that there is no limit to what you can become,” she said. “The American dream Bardwick was realized to an extent that could not now be duplicated.” Companies became multi-layered and bureaucratic, creating many more management positions than were needed, but also creating opportunities for promotion. Government programs also multiplied. As the baby boomer generation grew up and the economy hit several recessions, many more employees were competing for fewer high-level jobs. Baby boomers plateaued before they expected, too, since there are only a small number of jobs at the top of corporations.

As economic conditions changed, companies downsized and outsourced. As a result, she said, “everyone has become a business of one. That’s why we must ask ourselves, ’What do I have to offer that someone would want to buy? What can I do that will get someone who pays me closer to their goal?’ ”

Government planners, economists, academics, and business did not see this coming.  Black swans, native to where I live in Australia, are beautiful to see.  Of course, looking back, we can see how what I call the Great Reversal happened.   After WWII, the social contract called The American Dream exchanged a job for life that could buy a house and college for the children, for a commitment to a company. Over time, the contract was broken.  Lack of opportunity, low paying Walmart-style jobs, the gig economy, and children with high college debt ruining their lives has finally been disrupted.