U.S. workers rush to take advantage of pandemic bargaining power
A pandemic strained labor market has given willing and able workers more advantages over their employers for the first time in generations. As workers try to take advantage of this rare moment of opportunity, economists are less convinced.
Worker power is the ability of an employee to demand higher wages and benefits and to set conditions regarding their working conditions. Since the 1950s, the power of workers has generally declined as the power of corporations and shareholders increased and union strength declined.
But now the country has the most job vacancies since the Bureau of Labor Statistics started tracking data in December 2000. There were 10.1 million job vacancies registered at the end of June. This means that for every 100 jobs available, there are only 94 unemployed people available.
“We believe that workers’ power is essentially where the balance of power lies in the working relationship between employee and worker,” said Anna Stansbury, labor economist and assistant professor of labor studies. work and organization at MIT Sloan School of Management. . “People might be thinking: How much leverage do I have to ask for a raise? Or say no if my boss asked me to do something that I think is dangerous? “
“To a certain extent, it’s a zero-sum game,” she added, meaning “if one goes up… the other goes down”.
Before the pandemic, the workforce was already starting to favor workers.
“We had a tightening labor market before the crisis, and the war for talent was already resuming,” Diane Swonk, chief economist at consultancy Grant Thorton, said in an email. “By limiting supply and stimulating demand, we have put the entire labor market on steroids.”
But the new power is unevenly distributed.
“The dynamics of wages and the power of workers depend on which side of the job shock you fall,” said Anu Madgavkar, partner of the McKinsey Global Institute.
While wage growth has benefited all workers, more skilled workers with technical skills that can be used remotely have gained autonomy and market power and have broadened the geographic range of potential employers.
Unemployed people in areas most at risk of Covid-19 shutdown that rely on face-to-face contact, such as retail, dining, entertainment and travel, should focus on ‘life-proof’ skills. time, ”analysts said. According to research by McKinsey.
In this stronger labor market, it is often up to the workers to be the pivot. Ariana Garcia, 27, was twice laid off and fired in retail and beauty in 2020 due to the pandemic. A single mother, she found herself unemployed for the first time in her life and did not know how she would earn her rent.
“I didn’t feel that returning to retail was necessarily the safest or the most stable idea,” Garcia said. She said she had started to think about how she could leverage her staff, problem-solving and computer skills.
Garcia got a job as a school administrative assistant and invested over $ 2,500 to get her real estate license and sign with a local brokerage. She still does freelance work helping clients with makeup on weekends.
She said her new job pays less, but is more stable and offers better benefits. For the first time in her life, she says, she can say that she is not feeling well and that she cannot come to work. Previously, her colleagues and managers would have offered her water, a dazzling smile and encouraged her to “force it through”.
Garcia said she believes the new power of workers is here to stay.
“I’m okay with going to work for 9 to 5. But does 9 to 5 work for me too?” Is it good for my mind? Is he paying me enough? Do I have any benefits to provide for my family? Garcia said. “If it’s a workplace that isn’t willing to provide that, we’re not going to work there.
High-performing workers who can do their jobs by phone and computer were also able to negotiate permanent relocations during the pandemic, providing them with a lower cost of living and a better quality of life.
Tom Turnquist, 50, a hotel supply salesman, convinced his employer to let him move from Colorado to Arizona, where he moved into a four-bedroom house with a yard.
He turned the time he saved from wasting a commute and workplace distractions into higher productivity and sales. Three months after his move, management was initially suspicious, he got a call from the owner of the company, congratulating him on the great job he was doing.
“I think there might just be an institutional mindset that management could have… it’s been like this for decades, where we all walk into an office, and that’s how we do our work. work and our work, ”said Turnquist. “But I think, not only in my case, a lot of people over the past year and a half have proven that not only remote working is possible, but that it can be successful.”
There is a split in the market as more skilled workers reap more benefits from pandemic change, while less skilled workers receive less or even fall further behind, economic experts find.
“Measured by hourly wages, the hourly ‘power’ of workers has increased dramatically,” Daniel Alpert, managing partner at Westwood Capital and senior financial macroeconomics researcher at Cornell Law School, said in an email. “Measured by the hours offered to hourly workers in low-wage industries such as leisure and hospitality, retail, not so much.”
“Restaurants, especially the limited service and fast food restaurants, only want staff during peak hours and are under-resourced the rest of the time. This was not the case in the middle of the 20th century, ”he said.
Connie Carbno, 56, is an unemployed fast food restaurant worker in the small rural town of New Boston, Texas. She lost her job after her manager learned during the pandemic that they could get by with three employees instead of seven. Fast food outlets that raised wages are 30 miles away, where she faces more. competition for jobs.
“The main employer is Walmart, which is a fight because it’s the only company that pays more than minimum wage,” she said at just $ 7.25 an hour. “My bills have been prepaid, but it ends next month. So I hope to find a job as soon as possible.
Long term trends
Some economists are skeptical that part of the new labor force is permanent. Worker protection policies, unions and standards of fairness did not strengthen much during the pandemic.
“We have a kind of tight labor market in the very short term that adds to a still not tight labor market in a more systemic sense,” Stansbury said.
Other economists see long-term headwinds in the labor force working in favor of workers, like a wave of retired baby boomers reducing the supply of workers. The hoped-for “fall rush” of employees will likely be a trickle, especially as concerns about the Delta increase.
“The labor shortages linked to the pandemic will not be resolved overnight, even when the expanded unemployment benefits end,” said Julia Pollak, labor economist for the job site ZipRecruiter, in an email. And employers who need on-site workers will find it difficult as employees move to industries with more remote jobs available.
“The surprising development since the pandemic is not so much that we are witnessing a new transfer of power to the workers,” she added, “but rather that the change that was already underway has picked up and even accelerated . “