The recent unrest among workers in China signals a turning point in the evolution of the global economy.  The seemingly endless stream of under-employed labor from the Chinese countryside has finally dried up.  And although most of these newly employed workers have low levels of formal education, they are very tech savvy.  The convergence of these two phenomenon - the depletion of one of the world's largest reserves of under-employed labor, combined with technology-enabled "people power" - is setting off a rapid shift in economic power.

 

Workers who were powerless to protest low wages and harsh working conditions have now gained the upper hand, and they are using technology to communicate instantly among themselves and to the world, gaining concessions on both wages and working conditions.  And there is a contagion to the unrest  - it's spreading quickly across companies and industries.

So it's a new day in China - but it will be a new day for the rest of the world as well.   The changes in the economic calculus in China are bound to reverberate throughout the global economy: increasing cost of goods and most importantly, increasing wages, especially for lower-wage workers.  It might even be that unions in the U.S. will be able to gain back a bit of their former strength.

 

The global ripples won't happen instantly, and may not always be obvious.  But as workers in China gain economic power, so will workers everywhere, as the drag on wages created by the bottomless pool of under-employed Chinese labor over the past several decades has finally begun to dissipate.

 

In the short-run, the impact of this turning point will be mitigated by the huge labor surplus in the developed world that remains in the aftermath of the Great Recession of 2008/2009.  But that won't be the case forever.

 

Smart employers everywhere already know this and will be proactively responding by being vigilant about monitoring and addressing employees' concerns even before the labor market begins to rebound.  And at some point in the not-too-distant future, the rest will be wondering what went wrong.