Sign up to myFT Daily Digest to be the first to know about US employment news.
Becoming a real estate appraiser in the US normally requires dozens of hours of specialised training. But Roland Statulevicius managed to land a job in February with nothing more than a certificate from an online course.
Statulevicius, 58, was laid off from his previous job at a car dealership near Chicago during the pandemic, and his new role is a step up in pay and prospects. “Now there are possibilities everywhere,” he said.
He is one player in a profound shift under way in the US labour market, where American employers have historically been able to dictate terms to their workers.
But now companies are desperate to hire staff as continuing fears about the pandemic, a lack of childcare, and a temporary expansion of unemployment benefits have kept many workers on the sidelines. That means people looking for work hold more bargaining power with prospective employers than they have in decades.
“There have only been a few points in history when labour had the upper hand in negotiations with their employers and that goes to why the wealth distribution has gotten so skewed in the last three or four decades,” said Mark Zandi, chief economist at Moody’s Analytics.
“There was a brief moment before the financial crisis where wage growth was picking up, and there was a moment around Y2K that got nailed by the collapse of the stock market, and then you go back to the 1960s,” Zandi added.
Workers are using their newfound leverage to demand higher salaries and to prod employers into hiring and training them for jobs even when they lack experience.
The share of employers willing to provide job training to workers was 1.7 per cent last month, according to labour analytics software maker Burning Glass. That might not sound like a lot, but it is a 49 per cent jump compared with the same month of 2019. Less than one per cent of openings for utility company technicians said they were willing to train inexperienced employees in 2019, Burning Glass found. Now, nearly 15 per cent do.
Among them is Statulevicius’ new employer, Chicago-based PahRoo Appraisal & Consultancy, which agreed to put him through the additional training he needed to become a licensed appraiser.
PahRoo owner Michael Hobbs said he had never hired anyone with less than five years of experience in real estate until Statulevicius. But he was forced to drop that requirement following a “fire hose” of client requests and an empty candidate pool because of the Covid crisis.
“In the past, I had a pretty fixed view of the world and who we would hire,” Hobbs said. “Fast forward to today, it’s quite different. I don’t have any preconceived notions.”
Wages, too, are on the rise. Data from the New York Fed show that the mean salary employers must offer to entice a new worker into the labour force, known as the “reservation wage”, is up nearly $10,000 in the past year to $71,403.
The Bureau of Labor Statistics found that Americans are leaving their jobs in record numbers, peaking at 4m in April, in part because they see better opportunities elsewhere.
“There is no question that many people are saying, ‘I’m done working for poverty wages’,” said Donald Taylor, president of hotel workers union Unite Here.
American employees have tended to have less power over their working arrangements compared to their counterparts in other wealthy nations. A 2018 study by the OECD found the US is one of only two of its 38-member nations that does not require employers to give advance notice that someone is being fired or made redundant.
US labour law also contains almost no penalties for employers who interfere with workers’ attempts to organise unions, which the OECD blames for the relatively low numbers of workers that are able to bargain for better wages and working conditions. The US also offers less financial support for those out of work than in any other country in the study, reducing workers’ ability to be choosy when looking for work.
However, the Covid crisis has kept millions of Americans out of the jobs market, giving those who remain new leverage over employers. Some economists say the shift may have actually begun in the years before the pandemic when record low unemployment forced businesses to sweeten their offerings to lure in workers.
For workers such as Statulevicius, the newfound bargaining power means they can secure a foothold in newer, higher-paying industries. “Without the pandemic, maybe I would never have made this step,” he said. “Earnings aside, it’s good for yourself to always have a way to learn and keep your brain fresh.”
For others, it means demanding better conditions from their current employers.
“This debate about the return to physical offices is going to test the bargaining power of workers and how employers are going to respond,” said Nick Bunker, chief economist at the jobs website Indeed.
Skyler Reeves, an Arizona restaurant owner, made changes to the way he operates his business to hold on to staff, such as scrapping menu items that were frustrating to prepare. New equipment was purchased to ease gruelling jobs such as dishwashing, while a rota was introduced so no one worker was stuck scrubbing for too long.
“People used to compete for these jobs,” Reeves said. “Now we take anyone who comes in.”
The gains have been greatest for less-educated, low-wage workers. Their wages rose 3.7 per cent in the past two months, while those of their college-educated counterparts have grown 3.3 per cent. The margin between the two is the largest ever recorded by the Federal Reserve Bank of Atlanta. The workers gaining the most are disproportionately women and people of colour.
“The workers who are getting the most benefits are the ones who were hurt most by the pandemic,” Bunker said. “It’s a lot of catch-up growth.”
But the shift is my no means limited to low-wage jobs. Last week, executives at large US banks said they were paying more because of a war for talent.
Some economists believe that any ground workers have gained in recent months could be ceded back to employers when the expiration of the expanded federal unemployment benefits and the reopening of schools are expected to bring a torrent of workers back into the labour market.
But the Congressional Budget Office forecasts that the long-term growth of the American labour force is slowing. Current immigration rates are too low to keep the workforce as expansive as employers are used to, so according to Zandi at Moody’s Analytics, some element of competition might be here to stay.
President Joe Biden is pushing to cement workers’ progress, signing an executive order last week that intends to limit employers’ ability to force workers to sign non-compete clauses that stop them from leaving their current jobs for better ones in the same field. But labour leaders want more and are pushing Congress to pass a bill called the PRO act, which would strengthen bargaining rights.
Conservatives and business leaders warn that increasing workers’ bargaining power could raise costs for businesses still recovering from the pandemic and ultimately result in slower economic growth. “Forcing businesses to offer benefits when they are not ready could cost jobs,” said Kelsey Bolar, a senior policy analyst at Independent Women’s Forum. “It’s better to maintain a tight labour market than to mandate this.”
But labour activists and some economists say that, for workers, the shift is long overdue. “Labour has been on its back heels for decades,” Zandi said, “and now it has its time in the sun”.
Get alerts on US employment when a new story is published