Management, take notice — employees have the upper hand

 The current labor market heavily favors workers, granting them significant leverage. This is largely due to the extended duration of the U.S. unemployment rate below 4% and the high employment of prime-age workers. With fewer available workers, companies have less influence over their employees, leading to increased real wages and the ability for workers in various sectors to demand raises and negotiate favorable terms. 

The tight labor market has also resulted in a shift in power dynamics, as evidenced by successful union negotiations and workers' ability to secure desirable outcomes through strikes and collective action.

It's important to note that this increased leverage is not universal and may vary by industry. In expanding sectors, workers have greater bargaining power, whereas, in declining industries like media, workers may have reduced influence as companies seek to cut costs. However, the overall trend reflects a notable shift in the balance of power towards workers. 

Additionally, the recent situation at OpenAI serves as a vivid illustration of the rising influence of workers, especially in knowledge-based companies. The employees' collective action successfully achieved their goal and reinforced the value and power of workers, particularly in the highly competitive field of AI.  

U.S. companies have lost momentum in promoting Black professionals into management, according to new data from McKinsey & Co.
After the May 2020 murder of George Floyd set off a national conversation about race, equity, and opportunity, American companies set ambitious goals for advancing Black talent in their ranks. They have made some strides in hiring and promoting more Black professionals, especially at the highest levels of the company; there are now eight Black chief executive officers in the Fortune 500, compared with four in 2020.

Yet on the critical first promotion to management, new McKinsey data now show U.S. companies are no longer promoting Black professionals at the higher rate of a couple of years ago, and have reverted to nearly the same promotion rates for Black staff as in 2019. The downshift suggests that as companies’ focus has shifted to trimming corporate budgets and getting more workers back into offices, many have gotten distracted from earlier commitments to hire and promote more people of color, human resources, and other corporate executives and consultants.
James D. White, board chair of the Honest Co., says the promotion data confirms what he has been hearing from Black professionals. PHOTO: ASHLEY SHOEMAKER
James D. White, the former CEO of Jamba who now serves as board chair of the Honest Co., said the promotion data confirms what he has been hearing from Black professionals. “There is a really dramatic kind of pushback and retreat that I’ve seen in lots of places as it relates to the focus on Black men and Black women in the workforce.”
According to the McKinsey data, for every 100 men of all races promoted into their first management role in 2022, 54 Black women were elevated; in 2021, 96 Black women were promoted for every 100 men, approaching close to parity for a brief time.
First-time promotion rates for Black men have also fallen, dropping to 66 promotions for every 100 men of any race elevated into a first management role in 2022. That is down from 72 Black men promoted for every 100 men in 2021. White men and women, meanwhile, were promoted at relatively high rates consistently between 2019 and 2022.
McKinsey’s analysis included more than 270 companies that, together, employ more than 10 million people. The firm adjusted the population of each group to equal size to compare their rates of promotion.
Corporate diversity, equity, and inclusion efforts have also become the subject of debate—and cost-cutting—as some employees complained that merit alone, not diversity goals, should be used to hire and promote people.
For every 100 men of all races promoted, Black employees were promoted at these rates inthe same yearSource: McKinseyNote: Analysis adjusted the population of each group to equal size in order to compare rates of promotion.
“If you were borderline committed, you’ve just kind of exhaled and retreated,” said Michael C. Bush, chief executive of Great Place to Work, a research and consulting firm, citing culture audits based on questionnaires that his firm receives from the top quartile of the 18,000 companies it surveys each year. The series of questions probes each company’s core values and qualities that elicit trust, pride, and fun.
Just after Floyd’s death in May 2020, top firms said they were focused heavily on equity, recruitment, and promotions for Black men and women, the audits showed. More recent audits show most of the top 25% of companies have stopped making diversity a priority.
The first promotion from an entry-level role into the ranks of management can set a person’s earning trajectory for years to come. Getting left behind in promotions early on also delays future promotions, making it that much harder for Black professionals to eventually ascend to senior roles.
For companies, fewer first-step promotions for Black employees weakens the overall pipeline of future leaders, human resource and other corporate executives say. Other research, including McKinsey’s, has shown lack of advancement opportunities is one of the biggest reasons Black workers leave jobs at higher rates than white employees do.
“When we were paying attention, particularly to the advancement of Black men and women, we were doing better,” said Lareina Yee, a senior partner at McKinsey who co-wrote the study, of businesses’ diversity efforts.
Bosses have recently faced skepticism from some workers about the aims of diversity initiatives, as well as criticism from politicians. By the spring of this year, company executives dialed down their use of certain terms in earnings calls, including “diversity, equity, and inclusion” and “DEI,” by about a third.
Higher up the corporate ladder, the picture is more mixed.
In 2022, Black women were promoted to the executive ranks at a higher rate than all men. For every 100 men promoted into the C-suite, 132 Black women were elevated to those roles, up from 88 Black women promoted for every 100 men in 2021, according to McKinsey’s analysis.
Black women’s promotion rate into the C-suite for 2022 was higher than Black men, white men and white women.
Promotions into the C-suite for Black men in 2022 declined to 74 for every 100 men, down from 130 Black men for every 100 men in 2021, McKinsey said.
Overall Black representation at the C-suite level has been steadily rising since 2020—although still far behind that of white professionals.
Three Black executives were tapped to lead Fortune 500 companies in 2021: Thasunda Brown Duckett at TIAA, David Rawlinson II at 
Qurate Retail
, and Rosalind Brewer at 
, who has since stepped down. In 2022, Franklin Clyburn Jr. was tapped to lead 
International Flavors & Fragrances
 and Calvin Butler took the helm at 
. This year, Christopher Womack took over as Southern Co. CEO, while Toni Townes-Whitley became the CEO of 
Science Applications International
Still, the rising trend line of Black CEOs might be disguising a problem lower down the ladder, said White, the former CEO of Jamba.
“They’re going to seek an opportunity where there’s upward mobility at some other company,” he said.
Since 2020, companies have been focused more on recruiting new hires rather than retaining, training, and promoting existing employees, said Joelle Emerson, chief executive of 
, a provider of consulting services and analytic tools that has worked with organizations including American Express, Grubhub, and the National Football League on their DEI efforts.
“Organizations are filling a leaky bucket,” she said, referring to the hiring and retention of employees of color. “They’re bringing more people in, but those folks are not staying as long and certainly don’t tend to get promoted as quickly.”
Of 148 companies that Paradigm has worked with this year, a third track promotion rates by race and ethnicity, Emerson said: “If we aren’t even measuring these things, we have very little hope of addressing gaps.”
The Supreme Court’s recent decision to ban affirmative action in college admissions is making chief human resources officers nervous about tracking promotion rates by race, Emerson said, citing legal risk.

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