For now, workers have upper hand
Labor market nearly strongest in 50 years
Over a 20-year career in the heating, ventilation and air conditioning industry, Joey Dooley has hired plenty of people — but not as many as he’d like. Especially lately.
“I don’t think it’s ever been harder to find qualified people,” said Dooley, general manager for the North Houston location of ARS/Rescue Rooter, a national chain based in Memphis, Tenn. “I really do not think that I’ve ever seen it this hard.”
Many Houston-area employers can relate. Just a little more than two years after the economy crashed amid pandemic lockdowns and millions of workers lost jobs, the labor market is as strong as it has been in 50 years. Job openings far exceed the number of unemployed, and workers are regaining bargaining power lost to employers over three decades of globalization, declining union membership and economic dislocation.
On this Labor Day, national unemployment stands at 3.7 percent, after U.S. employers added 315,000 jobs in August. Wages are rising at the fastest pace since the 1980s. Union activity and support are rebounding, even in right-to-work states. And employers are improving benefits and working conditions to meet employee’s demands for flexibility and more life in the work-life balance.
“Certainly at some point the labor market will soften, but I think that we’ve seen a permanent shift from firms to workers,” says Gus Faucher, chief economist for the PNC Financial Services Group. “Things are different now than they were before the pandemic.”
In Texas and Houston, unemployment is running higher than the national average — the result of a growing labor force — but overall employment is hitting re
cord highs month after month. Jobs in both the state and the region are growing at a torrid 6 percent rate, far faster than the national rate of 4 percent.
“If you want a job, you should be able to find one in this town, and find it pretty quickly and pretty easily,” said Patrick Jankowski, senior vice president for research at the Greater Houston Partnership. “Anytime the unemployment rate is under 5 percent, that’s a very tight market. It means that the power is with the employee, not the employer.”
All the same, the future is growing increasingly uncertain. Inflation — 8.5 percent in July — is rising faster than wages, undermining workers’ purchasing power and squeezing household budgets as families pay more for food, utilities and transportation.
The risks of recession also are rising as the Federal Reserve aggressively raises interest rates to fight inflation by increasing borrowing costs, curbing spending and slowing the economy. Fed Chairman Jerome Powell recently conceded that the central bank’s policies will bring economic pain and job losses for Americans even if a recession is avoided.
A tenuous economy
The pandemic, which began with U.S. unemployment at 50year lows, showed how quickly the fortunes of workers can change. Millions of Americans lost jobs practically overnight as businesses shuttered and fearful customers stayed away. The unemployment rate spiked to 14.7 percent in April 2002
Even with the strong recovery, the economy remains tenuous today for many workers, particularly those in low-wage occupations.
Deborah Lewis, 63, likes her job as a baker for Sodexo at Texas Southern University, which she’s held since 2009. She has a good relationship with her executive chef and managers, and enjoys seeing students smile when she gives them a piece of cake or a freshly-baked cookie.
Still, she had started looking for another job before her union successfully negotiated a new contract earlier this year, which
will put workers on a path to earning $15 an hour over the next three years — a 3 percent raise this year, in her case.
Even under the new contract, she reckoned, she’ll still live paycheck to paycheck, especially with the price of chicken doubling and the cost of filling up her car running about $60 a week. She says management should realize that employees—“the people that make them money” — are in this situation.
“We’re not asking to get rich,” Lewis said. “We’re asking to be able to pay our bills — to be able to feed our children, buy their school clothes, keep a roof over their heads.”
Atypical recovery
The post-pandemic recovery hasn’t been typical. Employers across industries stampeded to hire en masse when the economy reopened, putting workers in the driver’s seat at a moment when federal stimulus packages had padded their budgets, enabling them to be choosier. Some were already, as a result of the pandemic, re-evaluating their priorities.
Many employers were left exasperated, grousing about a “Great Resignation” among American workers after the economy reopened; the nation’s
job quit rate rose to 3 percent by the end of 2021, a record.
But in hindsight, the “Great Resignation” might have been overstated, said Parker Harvey, principal economist at Workforce Development, a regional workforce development agency.
“It seemed to be construed that people were just quitting jobs and quitting working altogether, when the reality is people were just switching jobs,” Harvey said, noting: “Typically, most people can’t afford not to work.”
With overall employment now exceeding its pre-pandemic peak, it’s hard to make the case
for a large-scale rejection of work among American workers. Employers may, instead, be encountering workers no longer resigned to the wages, hours, and working conditions they might have accepted previously, analysts said.
The shift can be seen in a resurgence of interest in unions. Even in right-to-work states such as Texas — which has one of the lowest rates of unionized employees in the country — workers are showing an increased interest in organizing. A Starbucks in Houston’s Upper Kirby neighborhood could become the area’s first unionized outpost of the global chain.
New polling from Gallup found that 71 percent of Americans approve of labor unions — the highest approval rating Gallup has found on this question since 1965, and up from just 48 percent who said the same in 2009, during the Great Recession.
Jajuan Coleman, 37, began working as a wheelchair attendant at Houston’s Hobby Airport in February, after moving from Gary, Ind., where he worked in security at a Hard Rock Café. He likes the work at the airport, he said, and appreciates being a union member, a new experience for him.
But Coleman, who earns $14 an hour, also has his eye on other opportunities. He knows he has options in this labor market.
“I have looked for other jobs,” Coleman said, “because I would like to make more money for my work.”
‘A different world out there’
Even with the threat of recession, economists don’t see the job market deteriorating over the next several months. After struggling to hire workers, employers are unlikely to let them go easily — even in a downturn, economists said.
Nor do economists expect workers to lose all their clout or give up gains in working conditions, such as flexible schedules that allow them to work at home at least part of the time — a top priority for working parents, in particular, experts note.
“It is a different world out there,” said Faucher. “Employers can try to push against it, but they’re going to have big problems if they do.”
Dooley, for his part, isn’t counting on an economic slowdown to ease his hiring woes. ARS recently partnered with UpSmith, a Dallas startup, to develop an eight-week-long HVAC technician training program, in which participants will be paid as they learn the skills they need.
And even in the current labor market, Dooley said, the program has piqued some interest. The first class will have slots for several dozen people; already, several hundred people have applied.