Where Does the Power Lie in the Employer-Employee Relationship?

In the tug-of-war of who has the upper hand in the U.S. labor market — employers or employees — many observers and participants believe the power today is largely back with employers.

The days of the Great Resignation, “quiet quitting,” labor shortages and heightened workplace flexibility (i.e., remote work) may be at least partially in the rear view, as the workplace atmosphere shifts in the face of economic uncertainty — even amid continued job growth and low unemployment.

“As hiring slows, wage growth stabilizes and economic uncertainty looms, employers are regaining some of that control,” said Amy Mosher, the chief people officer at human capital management and benefits services company isolved. “Companies are being more selective in hiring, workplace policies are normalizing post-pandemic and many businesses are prioritizing operational efficiency over aggressive expansion. These factors contribute to the perception that the balance of power is tilting back toward employers.”

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Employers May Have More Power. Can They Use It Wisely?

Among HR leaders surveyed by isolved, 65% said they believe the power is shifting back to the employer — making workers more cautious and giving employers more leverage and, in some cases, resulting in businesses extending less flexibility and fewer incentives to job seekers.

The effects of that shift on total rewards (TR) practitioners, according to those surveyed, include a greater focus on efficiency and cost savings with an eye toward business priorities over workers’ well-being.

“While the post-pandemic trend has generally shifted power from employees back toward employers, the dynamic today appears to be more balanced, with both sides holding relatively equal influence in many sectors.”
— Sue Holloway, compensation content director, WorldatWork

Who Holds the Power? It Depends on Whom You Ask.

The answer to the question “who has the power today?” will almost always vary by industry, individual business and who’s being asked. For instance, when the Society for Human Resource Management (SHRM) explored the employer-employee power balance in a 2024 survey, 57% of polled HR leaders said the power was strongly or moderately in the hands of employees, while just 18% of workers and 13% of unemployed job seekers said the same.

Experts warn against painting a broad-strokes, black-and-white picture that puts such power solely on one side or the other.

“Much of the story about return to office [RTO] and employee-employer disagreements has always focused on the most prominent employers and the biggest cities,” said Liz Supinski, the director of research and insights at WorldatWork.

She noted that smaller cities, whose workers traditionally have had fewer work-from-home opportunities, had returned to pre-pandemic levels of in-office work by mid-2022.

“While the post-pandemic trend has generally shifted power from employees back toward employers, the dynamic today appears to be more balanced, with both sides holding relatively equal influence in many sectors,” said Sue Holloway, a compensation content director at WorldatWork. “There can be sectors with notable variations like the federal government, which now holds considerable employer power due to the restructuring, significant job cuts and layoffs across federal agencies. And in highly specialized or some tech-driven roles, employees still hold considerable bargaining power.”

“TR professionals are in a delicate position. On one hand, they must support cost-cutting initiatives to ensure financial sustainability; on the other, they must maintain programs that foster engagement and retention.”
— Amy Mosher, chief people officer, isolved

When Your Workers Are Feeling the Pinch

Many workers are sensing a shift, with employee confidence dragging in early 2025, according to research from Glassdoor. Among employees new to the workforce, their optimism related to their employment stability and business in general for the next six months hit a record low in March.

Rather than large-scale staff cuts, indications of a shift may bear itself out in:

A reduction in benefits such as mental health programs, college-tuition reimbursement and unlimited parental leave.
Fewer perks like free financial advice, paid volunteer hours and pet sick days.
A pullback of in-office amenities such as treat-filled kitchens, free meals and on-site baristas.
Reduced convenience-geared perks like commuting reimbursements and free laundry services.
More-conservative salary budgets and lower bonuses.

These changes have led many HR practitioners to feel as though they need to prioritize operational efficiency and cost savings over creatively and generously investing in employee retention and attraction.

This poses a dilemma: How can TR professionals uphold top-down directives to trim HR costs while ensuring they don’t see top corporate talent exit or see worker engagement take a tumble?

“TR professionals are in a delicate position,” Mosher said. “On one hand, they must support cost-cutting initiatives to ensure financial sustainability; on the other, they must maintain programs that foster engagement and retention. To strike this balance, TR leaders should emphasize personalized benefits, optimize rewards structures and invest in programs with measurable ROI [return on investment] — such as career growth opportunities and well-being initiatives.”

Don’t make the mistake of slashing rewards initiatives too aggressively, warned Robert Greene, the CEO of HR consulting company Rewards Systems, Inc.

“When you focus totally on efficiency, you forget about effectiveness,” he said. “Blindly saying you’re going to reduce your workforce costs may not be the best thing that’s ever happened to you if it destroys your effectiveness. Companies are trying to zero in on a micro level rather than a more aggregate or strategic level. Think about what business processes you can change or re-engineer to become more efficient and effective. What implications will that have on the way you do things, and what implications will doing things that way have on your workforce needs?”

Editor’s Note: Additional Content

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