New Trend? Old Trend.

New Trend? Old Trend.

When this headline appeared … what came to your mind?

If you’re from Pennsylvania, did you think of Hershey?

If you’re from Chicago, did you think of Pullman?

Some might have some less-than-charitable thoughts about company housing.

If you are a fan of Cadbury’s chocolate, you might know all about the sweet village that the company constructed for their workers in Bournville, England (which inspired Hershey).  One of Unilever’s predecessors, Lever Brothers, also had a stellar community built for their workers called Port Sunlight.

It seems to be a toss-up to determine where the first company-sponsored housing was built: Quarry Bank Mill (near today’s Manchester airport) or New Lanark in Scotland, were both founded in 1784 and both provided housing and better nutrition than was the norm at the time.  The cottages pictured were built in 1824 as housing for the Quarry Bank Mill near Manchester.

Seems the owner of New Lanark might have devised the original economic development deal as well.  The owner lured a boat load, literally, of people that had been emigrating to North Carolina when their boat crashed.  Stay here, and I’ll give you a job AND housing.   

Seems some things never change …

COLA

COLA

There’s a word that compensation consultants of a more recent era have shunned for at least two decades:  COLA

And not in favor of the unCola – in favor of NO COLA.

In fact, the consultants at CHRC have spent a fair amount of time explaining the differences between

Merit Budgets

and

COLA – Cost of Living Adjustments

Until their faces turn an unattractive shade of blue.

The phrase that gets economists animated is “wage-price spiral” … and many are turning an unattractive shade of red believing that the current wage increases are going to take the U.S. to the kind of wage-price spiral that the U.S. economy experienced in the 1970s.

So much to our delight, last week Mitchell Hartman on Marketplace did a story that featured the COLA that we don’t like to imbibe.  More importantly, in addition to economists that are convinced we are headed for the spiral, he featured two that pointed out key distinctions of what separates the current situation from that in the 1970s.

Ross Mayfield of Baird points out that unlike the 1970s, the worker’s demands aren’t driving inflation, supply constraints caused by the war in Ukraine and Covid are.  Economist Joe Brusuelas underscores the statistic that undergirds Mr. Mayfield’s point:

“At that time, labor unions represented approximately 1 in 4 American workers.”

Why were those COLAs so worrisome?  They were built right into those union contracts for years at a time, regardless of market conditions. That was a very large factor in the wage-price spiral

How many Americans belong to a union right now? 

We’ve Seen This Show Before

We’ve Seen This Show Before

Lots of the country has been suffering from blistering heat.

Back in the days before most homes had air conditioning there was one really good way to escape the heat.

The movies.

If you weren’t around in 1947, you, too, may have missed “The Best Years of our Lives” which won multiple Oscars that year, including Best Picture and Best Director for William Wyler.  The story begins with the unceremonious way in which three returning WWII veterans must find their way back to their shared hometown, bonding in the process.  As the story unfolds, the viewer realizes that pre-war life didn’t necessarily dictate war-time rank, and that being a hero in one uniform, might not translate stateside. After watching our essential workers, who were called heroes at the height of the pandemic, it was uncanny to watch a wartime hero strive to earn a living wage once the conflict was over.

While there seems to be no excuse for NOT having seen this movie before, watching it now, as the U.S. is emerging from our battle with Covid, seems eerily fitting.

We’ve all been telling ourselves that never before have we had to deal with such a crazy labor market.  That people have never had to readjust after such a life and death struggle; so many have lost loved ones.  What about those that might never be 100% healthy again? How does our society and business world work around that? What about folks that have skills that are obsolete? How are workers supposed to retrain and reskill yet again? 

Whether you are trying to escape the heat, sit out a rainy weekend, or finally understand why everyone raves about William Wyler and his films, “The Best Years of our Lives” will knock your socks off. 

The U.S. has seen this show before, and after watching this movie, you will feel the resolve that we can get through this again, despite all of our collective wounds.