Can Maslow’s Hierarchy Explain the Great Resignation?

Have your basic needs been met?

In the 1940s, the famed psychologist Abraham Maslow formed his theory of “Hierarchy”, that the major decisions in our lives (school, work, friends, family) were driven by our internal needs. These needs form a pyramid, with the most basic and immediate needs at the base, and our highest aspirations at the peak. We all need that base to survive. Not everyone, however, will climb the entire pyramid to attain the highest level… “self-actualization”.

The theory is that we all want to climb this pyramid. However, economic circumstances (a lost job or bad investment), trauma (family in the death, divorce, etc.), and other life-event can get in the way. Perhaps the rewards at the peak of the pyramid just don’t interest you. Still, there is always an upwards attraction by the rewards offered on the next level.

You may want a new car, a bigger house, or higher status. Most of us will want to ascend, climb, and achieve more. New achievements create bonds with work, school, the community, and your family. These bonds incentivize you to climb, and they support you. This prevents a small slip in your climb from throwing you back to the beginning, at the base of the pyramid.

However, Maslow’s Hierarchy is a product of 1950s American society. It is filled with the assumptions of the “American Dream”. One of those assumptions was that America was the freest nation in the world. Which may have been true, for white males. The aspirations of minorities, women, individuals with disabilities, even seniors were seen in this suburban Dream.

The Hierarchy and the Dream focused on consumer goods, big cars, and big houses. Big corporations and the U.S. government were trusted “partners”. Over the decades, corporate scandals, environmental awareness, and political corruption tainted the Dream. as the American dream faded through the years, the foundation on which Maslow’s pyramid was built, became increasingly less secure.

Do we still have the same beliefs and the same goals? Perhaps the Great Resignation is a result of Maslow’s crumbling foundation and needs more than just better pay and time-off to repair. Let’s dig a little and see what we find…

THE PAY GAP: Corporations, government agencies, and think tanks all attempt to predict employment trends. The Pew Foundation is a think tank that has been very vocal about a coming “labor crisis”, pointing to the stagnant wages of most American workers. Paychecks have become larger, but the real buying power stopped growing in the mid-1960s.

Since 1950 American workers have become 3 times more productive. In the early years after WWII, when productivity rose, so too did worker wages. After all, don’t workers make the goods and provide the services that create profit? But by the 1970s, increases in productivity no longer led to higher wages. If higher efficiency and profit were no longer going to workers, where was the money going?

EXECUTIVES: In the 1950s a CEO was paid 20 times more than the average worker. That is a lot, but not compared to CEOs today. In 2020 CEOs paid themselves 351 times more than the average worker. Did CEOs and executives become that more productive than their 1960s and 1970s counterparts? Probably not.

While executives are taking much more of the profits made in America, independent research shows that higher CEO pay does not result in higher productivity. If consultants made the same finding for lower-level employees… that their productivity did not rise with higher wages… their wages and benefits would immediately be cut. Yet, CEO compensation continues to rise.

WORKERS: During WWII, labor unions helped America win the war. After WWII, corporate America was increasingly uneasy in its “partnership” with labor unions. Corporations argued that outdated union work rules held back efficiency. Corporations wanted to introduce more automation and move work to lower-paying U.S. (and later offshore) locations. Corporations argued that without union interference, they could raise profits, raise worker pay, and offer superior benefits. Unions argued that benefits resulted from their battle against corporate greed, and not from corporate generosity. Take away the unions, they argued, and pay will fall and benefits will be cut.

As stated earlier, Executive pay and corporate profitability became unlinked from worker compensation. This marks a critical shift in the social contract between workers and corporations. Previously, worker productivity was carefully measured and was a critical factor for annual raises and promotions. Now, productivity (efficiency, profits) was almost solely credited to the CEO and a few key executives. Workers became a simple “cost”, like a piece of equipment. The generous bonuses Executives were given for cost reductions increased their conflict with workers. Without unions for protection, individual works had reduced negotiating power, and compensation stagnated.

Unions were already in decline by 1980, when Ronald Regan was elected President, and the Republicans shifted to the political right. Corporations and conservative politicians targeting the elimination of labor unions, and largely succeeded. In the 1950s 40% of jobs were unionized; by 2020 just 9% of workers. Corporations did become more profitable. Executive pay skyrocketed. But promises of higher pay and benefits for workers got lost in the shuffle.

SECURITY: Few workers today believe that hard work will earn them a secure job. COVID was the straw that broke the workforce’s back, but worker security has been falling for many years. Automation, at first, was only effective on the factory floor. But as jobs moved from factories to offices, automation followed.

Technical and political issues have kept most self-driving trucks off public roads, but on private timber roads, mines, and seaports automated trucks are commonplace. Self-driving tractors, harvesters, and heavy equipment are common sites on farms. And of course, the military has been using drones and remotely operated vehicles since the 1990s. Robots are, or soon will be, everywhere.

Peter Drucker was the father of the modern efficiency movement. He once said that if corporate offices were as efficient as farms or factories, we could eliminate 90% of employees. Does it still make sense to go to school for two decades, and get deeply in debt, for a career that may only last a few years? An “investment” in Maslow’s pyramid once offered a guaranteed return. COVID made “Zoom” and “working remotely” a part of our vocabulary. Will the coming round of remote work make our jobs more secure, or will it lead to the largest wage of automation and outsourcing in history?

FAMILY: The family is fundamental to Maslow’s Hierarchy. Americans once believed that a “serious adult” must be married, have children, and own a big house and car. Yet, there are fewer marriages, more divorces, and far fewer children. The traditional family is fading away. Is the workforce too underpaid to afford children? Or is it that two-career households don’t have enough time to manage a career and raise children? Whatever the reason, traditional families are fading away.

Families are also disappearing in Japan. The population has been declining for 15 years, leaving small towns deserted. Dating, intimacy, and marriage are increasingly rare for young workers as they focus on “more important” issues. That may boost their connection to Maslow’s Hierarchy while they are on the lower-lower levels, but without the demands of family, will Japanese workers be as motivated to climb to the top? Or will it even matter? Experts predict that Japan will lose half of its population by the end of this century. Clearly, as families (and the workforce) disappear, a lot of assumptions need to change.

Then, we have China, which rapidly evolved from agriculture to industry, and is now on the way to being a service economy. Overwhelmed young workers are rebelling, choosing “tang ping”, or “lying flat”. Do just enough to live and no more; reject marriage, dating, ambitions at work, and even a place to live. You can always sleep in a 24×7 cafe. That’s even more radical than America’s Great Resignation! Workers see themselves as mere cogs in a machine and have lost motivation. Is Bernie Sanders right… do we need Capitalism 2.0?

ENVIRONMENT: “The American Dream” is a house in the suburbs, a car in the garage, a smiling mother and father, and a couple of children. We didn’t think about pollution from the car, a house made of non-sustainable materials, or if Daddy paid the bills by working in a diverse workplace. We were constantly told that money doesn’t grow on trees, but we never asked if making money could kill all the trees.

Maslow’s pyramid is based on the desire for consumer goods. We now know that it takes more than money to pay for the American Dream. Young workers today talk about a net-zero carbon footprint, living in tiny houses, and of course… electric cars. They don’t trust corporations, and they don’t want to work for a corporation that does not contribute to the overall social good. To hire today’s workforce, corporations need a far more open, support greater diversity, and not destroy the environment…. and provide tangible evidence that this is indeed how they operate.

CONCLUSION?: Pundits are recommending higher pay to retain workers. Some even say that benefits should be offered. All good ideas, but it misses the big point. The old contract between workers and employers is pretty much dead. It has been for years. Unions and worker protections have eroded. Corporations promised a better workplace once unions were gone, but they failed to deliver. And distrust between workers and employers has never been lower.

If we want to get the workforce climbing again, we need three agreements. First, new and more relevant goals for the Pyramid. Even homeless individuals have mobile phones, while well-paid individuals are turning away big suburban homes and gas-guzzling cars. That’s definitely a new Hierarchy. Second, workers want transparency in how their company makes decisions and what happens to the profits it makes. Third, they want a meaningful voice; essentially they want a partnership with their employer. This is a new contract with American corporations. Pay and benefits? If these three changes are honestly pursued, then they should take care of themselves.

What do you think? Tell us how you feel about what it’s like to work today? Or, how you would like your workplace to operate!

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