Strong Economy Empowers Labor in Seeking Jobs and Political Change

(Bloomberg Opinion) -- Like Republicans in 2010, the electoral story of 2018 appeared to be Democrats winning back the House of Representatives. But with the value of hindsight, we’ll see that the shift in power was greater than it initially seemed.

Republicans used their wins at the state level in 2010 to draw advantageous electoral maps this decade, entrenching their partisan advantage until courts or the 2020 Census changed the status quo. The shift in power toward Democrats in 2018 may similarly manifest over time. The first signs may be in labor market power dynamics in 2019.

The labor force today has a Democratic lean: less white, younger and more educated than the electorate as a whole. And as the unemployment rate falls, labor market bargaining power is increasingly shifting toward workers rather than employers. We see it in the slow but steady acceleration in wage growth. In its December Beige Book report, the Federal Reserve noted that employers are reporting employees “ghosting” — simply not showing up for work without giving any notice or way to be contacted. We see it in the growing unionization movements nationwide.

What may happen soon is a clash between political control and the law wielded by Republicans, and labor market power controlled by workers. Consider the case of the University of North Carolina. At UNC, there’s a battle over what to do with “Silent Sam,” a divisive Confederate monument on the Chapel Hill campus. Torn down by protesters in August, it would have been housed in a new building on campus under a plan from the university’s Board of Trustees. Students, employees and some alumni fought this proposal, and the Board of Governors recently rejected it.

The employees played their part not only by speaking out but also wielding labor market power: More than 80 teaching assistants and professors pledged to withhold final grades from students in response to the board’s plan to keep Silent Sam. Teaching assistants are traditionally weak employees in academia, often overworked and underpaid. In a tough labor market, such employees who were upset by a political decision by their employer would probably go on about their work rather than risk their careers. In a tight labor market where workers increasingly wield more clout, it’s not so clear who wins if workers make a stand.

Here’s where national politics come into play. The incoming class in the House looks to be the boldest, most progressive in history. Representatives-elect like Alexandria Ocasio-Cortez and Ilhan Omar already have significant presences on social media. What we could see is more cases like what’s going on in North Carolina, where political power controlled by Republicans is in conflict with liberal-leaning workforces, and new Democratic lawmakers with large followings on social media urging those workers to strike to get what they want politically. Worker success in places like North Carolina will lead to similar attempts elsewhere.

This dynamic would pose a particular challenge for conservatives who support Trump. If the economy remains strong, workers will be empowered and Republicans will find themselves on the losing side of conflicts like the one in North Carolina. A weakening economy might quiet those conflicts, but it would also undermine Trump’s re-election campaign.

Republicans still control the White House, the Senate and many statehouses, they may soon find their political position is not what it seemed.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Conor Sen is a Bloomberg Opinion columnist. He is a portfolio manager for New River Investments in Atlanta and has been a contributor to the Atlantic and Business Insider.

©2018 Bloomberg L.P.