Luis Alvarez | digital vision | fake images
Employer demand for workers remains historically strong, and that means workers have the power to bargain for better wages, benefits and other aspects of their jobs, according to economists.
There were more than 11.2 million job openings in July, an increase of 199,000 from June, according to a US Department of Labor report released Tuesday.
Job openings are a barometer of the need for workers. The July jump was the first since March, when they reached 11.9 million, a record.
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Additionally, the number of voluntary quits measures the willingness or ability of workers to leave a job and thus serves as another measure of worker power. Most workers who leave voluntarily don’t leave the workforce altogether, but do so for another job, according to economists.
Resignations in July decreased from the previous month by 74,000 to 4.2 million, according to the Labor Department. While it was the fourth straight monthly decline, voluntary quits remain high by historical standards, suggesting the Great Quit trend isn’t over, the economists said.
Meanwhile, the layoff rate was unchanged in July and remains near record lows. The national unemployment rate of 3.5% ties at the beginning of 2020 with the lowest unemployment rate since 1969.
Collectively, workers have ample choice in the job market and “remain in the driver’s seat,” according to AnnElizabeth Konkel, a labor economist at job site Indeed.
“When they have those options, it certainly gives them an advantage,” Konkel said. “Maybe that means negotiating higher pay or flexibility or whatever kind of benefits a job seeker might be interested in.”
Workers have bargaining power
Workers have had that bargaining power since the beginning of 2021. Job vacancies and resignations surged to record levels as Covid-19 vaccines became widely rolled out and the US economy reopened.
Companies raised salaries at the fastest pace in decades to stay competitive in a challenging recruiting environment. That trend was more pronounced for people who changed jobs than those who stayed with their current employer.
However, stubbornly high inflation is pushing the Federal Reserve to raise borrowing costs for individuals and businesses. The central bank is doing it to slow the economy and labor market in an effort to curb rapidly rising consumer prices.
While the labor market remains active for workers, that is not likely to persist, although it is unclear when and to what extent things will cool down.
“As fall approaches, I think we’ll see a slightly different story,” said Elizabeth Crofoot, senior economist at Lightcast, that tracks labor market data.
“The quit rate is going down a little bit… it means workers may be a little hesitant to change jobs than before,” he added.