Employment relationships are based on an exchange of value. Jane provides products and services to her employer, Phil, in exchange for money. Phil provides money to Jane in exchange for her products and services. (There may be other values involved, such as an opportunity for Jane to do interesting work, but let's keep this simple.) The exchange works as long each party values what they receive at least slightly more than what they give.
If one party or the other is not gaining in the exchange, either can choose (among other options) to end the employment. If Jane isn't satisfied that the money is worth her time and energy, she can leave the company. If Phil isn't satisfied that Jane's products and services are worth the money, he can fire Jane. These choices give each party power with the other. Each has control of something the other wants, and the choice of whether to provide or withhold it. As long as the value they provide each other is reasonably similar, each party has similar power in the relationship.
Though Phil and Jane each have equal choice about continuing the employment relationship, there is a factor that swings power in the direction of the employer: aggregation.
Aggregation is one of the fundamental survival strategies of living systems (and non-living systems, too). An aggregate is a system that is made up of a critical number of more or less uniform pieces. A colony of ants is an aggregate made up of more or less uniform ants.
The power of aggregation as a survival strategy comes largely from what Jerry and Dani Weinberg, in their brilliant book General Principles of Systems Design , call The First Law of Aggregates: When it comes to survival, aggregates outlive their worst members. If the weakest ant dies, the colony survives.
Aggregates abound in living systems. A sea turtle lays hundreds (or is it thousands?) of eggs. If only one of her eggs survives to produce offspring of its own, her lineage survives the death of thousands. If none of her eggs survives, thousands of other sea turtles are laying eggs. If enough of their offspring survive, the species continues despite the deaths of millions.
That is the power of aggregation. That power is based in massive redundancy.
Human engineers use the power of aggregation when they build technical systems. The lighting for a football or baseball stadium, for example, consists of a dozen banks of lights, each bank including dozens of bulbs. If one bulb burns out, the light from the bank diminishes slightly. Suppose that instead of banks, a stadium were lit by twelve enormous, high-intensity bulb. The failure of a single bulb would reduce the quality of lighting significantly, perhaps putting the safety of the players at risk. In addition to survival, aggregation helps systems to degrade gracefully rather than catastrophically.
Organizations tap the power of aggregation. Phil has lots of employees in addition to Jane. If Jane decides to leave the company, the performance of Phil's group will decrease, but not collapse.
Jane, on the other hand, is less likely to have aggregation on her side. Where Phil has lots of employees providing products and services, Jane has a single source of income. If Phil decides to fire Jane, she will lose that single source. Where Phil may suffer a bearable loss of production, Jane suffers a possibly catastrophic loss of income.
Now, Jane may have a few aggregates of her own. She may have three other companies bidding to hire her. She may have a home business on the side. She may have a husband with income. She may have a small fortune in the bank. She may have a large pile of stock options, giving her what Silicon Valley engineers in the dot com boom called "fuck you money." If she has these things, her income (or wealth) may degrade merely significantly instead of catastrophically.
It is rare for employees to have aggregates that match those of their employers. Aggregation tips the balance of power in favor of employers. Aggregation is the mechanism that creates the imbalance of power between employers and employees.