Back in the 90s, the federal government ran a housing experiment, giving people vouchers to move out of high-poverty neighborhoods into low-poverty ones. They wanted to test if housing policy could be used to improve jobs, earnings and education. This made sense. Take people out of a culture of poverty and put them into a culture of opportunity, and hopefully the norms of opportunity would rub off on the people who relocated. The hypothesis was that they may adopt the actions and values that help build a better life if those values are inherent in their new community. The hope was that housing policy could be used as a magic pill to cure a persistent societal ill. Turns out that the move didn’t change anything for the people who got the vouchers. They maintained their lifestyle because, quite simply, that’s what they were used to and where they were comfortable. The experiment ended but that wasn’t the end of the story.
There was a big surprise several decades later with the kids of the people who moved. These children were apparently paying attention to their new communities. The next generation of kids from section 8 housing who moved to suburbia became, shockingly, suburbanites. They learned from watching what was happening all around them and developed their behaviors and comfort zones accordingly. As a group they had better education, better earnings, and by all related metrics followed by the government, a better life.
This lesson also explains the reasons for one of the biggest problems in our workforce today, a lack of commitment on the part of the millennial workforce to the professional organizations of the world. Bottom Line: We did it to ourselves. Over several decades we created an environment so hostile to long term employee / employer relationships that the next generation watched and learned and developed their own work commitment in line with those realities just like the kids from the section eight housing experiment. Millennials learned not to trust or have any level of long term commitment to companies. Surprisingly, at least in my experience, most hiring managers don’t really understand this. I hypothesize this could be because the managers of today are boomers. They grew up with a different life experience, one where it was aspirational to be selected by, and commit to, a company for long term employment. Their actions and thought process show this and I have personal examples that demonstrate this disconnect.
I experienced one example of this misunderstanding at a meeting of hiring managers trying to get to the root of their staffing problems. The managers thought the problem was community infrastructure. They were discussing the work life balance of the Millenials and one of them said ‘We just need a lake!”. The idea being that it was social infrastructure and activities that would attract younger talent to the area to get people to take the jobs and commit to the companies struggling to find talent. The lake, or lack thereof, wasn’t the problem. The problem was that the jobs offered didn’t mean anything to the job seekers other than a short term income. If I only care about an employer enough to get a paycheck, and I don’t see myself as part of something bigger then of course I’m not going to move to the middle of nowhere. I’ll stay in the city where it’s easier to, bounce from paycheck to paycheck. If, on the other hand, I see my hire as a major life step that defines who I am, no matter if a plant is in the middle of a field a hundred miles from nowhere, I’ll go and work my tail off as part of something bigger than myself. I’ll build the community after I have met the higher priority of getting the vaunted job and career.
Juxtapose this against another experience which illustrates an attitude which values a commitment to something bigger. This second example happened in the same highly rural region, but in another community far from the group that thought that the lake was the best way to attract talent. There was an older manufacturing plant with a Baby Boomer production manager, one who still believed in the value of commitment to the company. The company was experiencing difficulties. When given the opportunity, he still bought a house right next door to the company plant, even though closure was a possibility. The company was in conversations to move the operations to another state. He bought the house so he could walk the two blocks home at lunch and be back at the plant in minutes if there was a problem. Being fair, it helped that the house was under 50K, but it was still a huge commitment on the part of the employee in what he knew were somewhat uncertain times.
In a final example, I had a conversation with a second generation business owner who was struggling with talent. He couldn’t understand why his younger employees didn’t want to work all day for a job that started at a couple of dollars above minimum wage and then go to school at night to better themselves. Let alone that the school was in a town twenty minutes away and they had to attend on their own dime. He couldn’t understand why they didn’t see the benefits of potentially being promoted for a few extra dollars an hour. He felt that he saw the benefits of it when he was starting out, so he couldn’t understand why the younger generation wasn’t willing to do it. It didn’t register that the fact that his family owned the company was most likely a major factor in his motivation to go the extra mile with his own personal development.
In all three examples, the behaviors, or lack of action, were based on perception. It was the perception of the expected level of committed relationship between the companies and the employees. The manager group was so blind to it, they thought investing into a huge public works project was the cure. The idea of massively investing in people long term was not even considered. The older employee, who believed in the company’s commitment to him, beyond what was rational and obvious, was willing to bet a huge chunk of his future livelihood on the company. He did this to the point where he purchased a house in a town that had a manufacturing plant, a dollar general and a gas station as it’s sole economic footprint. If that company closes, even the ridiculously low price the manager paid for the little house would be mostly lost. The company was the only sizable business for 20 miles and realistically he’d have to move 60 miles to get another job. Nobody would want that house without the town’s plant. Finally, the second generation business owner, the one with familial equity, couldn’t understand why people around him without that equity didn’t have the same motivation to work 24/7 to enhance their skills for the betterment of the company.
The problems expressed by the managers group and the business owner can’t be solved overnight. They don’t understand that the issues they are struggling with grew over a generation. This probably explains why there is such a misunderstanding of the core issue: a lack of true long term commitment shown over a generation by employers. This lack of commitment resulted in the lack of commitment and skills on the part of the next generation workforce.
Problems, Misunderstandings, and Realities:
There are many issues and problems employers complain about that are the direct result of the adoption, and misapplication of the Friedman Doctrine. Milton Friedman, a famed economist, introduced the theory in a 1970 essay for The New York Times. In it, he argues that a company has no “social responsibility” to the public or society; it’s only responsibility is to its shareholders and the shareholders get to make social decisions. It’s not that the theory is right or wrong in it’s basic concept. That’s for others more steeped in economic philosophy to argue. My argument is that it’s ardent application has created a generation wide lost workforce. There are many broad examples of this.
I’m constantly hearing about a lack of Soft Skills as a huge problem with the next generation workforce. Employers blame the phone and the internet. I’m sure there is some truth to that but there is another thing that’s happened that’s more impactful than any modern technology. The insurance and political infrastructure has made it nigh impossible for kids to learn soft skills where it really happens. Kids, at least younger kids, can’t go to work with their parents. This is especially true if it’s an industrial production company of some sort. The face on one HR manager, when I once suggested that teenageers go into the plant to work part time, was utter disgust. She cited safety issues and through body language insinuated that the idea was insane. Safety is the warm and fuzzy blanket wrapped around the core focus of eliminating insurance costs and risk from a company. If eliminating corporate risk and increasing profits is your end goal, then of course your not going to have a comprehensive and safe program to introduce working youth to your company.
Where are kids going to learn how to problem solve if they don’t see it themselves first hand? Yes, we can make the argument that they gain some of these skills from family, school or sports but that’s very indirect. Kids learn from what they experience. They won’t understand problem solving in an industry environment if they don’t experience it while they are young. They also won’t learn the benefits and values of working for industry, one of the last sectors offering long term stable employment, if they don’t experience it first hand from a young age. All they will experience about career options is what they see during their after school fast food job or what the college recruiters tell them as they visit the campuses on annual field trips. If we changed the fabric of education and employment so that teens were working as much as they were in school from the earliest viable age, I suspect soft skills would be less of an issue in the workforce. I never hear anything but glowing soft skills reports from the few apprenticeship programs I’ve worked with so that says something to me. We eliminated younger kids from really experiencing the professional workforce, and we are now reaping the results in a generational absence of these skills.
Another problem, younger employees don’t stick around even if employers want them too. This one has a fairly obvious answer. They are given nothing to stick around for. The entire point of pension plans was to keep employees around until they weren’t useful and then gently and respectfully move them out of the organization when they couldn’t contribute any more. If one of the employer benefits of the move to the 401K is that it’s less expensive and less of a long term commitment, then there is an effect on the employee. The worker understands that the employer doesn’t care enough to make sure their employees have a strong retirement then they aren’t focused on fostering a long term relationship. No matter what relationship I’m in, personal or professional, if my partner structures things so that they have no long term commitments to me, I will naturally reciprocate in my own planning.
The ultimate long term relationship is not retirement, it’s employment. Corporate layoffs in response to a hiccup in earnings communicated loud and clear for decades that profit was more important than loyalty to people. It was the same with offshoring. Even when the jobs stayed in the country, the drive for profit has been underscored by ‘efficient management’ or ‘dirty tricks’ depending on your perspective where benefits have been reduced. I know one person who has four or five employers on their resume but never moved from the same cubicle for 30 years. The company was bought out again and again and every time his benefits were whittled down. Pension benefits became less and less until the program was pulled from them completely. PTO banks were reset again and again. These tactics were repeated by thousands of companies throughout the last several decades. This is really the MO of the massive Private Equity industry, an industry which should be called the Friedman Industry as it’s focus is to take over companies and reorient them to a philosophy of profits first and only. If you were a child in a generation which witnessed this type of behavior in the news, through your friends families, or heard it in adult conversations all around you, it would have an effect. It’s easy to see the non committal outcomes when those children hit the workforce.
The process is continuing to this day. Healthcare, when offered, became high deductible health care. Benefits for longevity of service were completely eliminated across most companies. No matter if your there for five years or fifty, you get just a few weeks PTO. Even without the benefit of pensions, if your not getting anything additional for sticking around, most of the younger workforce will logically conclude, why bother?
In most instances, the company moved training and investment onto the shoulders of the individual. They have been sucked into a bloated and overpriced education system that’s saddled younger Americans with literally trillions in student loan debt. Apprenticeship programs, the last remaining vestige of true employer commitment to the next generation of the workforce, don’t have this problem. Learning and productivity are intertwined so tightly that the system is efficient and builds extreme long term loyalty.
It’s not just reduced healthcare, or insubstantial retirement programs, or continual layoffs. It’s all of these things combined, and many others. There’s workplace quality of life changes. The move to cubicles from offices. The elimination of any form of formal employment via the growth of the gig economy. All of this screams “Hey, human, you only exist to make money for the company!”. The natural response is “Hey, company, I’m only here long enough to get a few bucks from you and then i’m outta here!”
There are really only two options to fix these ills. The first is to reverse everything. To bring back something akin to a pension. To restructure employment to look like it did at the height of the industrial age when people went to work for the same company for decades and brought the next generation along for a ride when Jr. was old enough to go to work at the mill. This will only make sense for organizations who need people long term, i.e. manufacturing. Unfortunately, this is a bit like trying to unionize modern day knowledge industries, it just doesn’t work. It’s an old fix for an old economic structure.
The next option is to destroy the system entirely and turn every non-factory job into a gig and everyone into a gigger. The whole world would be short term contracts and 1099 employees. This makes sense as employers and Wall Street love a flexible workforce. Unfortunately there is a massive issue with this solution. The things that employers provide, or sometimes provide, have to come from somewhere. That’s a big deal because we are discussing retirement and healthcare. To be successful, whatever replaces employer provided benefits has to be structured around mandatory participation and must be universal. I could even see contributions to a training / retraining and PTO bank of some sort that’s external to the company. There also needs to be a way to even out business cycles for the industries that have regular ebbs and flows in their workforce needs, although this type of organization will really benefit from this brave new world. As complicated as these ideas are, this is more realistically where we are headed when you look at the values of the next generation. If they only want to be around when they want to be around, then we should rebuild our system to meet that reality.
Employers used to say, “Commit to the company for life and the company will commit to you and give you a great life.” Then for the last few decades employers said, “Commit to the company for life and we’ll keep you for only when we need you, and for as little as we can get away with giving you.” That created a whole generation of workers who responded with “What’s work commitment and why would any fool do that?”. You won’t find this generation working long hours for years towards some corporate goal. But, I guess, if you really need them after hours, you may want to check the local lake. You’ll probably find some of them there.