On March 20, 2020, Tom Brady, the legendary quarterback of the New England Patriots, now a free agent, signed a two-year $50 million contract with the Tampa Bay Buccaneers. This is free agency. He could get this deal because he is famous – and has a resume that supports the view that he is good. His value can easily be monetized by his employers, past and future.
While we are not all Tom Bradys, most of us have lived in a labor market where we aspired to a similar “free agent” status and built our careers on working toward something like it, perhaps on a slightly smaller scale.
We want to sell our labor to the highest bidder. But first there must be bidders. Generally, there are more bidders in a labor shortage, rather than surplus. That situation may depend on various macroeconomic policies (like expansionary monetary supply) or geographic asymmetries (more jobs in major metro areas than small towns, for instance). It also depends on which economic sector – we hear more about startups in the tech sector and finance sector than in retailing or health care these days.
So, our prospects under free agency are better when fewer people with our skill set are looking for jobs, in places where many employers are seeking people like us, and times when those employers are trying to grow their business. Wages will be “market based” within those parameters. (Don’t expect $50M over two years like Brady!)
In conditions of labor surplus (unemployment), when fewer employers are seeking to add people, and many are looking for work, labor tends to be a commodity. Its cost may be necessary for the business, but if employers can pay less for the same commodity, they will! But, at some point, the supply of labor will contract – perhaps because of skill levels required for the job not matching the available pool, or successful expansion in one geographic area reaching saturation of the pool. This is when free agency results. Labor now becomes capital; you can sell your labor to the highest bidder – by threatening to leave your existing employer or exiting the market for whatever reason.
Young people entering the labor market for the first time are also free agents – if they can show reasonable evidence of in-demand skill level. But their unproven track record presents greater risk to prospective employers. Their bargaining position is not as strong as a more mature job seeker – one with a resume.
Back in the day, workers typically had labor unions to bargain for them. To some extent, escalating skill demands have replaced organized collective bargaining – credentials now fill much of that space. Some see a conspiracy between employers and higher education causing the phenomenon known as “degree inflation.” This may be natural, and we expect educators to plan the course of each generation’s school experience, K-12 on through college and graduate programs, to optimize for anticipated employment demand in future decades. Not an easy task – mid-career retraining will likely always be in the picture if we are to remain free agents!
Organizations are aware that the collective knowledge of their work force gives them something called “intellectual capital.” Intellectual capital can be a competitive weapon in the market. Yet too often the leverage of that intellectual capital is limited to a small leadership clique in any large enterprise. A far greater portion of the labor force is stuck in that commodity realm. This seems to be true in manufacturing, in retailing, even in much of the human services domain. Intellectual property, in law, tends to belong to corporations, not individual creators. You may get a bonus for a patent idea, and add it to your resume, but you likely won’t own it. Contracts with publishers and recording companies often demand signing away rights to your creative work.
As free agents, we must retain ownership of our ideas. Intellectual property should belong to each of us. And we should always seek the best deal possible in any contracts we sign.
Another common strategy corporations use to lower labor costs, in addition to high unemployment and monopoly of intellectual property, is to eliminate jobs through automation; or, these days, artificial intelligence (AI). Any job that a machine can do will cost less than one requiring a human being. All that is needed for advancement in AI is sufficient resources devoted to technology research and development. This tech R&D is done by universities, by government, and by corporate research consortia. If the coming advances are not matched by corresponding changes in mass public education, the effect on labor will clearly be negative. Current assumptions are that the jobs safest from AI are those where key skill sets are emotional rather than rational – touching and feeling, not thinking. New prospects here for powerful free agency bargaining?
Tom Brady was, indeed, a privileged young man. He was identified early (in childhood) as having exceptional potential in certain areas. Then he got lucky. Today he is a multi-millionaire. We don’t all have the privilege behind us that Brady had. Our encounters in life may have missed some of his important interactions. He is an entertainer, primarily. His productivity is based on his proven ability to win contests which are more spectacle than substance. Most of us won’t be so lucky. And we probably can’t devise a bulletproof plan early in life that will propel us to such stardom. All we can do is make maximum use of the resources at our disposal. Most important, Know Thyself! That may be the greatest challenge — to be honest with ourselves. We usually need others to help us find that truth, including those institutions entrusted with our care – education, parental modeling, social interactions, all equally critical.
In the end, some find it easier to become free agents by “dropping out” – don’t work for any employer, but go it alone, sell your ideas by yourself. Start a business. But I submit that relatively few, if they are truly honest, are well-suited to an entrepreneurial path. Most of us need someone else to take care of us, usually an employer.
If it could only be less competitive, more cooperative, we would benefit greatly. Today, many are questioning even Charles Darwin’s original meaning of Natural Selection. It now appears he found species are best ensured of survival, of being the “fittest,” not by doing battle with other members of their species (or tribe), but by finding superior means of cooperation within their cohort … their comrades.
— William Sundwick