Employer and Employee: Power and Risk

14 July 2021

This article attempts to highlight how the current power dynamic between employer and employee leaves employees vulnerable to the most amount of risk in the U.S. workforce.

Terms of Employment

The terms of employment at any job are often looked at as a two-way agreement to work. Anyone is "free" to negotiate or turn down a job offer and seek a new one. Let's walk through the typical employment process and see what comes up.

Once a candidate has applied and interviewed for a position, the employer presents their potential employee with a job offer which outlines the terms of employment. An employee has the ability to negotiate their terms of employment, including wages, in the small window of time between when they receive the job offer, and when they officially accept or deny it.

Let's look at wages first. Wages are typically competitive, which means that wages usually match the competition for similar positions within a specific field of industry and are impacted by supply of workers and demand for work. Aside from the federal minimum wage (and states that have higher wages), there are no restrictions for the amount of wages being paid.

Once wages are determined at time of hire, they generally only go up in the case of raises. Average raises for 2020 were reported at 2.6% for 2020, a 0.3% drop from 2019. Employers are not required to give raises.

U.S. employees typically cannot re-negotiate their salary after hire. In this way, employees become 'locked in' at the initial rate and will only significantly increase if the employee receives a promotion to a new position or finds a different job.

Here is where the power imbalance lies: depending on the severity of need for a job (and its benefits), it becomes a risk for the employee to boldly negotiate salary. This is because the employers may rescind a job offer at any time for any reason. In dire times, this can be too big of a risk to take.

This imbalance draws from the fact that individuals are usually more desperate for work (to pay their bills) than businesses are for workers. While employers work on hiring a new employee, nothing is stopping them from re-routing that work onto an existing employee until the position is filled.

Let's also look at health insurance benefits. In the 1940s, the government incentivized employers to offer health insurance to workers. Workplace health insurance is typically cheaper than an individual health plan. This is because most insurers and health plans require employers to cover at least half of the premium cost for employees.

Without workplace health insurance, individuals must pay for premiums out-of-pocket when insured on an individual-level plan. This makes workplace health insurance more affordable than private insurance, and ties employee's reliance on job stability directly to cost of healthcare. No law directly requires employers to provide health care coverage to their employees.

Anyone who has paid for medical care without insurance knows how much higher the cost medical procedures and hospital bills are. In this way, affordable health insurance is used as an incentive to work - but only if the job being applied for offers such benefits at all.

This can result in someone hastily accepting a job that they don't want, at a wage that they don't feel is fair, in order to be guaranteed health insurance at an affordable cost.

At-Will Employment

Employment is presumed to be “at-will” in all U.S. states except Montana. At-will employment means that an employer can terminate an employee at any time for any reason, except an illegal one, or for no reason without incurring legal liability. Likewise, an employee is free to leave a job at any time for any or no reason with no adverse legal consequences.

At-will means that an employer can change the terms of the employment relationship with no notice and no consequences. The National Conference of State Legislatures points out, "in its unadulterated form, the U.S. at-will rule leaves employees vulnerable to arbitrary and sudden dismissal, a limited or on-call work schedule depending on the employer’s needs, and unannounced cuts in pay and benefits. Most countries throughout the world allow employers to dismiss employees only for cause."

Being fired at any time for any reason sounds bad enough, but unannounced cuts in pay and benefits? What about those employment terms both parties agreed to, which states pay and benefits? U.S. employers have the power to change this at any time. Regarding pay cuts, employers are only required to notify their employees of such a change before the employee works at least one hour at the new reduced rate.

At-will employment is often spun as being mutually beneficial for both the employer and the employee. This is because the employee has the ability and choice to leave at any time with no reason, with no adverse legal consequences.

Quitting vs. Being Fired or "Let Go"

Another glaring inequality between the employer and the employee is the expectation to give at least two weeks' notice when quitting a job. Employees who fail to do this might forfeit a good reference from this company for future employment, or risk hurting their professional reputation.

On the other hand, if an employer decides to let their employee go, there is typically little-to-no advance notice, and the employee holds limited power to retaliate against this action unless it can be proved that termination was a result of discrimination.

Changing Jobs

There may be no legal consequences for quitting a job to find a new one, but there are many other risks involved in doing so.

  • Companies can impose a 30-day to a 365-day waiting period before health coverage begins for an employee at a new job. This can leave a fully employed worker without health insurance for up to a year, requiring them to pay out-of-pocket individual insurance, take Continuation of Health Coverage (COBRA) from a previous workplace (if available), or simply go uninsured.
  • Some jobs require employees to sign non-compete clauses in specialized fields (such as in the tech industry) which makes it difficult to find a job with a comparative role in the same industry for a certain period of time.
  • If someone is leaving a job, they might be unhappy with elements of their current job beyond wages and benefits. Before actually changing jobs and working at the new one, it is difficult to tell if the change will be better or worse.
  • It is generally frowned upon by employers to discover that a prospective employee has a history of changing jobs - even if that history can be justified.

Labor Unions

Labor unions were created in order to protect employees by attempting to level the ground between employers and employees. Unions help workers with work-related difficulties such as low pay, unsafe or unsanitary working conditions and long hours. Unfortunately, the U.S. workforce has a history of going above and beyond to scare workers out of unionizing. In fact, U.S. employers were charged with violating federal law in 41.5% of all union election campaigns in 2016 and 2017.

Propaganda discouraging labor unions has been woven in to the fabric of the U.S. workforce itself. This results in the majority of employees lacking the power to truly fight for their best interest, in fear of retaliation.

Related Links:

Understanding the Anti-Union Industry

What Are the Arguments Against Unionizing?

Playlist of Anti-Union Propaganda Videos