For perhaps the first time in decades, the mix of current economic conditions is tipping the scales in favor of workers when it comes to the natural square-off of employees versus employers.
A near-record number of available jobs and workers who are demanding more from potential employers has led to critical labor shortage issues in Utah and across the country. Recent polling by the Deseret News shows the issue has spilled over from the business community and is now widely shared by individuals.
Labor economist Lawrence Katz summed it up this way in an interview with the Harvard Gazette last month:
“I think we’ve really met a once-in-a-generation ‘take this job and shove it’ moment,” Katz said.
Americans are continuing to walk away from their jobs at near-record levels as job openings outpace available workers and employers, many of whom are trying to staff up for the start of the busy holiday season, scramble to fill positions.
A report released last week by the U.S. Department of Labor shows wage growth in the three months ending September 30 was the largest in 20 years and up 4.2% over the last 12 months, another record.
With millions of unfilled jobs across the country, employers are being forced to raise wages and offer more perks, like remote work options and schedule flexibility, to potential employees whose bargaining positions have never been better.
Lower-paid workers have seen the biggest gains, with pay rising for employees at restaurants, bars and hotels by 8.1% in the third quarter from a year earlier. For retail workers, it jumped 5.9%.
The healthy increase for disadvantaged workers “is the result of specific policy choices to give workers a better bargaining hand and to ensure the economy recovered faster,” said Mike Konczal, a director at the left-leaning Roosevelt Institute. “The fact that it’s happening is pretty unique.”
The stimulus checks and an extra $300 a week in jobless benefits, which had a federal deadline come up in early September (but ended on June 26 for eligible Utahns) gave those out of work more leverage to demand higher pay, Konczal said. In addition, the Fed’s low interest rate policies helped spur more spending, raising the demand for workers.
In August, there were 10.4 million jobs available, down from the 11 million in July, which was the most in two decades.
Millions of Americans are responding to rising wages by quitting their jobs for better paying positions. In August, nearly 3% of American workers quit their jobs, a record high. A higher number of workers leaving also means companies have to raise pay to keep their employees.
Workers who switch jobs are seeing some of the sharpest income gains in decades. According to the Federal Reserve Bank of Atlanta, in September job-switchers saw their pay jump 5.4% compared with a year earlier. That’s up from just 3.4% in May and the biggest increase in nearly 20 years. For those who stayed in their jobs, pay rose 3.5%.
Katz said it wasn’t clear whether the current power shift favoring job seekers over those offering jobs would be tenable over the long term.
“I think a lot of employers are surprised at how many workers have balked at coming back to the office, the restaurant or other workplaces,” Katz told the Gazette. “What I don’t know is whether employers can hold out and try to restore the pre-pandemic bargain more favorable to employers than to workers.
“The longer people stay out of work, the more their finances will go down, and they’re not going to get stimulus checks again,” he said. “Maybe workers can hold out for six months and then the world will go back to the way it was before the pandemic. Or maybe the current moment reflects a permanent change in people’s values and a change in their willingness to withhold labor supply, individually and collectively.”
Contributing: Associated Press