Hourly workers’ leverage remains amid hiring boom
Experts: As conditions stay favorable, bargaining power likely to stay for now
NEW YORK — As inflation skyrockets, hourly workers keep changing jobs in pursuit of higher wages. And with unemployment still near a 50-year low, experts say that option is likely to remain open to them for the near future.
More than 4 million Americans have quit their jobs every month since June 2021, a level never seen before last year. A new Pew Research survey found that about one in five U.S. workers say they are very or somewhat likely to look for a new job in the next six months.
For many workers on the low end of the pay scale, though, inflation has already eaten into or erased any real wage gains, said Brad Hershbein, senior economist at the Upjohn Institute for Employment Research.
In July, hourly earnings rose 0.5%, an increase of 5.2% over the past year — still not enough to keep up with inflation. And sometimes switching jobs may mean earning more while giving up benefits like health insurance or schedule consistency.
Still, hiring is booming — U.S. employers added more than half a million jobs in July, according to the monthly jobs report released Friday — and unemployment remains near a 50-year low, meaning job-switching will likely remain an option at least for the near future.
“One major source of worker power is the implicit threat that you’ll quit your job and take another,” said Heidi Shierholz, president of the liberal Economic Policy Institute.
“When there’s a huge number of job openings at one time, that implicit threat is real,” she said.
That could change if hiring slows and the U.S. economy continues to weaken. But for the moment, “the momentum is still with the worker,” Hershbein said. “We’re not where we were six to 12 months ago — but the labor market remains strong.”
Labor economist Kathryn Edwards of the Rand Corporation said that while hourly pay increases may be attainable right now through job-switching, other benefits — such as regular hours, sick days and health insurance — are often not even on the table.
Workers considering switching for higher wages should also take into account the possibility of “labor hoarding,” where an employer will hire new employees to have on hand, but with no guarantee of regular hours, Edwards said. In these cases, the overall return to a worker changing jobs may be lower.
“Employers bait and switch all the time,” she said.
Some workers would rather stay where they are and push for higher wages. In response to widespread instability in workplace conditions, there has been a marked increase in worker organizing in recent months, Edwards and Shierholz noted.
Union drives are up 58% over the same period last year, according to the National Labor Relations Board, and workers filed nearly 2,000 petitions for representation in the first three quarters of the 2022 fiscal year, including high-profile campaigns at Amazon and Starbucks locations.