Even amid the Great Resignation, job demand skyrocketing and shifting power dynamics between employers and employees that have led companies to enhance compensation packages and other perks, fears over job security still exist among a majority of workers.
“Workers have experienced a tremendous amount of upheaval,” ADP Chief Economist Nela Richardson said during a recent CNBC Evolve Livestream. “The changes are both seismic and persistent.”
Richardson cited a recent ADP survey that found that only 20% of workers felt that their job was secure.
That is just one byproduct of a new working landscape that is poised for further adjustment due to the looming threat of a recession and slower growth for companies, both tied to the fight against inflation.
Even as the economy has added over two million jobs this year, near 40-year high inflation is limiting the amount of money workers bring home and jeopardizing a full recovery for the economy from the Covid-19 crisis.
“The real thing 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’s just not going as far as it used to.”
“Even though their wages have gone up and they’re growing faster, when all is said and done the average worker in the fourth quartile [of income earners] is only making about 2 bucks, a little less than 2 bucks [more] than they did in 2019 per hour,” Richardson said. “Despite all the talk of wage growth, it hasn’t been stellar when you think about inflation. Real wages are declining, and that’s true at every income level.”
U.S companies were expecting to pay an average 3.4% raise to workers in 2022, according to a January survey, outpacing the raises in both 2020 and 2021. While inflation was one reason given as to why, 74% of companies cited the tight labor market.
Microsoft recently said it would be raising compensation. “This increased investment in our worldwide compensation reflects the ongoing commitment we have to provide a highly competitive experience for our employees,” a company spokesperson told CNBC.
A focus on worker flexibility and security
To keep workers happy in an inflationary environment, organizations must also focus on boosting worker flexibility and security, Richardson said.
ADP’s survey shows workers want flexibility over their time and more autonomy in their work. In spite of inflation, “our data shows that workers are willing to take pay cuts to get that kind of flexibility,” Richardson said.
This places even more importance on how companies are approaching bringing back workers to offices. Two-thirds of the U.S. workforce would consider changing jobs if they were required to return to the office full-time, according to ADP’s People at Work survey.
This flexibility is also nuanced. “Having some flexibility about when you work is so much more important to the U.S. worker than flexibility about where you work,” Richardson said.
It could also aid in a rebound for female workers. More than 1.4 million net jobs were lost among women since the pandemic began. Before the pandemic, women made up 46% of workers, but took on 53% of the losses, according to Richardson. To rebound from these losses, “flexibility could be the answer,” said Richardson. “It could be a way to accommodate the very real fact that women have a larger share of the family responsibilities.”
Richardson highlighted that the current labor shortage also encompasses skill sets. “We need to start training the workforce of tomorrow for the jobs that are needed, not today, but the jobs that will be needed tomorrow,” she said. Boosting skill sets will lead to increases in job security among workers.
Despite the possibility of a recession, organizations must make changes and evolve now to deal with the problems they are facing today.
“Whenever the Fed is hiking, recession is always that shadow in the closet that may come out. There is always a probability of recession; that doesn’t necessarily mean that it should be a front-burner concern for companies who, recession or not, have to make hiring decisions,” she said.