Because there is still a historically high demand for workers from employers, economists believe that employees have the power to bargain for better terms in terms of compensation, benefits, and other facets of their employment.
According to a U.S. survey, there were more than 11.2 million job opportunities in July, up 199,000 from June. Tuesday saw the release of a Department of Labor report.
Job listings serve as a gauge of labor demand. Since they reached approximately 11.9 million in March, the increase in July was the first.
Additionally, the number of voluntary quits is a further indicator of worker power because it reflects employees’ willingness or ability to quit a job. Economists claim that the majority of workers who leave on their own do so in search of another job rather than completely leaving the labor force.
According to the Labor Department, the number of resignations fell by 74,000 to 4.2 million in July from the previous month. Although it was the fourth consecutive month that voluntary quits decreased, they are still high by historical norms, indicating that the Great Resignation trend is still ongoing, according to economists.
The unemployment rate remained low compared to other periods and remained steady in July. Early 2020 saw the lowest level of unemployment since 1969, at 3.5% nationwide.
Considering these options, AnnElizabeth Konkel, a labor economist at the employment site Indeed, claims that workers “remain in the driver’s seat” and have a wide range of options in the job market.
“When they have those choices, it certainly gives them an upper hand,” Konkel said. “Maybe that means negotiating a higher wage or flexibility or whatever types of benefits a job seeker might be interested in.”
Workforce bargaining power
Since the beginning of 2021, workers have had this negotiating ability. With the widespread distribution of Covid-19 vaccinations and the reopening of the US economy, job postings and resignations reached historic highs.
Businesses increased pay at the quickest rate in decades in order to stay competitive in a difficult hiring climate. Compared to people who stayed at their existing employers, the tendency was more obvious for those who were switching occupations.
The Federal Reserve is being forced to increase borrowing costs for both consumers and businesses, nevertheless, as a result of persistently high inflation. In an effort to slow the rate of growth of the economy and the labor market, the central bank is taking these actions.
Although it’s still a hot job market for workers, that’s probably not going to last forever. It’s just a matter of when and how much things will cool off.
“As the fall approaches, I think we’ll see a slightly different story,” Elizabeth Crofoot, a senior economist at Lightcast, a company that monitors labor market information, said.
“The quits rate coming down just a little bit … means workers may be a little more hesitant than before to switch jobs,” she added.