We may be seeing problematic signs for workers and worker power in the economy. It’s too soon to be definitive and the signals, at this point, are decidedly mixed. But if these early signs continue and build into a trend, workers may experience rising unemployment, slower (or no) wage increases, and less ability to change jobs to raise their pay and improve their working conditions.
The first troubling data points were included in the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS) report for January. The number of workers laid off from their jobs in January had increased, the number of open jobs had declined, and the number of workers quitting their jobs during the month also had declined. Now, the number of open jobs and worker quits did not drop off a cliff. Layoffs did not skyrocket. We are not in the midst of a catastrophic economic collapse like we experienced at the beginning of the pandemic recession in March 2020. Not even close. The JOLTS results suggest there are still twice as many available jobs as unemployed workers. The number of layoffs remains historically low. The number of quits remains historically very high.
But these three developments in the JOLTS report taken together suggest that individual workers’ power to bargain for better jobs, better wages, and better benefits may be weakening --- a little. As Prof. Teresa Ghilarducci of the New School said during the Power at Work Blog’s Workers by the Numbers blogcast about the BLS report, fewer quits indicates that fewer workers believe they have the power to find better quality employment than their current job. An increase in layoffs suggests that employers are eliminating more jobs. The decline in open jobs is a direct signal that employer demand for workers is lower, albeit only slightly.
The second potentially troubling data point was the Labor Department’s report on initial weekly unemployment claims during the week ending March 4: the number of initial claims grew by 10% after many weeks at a consistently lower level (i.e., below 200,000 per week). These UI claims are generally understood to be a proxy for layoffs. Not everyone who is laid off files for unemployment benefits, so these numbers may understate the number of layoffs. For example, some workers find new jobs quickly, perhaps while living off severance pay, and may not need unemployment benefits. Regardless, more initial unemployment claims means lower employer demand for workers and more workers seeking jobs. Nonetheless, the total number of claims remains quite low and is nowhere near recession levels. It’s the new direction that is worrisome, although it is important to add that these data can bounce around a good bit (“noisy” in economic parlance), so one report from one week may not tell us a great deal.
The third data point emerges from BLS’s monthly employment situation report for February: wage growth has slowed. Average hourly wages rose 8 cents (0.2%) from January to February, which is the slowest wage growth in six months and well below the last year’s 4.4% wage growth rate. Again, the month-to-month differences are small, but wage levels give some indication of employers’ assessment of their ability to recruit the workers they need to hire. Simply, employers who cannot find job applicants raise wages to attract more workers. Slower wage growth may indicate employers’ concerns, if they ever had them, are softening.
BLS’s report about February was decidedly mixed. The economy created 311,000 net new jobs, which is terrific news for workers and worker power, even though February’s number is lower than January’s whopping 517,000 net new jobs and 2022’s average of 401,000 jobs added per month. More employers seeking more workers gives workers more options. In addition, “labor force participation” (i.e., the percentage of workers employed or actively seeking work) increased while the number of people out of the labor market and wanting work decreased. These workers have likely decided that commencing or re-commencing a job search will pay off for them with a good-enough-quality job.
For a full and fun analysis of February's BLS employment situation report, watch our Workers by the Numbers blogcast or listen to the podcast.
In sum, the news isn’t all bad. Some of it is pretty good. And not only isn’t the bad news all that bad, these few data points may be either a blip in an otherwise healthy economy picture or the beginning of a long-term and gentle trend that does not prove difficult or painful for workers and destructive of worker power. On the other hand, trends start somewhere. We will need a few more months to know if this is the beginning of something bigger and truly worrisome.
