Even amid the Great Resignation, the surge in job demand, and the shift in the balance of power between employers and employees that have prompted companies to improve compensation packages and other perks, fears remain among a majority of workers about job security.
“Workers have seen a tremendous amount of upheaval,” ADP chief economist Nela Richardson said recently during a CNBC Evolve livestream. “The changes are both seismic and persistent.”
Richardson cited a recent ADP poll that found only 20% of workers felt their jobs were safe.
That’s just a by-product of a new work landscape poised for further adjustment amid the looming threat of recession and slower growth for businesses, both tied to the fight against inflation.
Even though the economy has added over two million jobs this year, nearly 40 years of high inflation is limiting the money workers are bringing home and threatening a full recovery of the economy from the Covid-19 crisis.
“The real issue to focus on today is inflation,” Richardson said. “What inflation does is it erodes the value of that paycheck. …People are getting more take-home pay; it just doesn’t go as far as it used to.”
“Even though their wages have gone up and they’re growing faster, the average worker ends up in the fourth quartile [of income earners] only makes about $2, a little less than $2 [more] than 2019 per hour,” Richardson said. Real wages are going down, and that’s true at all income levels.”
U.S. companies expected to pay workers an average 3.4% raise in 2022, surpassing pay rises in 2020 and 2021, according to a January survey. While inflation was a reason, 74% of companies cited the tight labor market.
Microsoft recently announced that it would increase compensation. “This increased investment in our global compensation reflects our ongoing commitment to provide our employees with a highly competitive experience,” a company spokesman told CNBC.
To keep workers happy in an inflationary environment, companies must also focus on increasing worker flexibility and security, Richardson said.
ADP’s survey shows workers want flexibility in their schedules and more autonomy in their work. Despite inflation, “our data shows that workers are willing to take wage cuts to get that kind of flexibility,” Richardson said.
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This puts even more emphasis on how companies approach the return of workers to the office. Two-thirds of the US workforce would consider changing jobs if they had to return to the office full-time, according to ADP’s People at Work survey.
This flexibility is also nuanced. “Some flexibility in terms of working hours is much more important to the US worker than flexibility in terms of work location,” Richardson said.
It could also support a recovery for female workers. More than 1.4 million net jobs have been lost among women since the pandemic began. Before the pandemic, according to Richardson, women made up 46% of workers but bore 53% of losses. To recover from those losses, “flexibility might be the answer,” Richardson said. “It might be a way of accommodating the very real fact that women have a larger share of family responsibilities.”
Richardson emphasized that the current labor shortage also includes skills. “We need to start training tomorrow’s workforce for the jobs that will be needed, not today, but for the jobs that will be needed tomorrow,” she said. Increasing skills will lead to increased job security for workers.
Despite the possibility of a recession, organizations need to make changes and evolve now to address the issues they face today.
“Whenever the Fed goes on strike, a recession is always the shadow in the closet that can appear. There is always a chance of a recession; that doesn’t necessarily mean it should be a primary concern for companies that may or may not have a recession to make hiring decisions,” she said.