Choice and power are connected, but very different, concepts when they are used to describe workers’ circumstances. These two terms are often confused or treated as synonyms, which they are not. The resulting confusion contributes to a public discourse that undermines workers and weakens their position in the labor market and the workplace. So, the goal of this post is to try to clear up the confusion, explain the differences and connections, and explore their implications.
Choice describes workers’ ability to make decisions for themselves based on their personal preferences, values, and interests. It embodies the worker’s freedom to assess alternatives and select options that best align with that worker’s aspirations and needs. In the context of the labor market and the workplace, the best illustration of choice may be the idea that workers are free to choose among jobs.
To a large extent, the theory of the American labor system is built on this very choice. Workers purportedly choose a job that best actualizes them and yields the most compensation for their skills, talents, and effort. Employers are supposed to be free to choose the workers that best maximize their organizations’ productivity and, therefore, profit. This is the vaunted free flow that allegedly puts labor to its highest use. This theory is so powerful in the American economy it is codified in the employment at-will rule that holds there should be few legal limits on workers and employers establishing and ending their relationships.
This idea that labor flows freely is more myth than reality. A host of barriers deprive workers of choice in the labor market: skills barriers, education barriers, geographic barriers, discrimination, inadequate information, and language barriers, to name just a few. Also, employers engage in an astonishing and insidious number of anti-competitive schemes to deprive workers of job choices, including non-compete clauses in employment contracts, training reimbursement agreements, non-disclosure agreements, and no-poach agreements. Workers may have some access to new jobs, but their choices are sharply constrained. Workers with less education and job training, less workforce experience, and more challenges with English-language proficiency or other physical or social barriers have fewer choices.
Power, on the other hand, is defined by workers’ ability to influence or determine others’ decisions, especially their employers’ decisions. It entails control over resources --- especially workers’ own labor, skills, and knowledge --- or access to some form of authority (e.g., labor and employment laws) that workers can use strategically to exert influence over their employers. The greater workers’ resources, the greater is their power. So, an individual worker who can make a credible threat to quit a job may be able to persuade their employer to provide a one-time raise or a promotion. If every worker in a workplace threatens and/or participates in a strike, the employer may have to agree to a collective bargaining agreement that benefits all those workers in numerous ways.
Unlike choice, power is relational. Workers’ ability to influence their employers depends, in large part, on how their power compares to their employer’s power. This comparison is largely measured by the “difference of alternative” --- that is, do the worker and the employer have alternatives to their relationship? Imagine a worker who requests a raise. The employer says no. The worker’s alternative is to quit. The employer’s alternative is to replace the worker if they quit. The worker’s power will be determined largely by the worker’s ability to find a new job easily, or to support themselves during a more protracted job search. The employer’s alternative is to find a replacement worker or absorb the lost productivity of a job that remains empty for some time. Extremely valuable workers are harder to replace and more likely to find a new job (think LeBron James or Missy Copeland). Their loss costs their employers more. So, they have greater comparative power. Workers whose skills and knowledge are shared with many workers, including unemployed workers, are easier to replace and may find it harder to secure a new job. They may have the choice to quit, and the choice to seek another job, but that choice likely will not leave them better off.
Two critical points about the difference of alternative. First, more choices means more alternatives and, therefore, greater individual worker power. The last two years in American economic history illustrate this fact. Unemployment has been at historically very low levels. Employers complain they are struggling to find workers of any kind, not merely highly skilled workers. As a result, roughly four million workers per month have had sufficiently increased power to quit their current jobs with a reasonable assurance they will find a new job. Employers have been forced to respond by raising nominal wages (i.e., not inflation-adjusted), especially for workers at the lowest end of the wage distribution, in order to attract new employees.
The problem is that tight labor markets do not last forever. The number of quits each month appears to be slipping and layoffs and discharges have grown slightly. Thus, individual worker power may be very slowly reverting to the mean. Especially if the Federal Reserve Board continues its high interest rate policy, the power balance between employers and workers will return to the employer dominance that is our society’s ordinary condition. Unemployment will rise. Wages will stagnate again as employers realize they do not have to pay more to attract workers.
Nonetheless, the availability of more choices increases workers’ power. Regardless of the direction our economy is taking, public policies that break down all the barriers employers have erected to stymie worker choice will build worker power. They are worth pursuing.
Second, and perhaps more important, most workers have fewer alternatives than their employers or, more precisely, employers are usually going to be able to withstand the loss of an employee more successfully than a worker can survive the loss of a job. Employers typically have reserves of capital. They also usually have other employees they can force to work overtime to cover for a worker who has quit. Employers also have access to lending and equity markets that can provide short-term cash infusions, if needed. By contrast, most workers have little savings or cash on-hand. They face a relentless stream of mortgage or rent payments, food bills, utility payments, and other bills they must pay regularly to support themselves and their families. Generally speaking, employers can wait for workers. Except for those with robust savings accounts or full confidence they can find a new job quickly, workers can’t wait for paychecks. This aspect of the difference of alternative explains the fear that drives so many workers to accept jobs that pay them too little and exploit them too much. It weakens their power to the point where they do not have a choice.
The only remedy for workers is to increase their power through other means: collective action, organizing, and bargaining collectively for better working conditions, fair treatment, and equitable compensation. Understanding the distinction between choice and power is vital to worker power. Too much of our public discourse and too many of our public policies equate choice with power, or worry more about choice than power. A more realistic focus on the role of power in labor markets would improve our discourse, inspire more worker organizing, and reform our public policies.
