Low-Wage Workers Now Have Options, Which Could Mean a Raise
McDonald’s is increasing wages at its company-owned restaurants. It also helps its franchisees retain their workers by funding childcare services, senior care, and tuition assistance. Salaries are also on the rise at Chipotle, and Papa John’s and many of his franchisees are offering hiring and referral bonuses.
The reason? “In January, 8% of restaurant owners saw recruiting and retaining the workforce as their biggest challenge,” said Hudson Riehle, senior vice president of research at the National Restaurant Association, in an email . “By May, that number had risen to 72%.”
Restaurant workers – burgers and bussers, cooks and waiters – have emerged from the pandemic recession to find themselves in a position they could not have imagined a few years ago: they have options. They can afford to wait for a better deal.
In the first five months of the year, restaurants posted 92% more “wanted worker” positions for waiters and waitresses than in the same months of 2018 and 2019, before the coronavirus pandemic isn’t closing bars and restaurants across the country, according to data from Burning Glass, a labor market analysis company.
That’s not all: The jobs waiters and waitresses typically transition into – as bartenders, hosts and hostesses, chefs and food preparers – are also booming.
Something similar is happening throughout the lowest paid part of the labor market. Many employers have blamed the extended unemployment benefits for their difficulties in filling the gaping vacancies. But the strong recovery in hiring – clustered in urban service industries – is creating bottlenecks in sets of occupations that are improving the prospects for much of the country’s low-wage workforce.
Marcela Escobari, Ian Seyal and Carlos Daboin Contreras from the Brookings Institution in Washington provide a business-by-business analysis of this dynamic.
Of the roughly 11 million jobs lost between the first quarter of 2020 and the first quarter of this year, they found, more than four million were in occupations that are rebounding with a double benefit: demand for workers is high and they are launching ramps for sometimes more remunerative jobs which are also developing rapidly.
For example, between January and May, there were almost three times as many job postings for construction workers as the average for the same five months of 2018 and 2019, according to Brookings analysis. What’s more, painters and carpenters – two professions construction workers typically go to – are also inundated with offers.
At the same time, construction can attract workers from other occupations. While many contractors – especially in residential construction – are desperate for workers, “trucking seems to be even more desperate,” noted Ken Simonson, chief economist for the Associated General Contractors of America. One reason could be that construction, with its high salary, tends to attract a lot of truckers.
“A lot of construction workers have commercial driver’s licenses,” said Simonson. “Trucking companies call it poaching. I would call it a lure.
Building cleaners are in high demand. But an unemployed janitor who wants something better can probably get a job as a gardener, housekeeper, or construction worker. These are among the top five occupations that building cleaners move to most often, according to data from Brookings. And they’re booming, too.
Something similar is happening in the market for nursing and home and nursing aides, as well as practical and professional nurses, who are paid much more. All are experiencing an increase in job offers.
About two-thirds of the more than four million jobs are in occupations at the bottom of the pay scale, paying less than $ 17.26 an hour. The job market is much less flourishing for occupations paying more than $ 30.
“What is happening right now is not the increase in salaries for college graduates – it is the salaries of lifeguards at my pool,” said Betsey Stevenson, former chief economist for the Department of Labor who is now at the University of Michigan. “This closing of the pay gap could persist.”
And that could help explain the peculiar nature of the post-pandemic labor market rebound, in which high unemployment coexists with complaints of labor shortages.
“This underlies the feeling that workers at the bottom have options to work for a better job,” Ms. Stevenson said. “What employers are used to paying won’t really reduce it. “
More than 3% of workers in the private sector quit in April, according to the Ministry of Labor. This is the highest rate since the government started collecting data two decades ago. The rate fell only slightly in May, to 2.8%. And the resignation is particularly noticeable near the lowest paid level of the labor market: 5.3% of leisure and hospitality workers and 4% of retail workers quit in May.
Pay seems to be reacting. The wages of workers with only a high school diploma have been gaining ground over the wages of their more educated peers since the spring of last year.
Could it be just a flash in the pan? Heidi Shierholz, who was also chief economist at the Department of Labor during the Obama administration and is now policy director at the Left Institute for Economic Policy, is skeptical that the labor market is breaking with its tendency to stagnation of wages for decades. at the bottom and lavish rewards at the top.
“How much of what this captures is just a trampoline effect?” she wondered. “The jobs that come back tend to look like the jobs that were lost.” Once the dust settles and the job gaps created by the pandemic in several industries are filled, the deal offered to workers could look a lot like it was before the pandemic.
At the end of the day, “we’re stuck in a world where labor is very cheap and we don’t expect much from it,” Ms. Stevenson said. “I don’t see this pandemic fundamentally reshaping that. Ms. Shierholz put it this way: “There has been no fundamental restructuring of power in the economy.
Some of the most lasting changes brought about by the pandemic could hurt low-wage workers. Restaurants, taxi fleets and hotels in big cities are likely to see less business as companies cut back on business trips and people working remotely cut back on lunches and happy hours downtown.
More job losses should be expected if fast food establishments and other service companies decide to replace their face-to-face employees with robots and software. Still, there are signs that the country’s low-wage workforce could benefit from more lasting increases.
Even before the pandemic, the wages of less educated workers were rising at the fastest rate in more than a decade, propelled by falling unemployment. And after the temporary UI extension ends, with Covid-19 under control and children back to school, workers may not want to accept the deals they have agreed to in the past.
Jed Kolko, chief economist of the placement site Indeed, pointed out one piece of evidence: the increase in the reserve wage – the lowest wage that workers will accept for a job.
According to data from the Federal Reserve Bank of New York, the average reserve wage is growing fastest for workers without a college degree, reaching $ 61,483 in March, 26% higher than a year earlier. Apart from a low at the start of the pandemic, it has been on the rise since November 2017.
“This suggests that this is a deeper trend,” Kolko noted. “It’s not just about recovery.
Other trends could support higher wages at the bottom of the ladder. The aging population, in particular, is shrinking the pool of able-bodied workers and increasing the demand for healthcare workers, who struggle for low wages but are essential to supporting a growing cohort of older Americans.
“There was a workforce crisis in the home care industry before Covid,” said Kevin Smith, general manager of Best of Care in Quincy, Mass., And president of the association. state industry. “Covid really laid this bare and exacerbated the crisis. “
With more families turning their backs on nursing homes, which were the first hotbeds of coronavirus infections, Smith said, personal care aides and home helpers are even rarer.
“The demand for services like ours has never been higher,” he said. “It will never come back.”
And some of the changes brought on by the pandemic could create new transition opportunities not yet shown in Brookings’ data. The accelerated shift to online shopping can be a disastrous development for retail workers, but it will likely fuel demand for warehouse workers and delivery truck drivers.
The coronavirus outbreak has caused such an unusual recession that any prediction is risky. And yet, as Brookings’ Ms Escobari pointed out, recovery may present rare opportunities for those struggling for low wages.
“This time around, people looking for a job can have a lot of different options,” she said. “It’s not typical.”
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