Before the coronavirus pandemic began to affect the US, the country was seeing strong numbers in its economy. The unemployment rate in December 2019 was 3.5%, the lowest since 1968, according to The Balance, and the Gross Domestic Product grew 2.3%. As a result of the booming economy, employers were hiring and employees often had their pick of jobs. In the job market, you could say that the employee held the power.
Flash forward to March 2020 and the picture is not as pretty. Businesses began to shut down due to social distancing measures, meaning layoffs or furloughs for employees at those businesses. While social distancing measures decimated specific industries, restaurants and airlines aren’t the only establishments that have had to say goodbye to employees.
As stocks fell and employers became nervous about entering into a recession, layoffs occurred all over the country. As of May 28, 40 million people, the equivalent of one in four US workers, had filed jobless claims since the middle of March, when the coronavirus pandemic began to severely affect the US.
So now the question is, who holds the power in the job market?
What does “power in the job market” mean?
When we talk about “power” in the job market, we typically are discussing the relationship between a job seeker and an employer.
“Back 15 or 20 years ago, a term that was very popular in organizations was becoming ‘an employer of choice,'” said Danny Nelms, president of Work Institute. “So how do we become ‘an employer of choice?’ That branding was an attempt at companies trying to create the conditions wherein fact employees would choose to stay and choose to affiliate with a company. In other words, they wanted to come to work for that company because of their reputation, and because of what they were known to be as an employer.”
Basically, “power” in the labor market comes down to choice; Whoever has more choice has more power.
“Choice is the key power component when it comes to the employment marketplace,” Nelms said.”As unemployment goes down, and there are more and more opportunities out there, employees can choose…and they do. They choose to go to places where they feel like the opportunities are going to be greater, where management treats employees with respect, are helpful to them, and supportive of them.”
Who has the power in the job market right now?
“When there is high unemployment, it does tend to shift control of the employment relationship back to the employer, because suddenly, there are not as many opportunities out there, there are not as many open jobs, so employees don’t have the choices that they normally would have,” Nelms said.
Right now, as employers lay off or furlough employees or go on hiring freezes, and unemployment continues to rise, it’s clear that employers have more choices than job seekers.
Each year Work Institute releases a Retention Report that uses data to analyze the employer and employee relationship.
“As employee supply is limited and demand for workers increases, workers have and will continue to have increased choices – they are in control,” Nelms wrote in the 2019 report, which reported on 2018 data.
Nelms realizes that with the current situation, employers have a bit more of the power.
“There are many people in the U.S. right now who are hurting financially, and so in many cases they may have to go to work at places that they may not want to,” Nelms said. “There certainly are employees that are having to make some adjustments to their expectations of what they want to do, the work that they want to be doing, and who they want to be doing it for because we’re in a compromised economy and that’s just the reality.”
With that being said, Nelms emphasizes that as the economy makes its comeback and more jobs return to the market, employers must be vigilant about enacting programs and policies that show they care about their employees.
“Employees understand when economic conditions impact the business that sometimes layoffs occur, but you hear stories of people that have at-risk children who are basically being forced to go back into the office when that’s putting their children at risk,” Nelms said. “Those are things that are just not good, and employers are going to pay the price for that in the long run.”
How has the pandemic changed the way job seekers and employees feel?
Jobvite, a software and recruiting corporation, surveys job seekers annually to create a report on the state of the job market. In the 2020 Job Seeker Nation Report, Jobvite was able to capture many of the impacts of COVID-19 on the job market by surveying job seekers in February, directly before the onset of the coronavirus pandemic, and in April, about a month after the pandemic began to directly affect the nation and its economy.
Here are the major changes from February to April:
1. Job seekers think finding a job is harder
According to the April report, 73% of respondents believe finding a job this year is harder, compared to only 48% who felt this way in February.
Even further, 44% of respondents in the April survey think it is “much harder” to find a job now than it was six months, compared to 23% in February.
2. Current workers are worried about losing their job
In the April survey, 47% of workers said they are afraid of losing their job this year, compared to only 28% who reported they were worried in February.
3. Job seekers are more concerned about company values when accepting a job offer
Both the February and April surveys asked respondents what they are concerned about when accepting the job offer.
These are the top factors in the decision to accept or not accept a job:
- Compensation and career development remained the same between the surveys: 61% in both surveys
- Company values and culture: 52% in April compared to 38% in February
- Company’s location and facilities: 57% April vs. 45% February
- Quality of work: 50% in April compared to 42% in February
- Job security: 38% in April vs. 31% in February
There was a 14% jump in the number of people that listed that company values and culture play an important role in a person’s decision to accept a job or not. While it may surprise you that this particular aspect of accepting a job spiked from February to April, Jeffrey Rohrs, Chief Marketing Officer for Jobvite, explains that these job seekers are thinking about the company’s values and culture as a way to measure job security.
“If people are having to make a jump, they want to make this next leap perhaps their last or certainly one that has greater stability than what they’ve experienced,” Rohrs said. “Certainly as you get older, you see a definite craving for stability in your career, but I think there is going to be a new kind of attitude that Millennials on down, having gone through this experience, especially if they’ve been furloughed or lost a job… they’re going to be rethinking about the type of organization they are joining… what kind of stability it has, what kind of culture it has.”
Job seekers are more concerned about job security when accepting a job offer
As mentioned above, job seekers are certainly more concerned with job security while serarching for their next role. This aspect jumped from 31% reporting in February that it is a top factor when deciding to accept a job, to 38% reporting the same in April.
Job seekers are more concerned about a company’s location and facilities when accepting a job offer
There was also a notable spike in the company’s location and facilities as a top factor when accepting a job offer, from 45% reporting this as a top decider in February to 57% reporting the same in April.
“[That figure] suggests the desire to be close to the family to be able to take care of them…so location does matter,” Rohrs said. “I myself was a road warrior for years, and now I find myself having a 30 foot commute. That’s a dramatic change that allows me to be here for my family. It allows me to handle emergencies, and so it really equates to a desire to protect those who you love, be close, and have an employer who understands, can be flexible, and has compassion for that element.”
Who had the power in the job market before the coronavirus pandemic?
As mentioned above, 40 million Americans have filed for unemployment benefits throughout the coronavirus pandemic. This number is unprecedented. Ahead of the pandemic the U.S. was seeing some of the lowest numbers of unemployment in its history.
With low unemployment comes more choices for the job seeker, effectively giving them more power in the decision over which organization to work for.
When will power in the job market return to job seekers and employees?
According to the Wall Street Journal, employers that were forced to layoff some employees expect those cutbacks to be only temporary, which is a welcome change from the economic downturns that occurred in the 1990s and 2000s, which mostly saw permanent layoffs.
Authorities in some states require employers to be clear on whether a layoff is permanent or temporary, giving us a clue into employer’s mindsets and the job market on a while. Initial reports suggest that most large employers plan to bring their workers back when they can. For example, in California, only 7% of the 122,700 layoffs that occurred in March and April were reported as permanent.
In Colorado and Washington, employers have reported a total of 23,400 layoffs so far in 2020, which far exceeds the number announced in either 2008 or 2009. Of the 2020 layoffs, almost 75% were reported to be temporary, compared to less than 1% in 2008 and 2009. These numbers suggest that companies are not looking to restructure their businesses during this crisis, but instead are hoping to ride out the storm and come out the other side.
So now that we know that the jobs will return to the market, the biggest question is that as the number of coronavirus cases continues to subside in the country, when exactly will the job market return to pre-pandemic numbers?
“I’m a little more of an optimist,” Nelms said. “I see it as being fairly quickly, with the exception of a few industries that are going to be a little bit slower, specifically the travel industry, hotels, conventions, airlines… I think it’s going to have a little bit of a lagging impact in those areas. But I think other parts of the economy will come back relatively quick.”
But how quickly is “relatively quick” and where will the opportunities be?
“Employees have been laid off and furloughed…as companies need to rehire and bring those people back, they may or may not look to rehire the same people. They may try to upgrade, they may just think they need to do differently,” Nelms said. “So I think there are going to be enormous opportunities in the employment marketplace in the second half of the year. And that’s going to potentially shift control back to the employee.”
Jennifer Fabiano is an SEO reporter at Ladders.