Low unemployment sounds great. But it also means newer workers who do a lesser job of keeping customers satisfied. And unhappy customers turn into unhappy voters, according to a recent opinion article penned by a pair of Eli Broad College of Business experts.
“If the past is indeed prolog, the American economy may find itself with a bevy of less-happy, irritable and frustrated consumers – and voters – over the past few months,” Forrest Morgeson and Tomas Hult wrote recently in the Hill, an influential Washington, D.C. newspaper focused on national politics.
Morgeson, an instructor in the Department of Marketing, is director of research at the American Customer Satisfaction Index in Ann Arbor. Hult is the Byington Endowed Chair in the Department of Marketing and director of the International Business Center.
The torrid economy has dropped unemployment to its lowest rate in almost two decades, resulting in free-spending and happier customers. But it’s also created a tighter labor market with many workers looking to upgrade their roles: a record of nearly 3.6 million Americans quit their jobs in July, Morgeson and Hult wrote.
“This is where things get tricky and less positive. The intersection of customer satisfaction and macroeconomics and politics has potential bullwhip effects,” Morgeson and Hult wrote. “When the unemployment rate dips and many workers switch jobs, data from the American Customer Satisfaction Index show that the effect can be a negative to customer service, customer satisfaction, and to economic growth.”
That’s because many of those revolving-door jobs are customer-facing in nature, like those in retail, restaurants, and call centers, where replacements are less experienced yet the front door sentries of the business.
“Low unemployment rates and job switching result in eroding customer service for many companies across many industries,” Morgeson and Hult wrote. “If customer service erodes enough, the consequence is also a dip in customer satisfaction. This often causes consumers to hold on to their wallets more tightly, slowing down the pace of economic growth.”
How soon may such a slowdown happen? The latter part of this year is Morgeson’s and Hult’s estimate. “Of course, angry consumers are not what the Trump White House, policymakers, or companies hope to see for the balance of the year,” the pair wrote. “After all, midterm elections are approaching, and the critical holiday shopping season is on the horizon.”
What may negate these negative effects to some extent are new economy traits. “Dramatic improvement in training programs and automation in various industries have helped certain customer-facing positions,” the pair wrote. “So, advanced companies can soften the blow of the glut of new, inexperienced employees across the country.”