By Tom Harvey
“Equity” is defined as being fair and impartial. “Rank and file” are the ordinary members of an organization or business as opposed to its senior leaders.
The number of U.S. workers reached a high of 165 million in early 2020, at the start of the COVID pandemic. If you tally the number of CEOs, add the estimated people who report directly to those CEOs, plus the directors of the organizations these senior leaders manage one, can estimate that the top brass represent less than 3% of the total workforce. So how have the other 97%, the rank and file, the folks who drive trucks, wait on tables, make things, sell things, fix things and basically make the economy hum, fared?
The rank and file have taken some hits
Mergers and acquisitions average about 19,000 each year in the U.S., almost all under the guise of “streamlining operations.” For example, AT&T’s acquisition of Time Warner resulted in a $400 million payout for Time Warner’s CEO, while 45,000 workers lost their jobs. Goldman Sachs and JP Morgan shared in over $300 million in fees from the transaction. Larger acquisitions are usually promoted by Wall Street investment bankers, often encouraged and funded by large investment managers such as Blackrock, and on average result in 30% of the rank-and-file employees losing their jobs.
Immigration, according to open-border politicians, reduces corporate costs by adding less expensive labor to the economy. This, however, dampens overall compensation for less experienced members of the rank and file already here. A 2021 New York Times headline read: “Migrants were encountered 1.7 million times in the last 12 months, the highest number of illegal crossings recorded since 1960.” The majority were allowed to stay and seek work in the U.S.
COVID cost the U.S. economy more than 22 million jobs in 2020. Between 30% and 40% of business closed because of the pandemic. These were almost exclusively small businesses deemed “non-essential” by government officials. Most of the larger employers, e.g., Walmart, were allowed to continue operating. Close to 50% of all workers are employed in small businesses. Several state governors persisted in this lockdown long after it was shown to be damaging to rank and file employees and of marginal value in stemming the COVID virus.
Civil unrest swept through every major U.S. city, destroying hundreds of businesses and thousands of jobs in 2020. Many mayors were hesitant to quell the destruction. As a reduced role for police was promoted by far-left politicians, a rising crime wave forced many of the rank and file to relocate away from the urban core. They were in search of security for their families and for many, new jobs as well.
Inflation is a general increase in prices and a decline in the purchasing value of money. Inflation has been fueled by too much money, much of it voted into the economy by politicians, chasing a restricted flow of goods. Some pandemic-related restrictions were needlessly prolonged by progressive politicians. Inflation is a silent “tax” that disproportionately punishes the rank and file.
The push for Diversity, Equity and Inclusion (DEI)
DEI is a term used to describe policies that encourage representation and participation of diverse groups. This includes different genders, races, ethnicities, religions, cultures and sexual orientations.
More and more financial institutions, such as Goldman Sachs, JP Morgan and Blackrock, now include DEI “leadership demographics” in their decisions to invest, make loans or provide advice. They analyze CEOs, direct reports to CEOs and board members to see if the appropriate groups are adequately represented. Goldman Sachs loudly proclaimed they will “never take another company public if its leadership wasn’t sufficiently diverse.”
While some DEI measurements include all employees, companies that claim to embrace DEI must reflect a leadership suitably diverse and inclusive or risk being labeled “unacceptable” to a growing number of investment and financing sources.
The Great Resignation
The rank and file are not happy. Mergers, immigration, COVID, crime and inflation have taken a toll, and the rank and file are responding with their feet. More than 47 million Americans quit their jobs in 2021 – a new record – and the trend continues.
The pandemic brought new flexibility into workers’ lives. As people balanced child care, remote schooling and working from home, Zoom meetings and group updates over Teams replaced the traditional eight-hour day at an office.
Later, as vaccines became more and more available, companies started to call people back to the office. At the same time, DEI employee seminars began in earnest as organizations hustled to meet the new DEI yardsticks, encouraged by politicians and mandated by major financial institutions. Some promotions and senior management hires seemed to go to many because of their group identity rather than their accomplishments. Also, many of the rank and file didn’t want to give up their newfound flexibility and independence. So, they quit in droves to find a more accommodating work environment or to work for themselves, somewhere where exposure to a surprise merger and the risk of job loss wouldn’t derail their future.
Millions of workers decided it was time for a change. The burnout experienced by the rank and file and the isolation during the pandemic drove some to change careers as they searched for organizations more concerned with being fair and impartial, rather than leadership’s latest fads.
The unique combination of political, economic and social turmoil continues to prompt thousands of the rank and file to seek out secure, stable work environments more aligned with their personal values, equitable work environments that are committed to being fair and impartial.
Prior to joining the business faculty of a Midwestern university, Tom Harvey was the CEO of several companies. His email is [email protected].
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