Structural Strikes

Econometrics is a study of economic systems using statistical methods. Bored yet?  It uses mathematical models to describe the behavior of an economy.  Most of the time a system behaves in some sort of trending pattern.  Every once in a while, however, there is sufficient change in the pattern which gets described as a structural break.

While there’s probably not enough statistical evidence to call it a true break, there is a disturbance in the labor force.  Have you noticed the number of headlines describing employment strikes growing?  While the full drama of a Hollywood strike a few weeks ago never materialized, the script was being written.  Similarly, the ending to a strike at a major tractor manufacturer has not been inked just yet.  There’s even an ongoing labor dispute in Battle Creek, Michigan as Tony the Tiger’s coworkers are unhappy with their labor contract; this plant hasn’t experienced a worker uprising since 1972 and workers have rejected offers that some might describe as Grrreat!. 

Structural breaks are statistical phenomena.  On their own, they don’t offer qualitative information.  So while we wait for more data to materialize and confirm whether or not a permanent change is afoot, a narrative is starting to emerge.  Here in America, the Great Resignation moniker for the current era in the jobs market is gaining popularity.  This nickname describes a nation with over 10 million unfilled jobs and 4.2 million fewer people working than in February of last year. 

Time will tell if the power balance between labor and capital is experiencing a true shift, but this study from Harvard Business Review has started quantifying things.  As it turns out, resignation rates among those 25-60 years old have increased in some cases as much as 20 percent between 2020 and 2021.  However, groups both younger and older are resigning at a slower rate.

It’s probably too early to confidently suggest a new equilibrium is being reached between labor and capital, but there is a growing number of anecdotes.  If enough of these stories develop, statisticians will pick them up in their mathematical models.  Journeys from short-lived anomalies to statistically significant structural breaks can be long-term in the making but may end in new paradigms with potentially generational durations once they take hold.