ADP Economist: Higher wages aren't enough to bring workers back
New York (CNN Business)America’s “Great Resignation” has transformed the workforce, leading to higher wages and better conditions for many. It has also left a mark on the nation’s high rate of inflation.
But as the “Great Return” beckons for employees who have spent months working from home, their attitude to in-person work, pay and job switching may have undergone a similar metamorphosis.
Prospects of better pay or benefits (or both) have motivated many workers to look around. The number of workers quitting their jobs hit a record high in November last year.
All these workers applying for different jobs has incited wage competition between companies, pushing salaries up. And, in turn, those higher wages have pushed inflation even higher, with the “Great Resignation” contributing around one percentage point to last year’s inflation rate, according to a new report from the Federal Reserve Bank of Chicago.
In December, the Fed’s preferred measure of inflation — the personal consumption expenditure price index — rose 5.8% from the year before. It was the biggest jump since 1982.
Meanwhile, the nation has far more available jobs than workers to fill them. As of December, there were nearly 11 million job openings, or 58 unemployed workers for every 100 positions, according to ZipRecruiter.
As more people look for new jobs while they are already employed, negotiated wages go up, according to the Chicago Fed, which fuels wage inflation, and to some extent overall inflation.
Will the ‘Great Resignation’ gain even more momentum?
It is impossible to say whether wage pressures and high job mobility will persist throughout 2022 and beyond the pandemic, the Chicago Fed economists said. For now, the jury is still out.
Julia Pollak, chief economist at ZipRecruiter, predicts that many people who are required to return to the office full-time will leave for jobs with greater flexibility.
“March 1 is the new return-to-office date for many companies. Those that are requiring employees to come back to the office five days a week are experiencing a bigger backlash than they had anticipated—so much so that the Great Resignation could accelerate in the coming months,” Pollak told CNN Business in an email.
More than half of the workers with jobs that can be done remotely say they want to work from home all or most of the time, even after the pandemic, according to a survey released Wednesday by the Pew Research Center.
Ultimately, the market will determine what it takes for companies to win in the war for talent in midst of a labor shortage, Pollak added.
Being back in an office environment, around colleagues and — more importantly — supervisors, would make it harder to sneak a Zoom (ZM) interview into the work day. On top of that, returning to in-person work might also increase job satisfaction in certain industries after such a long time of being isolated from colleagues.
If returning to the office really deters workers from switching jobs, it could also alleviate some of the inflationary pressures caused by higher wages.
In their efforts to retain talent, some employers are offering additional time off, pet sitting or other creative perks. Many are also considering hybrid work schedules that include days in the office and days worked remotely to appease workers and their new-found flexibility.
–CNN Business’ Jeanne Sahadi contributed to this report
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