For the first time in a generation, workers are gaining leverage over employers, the New York Times reports.
The change is due to businesses being willing to pay more, take on employees with less experience and show more flexibility when it comes to when and where employees work.
The minimum compensation workers without a college degree required increased by 19% from November 2019 to March 2021, a difference of $10,000 a year, according to a survey by the Federal Reserve Bank of New York.
A survey of human resources executives from large companies conducted by research group Conference Board in April found that 49% of organizations with a mostly blue collar workforce found it hard to retain workers, a jump from 30% before the pandemic.
This data is not favorable for employers looking to fill positions. Population growth for Americans ages 20-64 was negative last year for the first time in American history. The Congressional Budget Office predicts the labor force will grow only 0.3% to 0.4% annually in this decade. In contrast, the workforce grew 0.8% annually from 2000 to 2020.
A generation of managers that came of age in a period of abundant workers must now navigate their businesses through job scarcity. This means that while workers are now more emboldened to leave a job that does not meet their needs, companies can think more expansively about who is qualified in the first place. Executives concluded that some job qualifications were unnecessarily demanding, for example, requiring a graduate degree when a six-month training course could adequately prepare an employee.
Jobs also involve more than a paycheck. Salary matters, but so do benefits, the work environment, opportunities to advance and flexible hours. As the labor market tightens, people routinely favor these less-quantifiable aspects of a job.
While the benefits of this tightening market can take many forms, one of the most important effects is that employees are now in charge of where, how and when they work.