The Disturbing New Labor Trend: Skilljacking

Skilljacking Image From Unsplashed

by Mortimer Durst | MetroWire Syndication and Ordinary Business Journal

Over the past year, employers from across the country have discovered a disturbing new labor trend: Employees are demanding higher pay as they accrue experience and more skills. Companies are also reporting that when they do not accede to these demands, they are at risk of losing their most valuable and experience personnel. The term for this phenomenon is “skilljacking”.

One can imagine why an employee might believe it’s a good idea to leverage of skills and experience to demand more in wages, but this strategy comes with a number of pitfalls that workers may not realize and can ultimately be to the detriment of everyone. “Balancing our bottom like is already a delicate balancing act. What they need to understand is that we need to remain viable for them to have a job at all,” explains John White, Vice President of personnel at 20th Century Services, Inc.

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“Are we supposed to raise our prices every time one of them wants to put the screws to us? We have already had to raise our prices three times in the last quarter just to keep up with the increasing costs of essentials,” explained Mike Johnson of Basic Foods. “Maintaining consistency on personnel costs really ought to be one way we can try to offset the rising prices of everything else. It should be everyone’s priority.”

“Wage increases go hand in hand with inflation,” explained Brooklyn Institute labor economics Jerry Wickhelm. “Wages go up, prices go up, wages go up, prices go up, and so on. The best way for businesses stop this vicious cycle is to contain personnel costs. But when companies try it seems like workers respond by expecting the wage fairy to show up or something. I don’t know what they expect to happen, frankly.”

When employees are originally hired, Mike Johnson explains, they sign an employment agreement with specified wages and job description. If they come back to the employer and demand more money they are seeking to breach the agreement that they signed. They are essentially using the very skills they learned on the job to extract more money from the employer. Johnson says that’s extortion and his company won’t tolerate it for any longer than they have to. “When they ask for an increase in pay, they are implicitly suggesting that they are willing to leave if they don’t get it. Why even give them those skills? And who wants to invest in an employee that might leave?”

“To add insult to injury,” Johnson says, “they only have those skills and that experience because of the opportunity we gave them. And now they turn back and want to us to pay more for the skills we gave them in the first place? It’s galling.”

Wickhelm agrees. “It would be one thing if they could offer to do a better job for this extra money, but employees usually report that they are already doing a better job. So on what basis should employers start paying them to do more to do the same job they’ve been doing. And if they’re holding back, the employer has a case for theft because they’re taking the employer’s money and not giving it everything they can. We haven’t seen courts embrace this logic yet, but we’re likely to see more and more of it going forward if people keep expecting more money to come to into work.”

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Not only is requesting higher pay itself risky, but industry experts say getting that pay could itself come back to haunt the employee when it comes to layoffs because so-called “skilljackers” also run the risk of putting themselves in the front of the line when layoffs happen. When employers need to make cuts, they naturally look towards the higher paid employees below the executive level and that puts these employees directly in the crosshairs. “When I see two employees in equivalent positions at different payscales, it would be irresponsible to keep on the employee that is costing us more money. There’s no reason I can think of why that would be beneficial,” Molly Hoffman, Chief Operations Office at Essential Innovations explains.

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Another risk to skilljacking comes when they look for work elsewhere. John White of 20th Century explains, “When I see someone who worked at a company starting at one wage and leaving with another, it’s rather clear what happened and what they did to get that extra money. If they extorted their former employer, will they extort from us as well as they gain experience on the job, learn our systems, and integrate themselves into our operations? I just don’t think they realize how bad that looks.”

Mike Johnson agrees. “Sure, it’s tempting to freeload off the skills their previous employers gave them, but it’s a matter of ethics. They’ve made clear the kind of unreliable person they are. Why do that when we could just hire somebody with no experience, lock them in at an entry level wage, and then try keep them there indefinitely? Those are the people we want, and to get them we’re willing to let those jobs remain open and have our remaining workers take on additional responsibilities as long as we have to in order to cover temporary shortages.”

“So long as they don’t use it to ask for more money,” he quickly added.

{Will Truman contributed to this report}