‘Employers hold the cards now’ as power shifts in US jobs market

Headline figures pointing to a booming US job market are masking a shift in the balance of power from employee to employer, with companies becoming more demanding of their staff as they find it easier to replace them.

US employers are laying off staff, forcing remote workers back into the office and becoming pickier with their hiring decisions, even as the economy continues to add jobs at a breakneck pace.

Non-farm payrolls figures published last week showed the US economy added 353,000 jobs in January — almost twice the forecast number. Yet other data, such as last week’s Employment Cost index, shows that wages are not rising as fast as they were.

Loretta Mester, president of the Cleveland Federal Reserve, said on Tuesday that businesses in her region were reporting that it was getting easier to hire than a year ago as more people applied for each job opening.

“At this point, I suspect we will see further moderation of wage growth, with a gradual slowing in job growth and an uptick in the unemployment rate over the year from its very low level,” she said.

Workers have been in short supply since the start of the Covid-19 crisis, forcing employers to yield to the demands of those staff they had on everything from pay to working locations, lest they leave for a better job elsewhere. But employees have become more reluctant to quit as their confidence in the labour market erodes.

The number of workers who voluntarily resigned their jobs fell to 3.4mn in December, the labour department said last week. That is the lowest figure since January 2021 and 25 per cent below the November 2021 peak.

The number of Americans working part-time jobs and multiple jobs is also increasing, which economists see as a sign that workers are struggling to find full-time employment. The Bureau of Labor Statistics says the vast majority of those not working full-time hours are doing so out of personal choice, however.

“[The labour market] is 100 per cent changed from where it was two years ago,” said Kyle Samuels, founder of executive search firm Creative Talent Endeavors and former chief recruiter for fast-food group Yum Brands. “Employers are holding the cards now.”

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Executives say that replacing and retaining staff has become easier in recent months, allowing them to be firmer with existing staff and prospective hires.

“We are feeling the pivot back to an employers’ market on a regular basis,” said Jeri Hawthorne, human resources chief at the insurer Aflac, adding that filling roles had become easier in recent weeks. “People are a little more patient, a little more tolerant of delays.”

Aflac had to change its hiring process a few years ago as candidates had so many options that many abandoned applications that asked too many questions or alluded to an elaborate interview process, Hawthorne said.

Growing numbers of large companies are mandating that workers start working from the office again, often against their wishes, in the hope of boosting productivity.

Bank of America last month sent “letters of education” to staff who were coming into the office fewer than three days a week, threatening “disciplinary action” if their attendance did not improve. UPS said last week that it expected its managers to work from the office five days a week. Google and JPMorgan Chase are among other companies now mandating a return to offices.

“Employers say that the biggest benefit to them of remote work is an improvement in retention, and the second is a boost in recruitment,” said Julia Pollak, chief economist at jobs site ZipRecruiter. “As labour market conditions cool and employers find it easier to recruit and retain workers without sweetening the pot, companies pull back on remote work.”

Workers seem to be complying. An analysis of building access card data from 10 US cities by security company Kastle found that office occupancy reached its highest level since the start of the pandemic last week, at 53 per cent.

Eric Lund, head of global recruitment at Kaseya, said that the number of responses the Miami-based IT software developer gets to its job postings had been growing in recent months, allowing it to be more selective.

Kaseya has required its staff to work in the office five days a week for the past two years, and had often seen candidates withdraw once they learned that there were no opportunities for hybrid work. But as other large Miami employers brought employees back to the office last year and tech sector lay-offs made headlines, applicants became more receptive, Lund said.

“It’s shifting to the employer having more choice,” he said. “Would I say it is a complete employers’ market like it was in 2010 or 2009? No.”

Other groups are making sizeable cuts to their staffing. Tech companies including Alphabet, Amazon, Salesforce, Microsoft, Zoom and Snap laid off about 32,000 employees since the start of the year, according to Layoffs.fyi, which tracks job cut announcements. UPS, Estée Lauder and Citigroup also announced lay-offs in recent weeks. 

Still, Samuels said, job seekers were likely to retain some of the flexibility they gained in the Covid crisis and the ensuing labour shortage.

Hawthorne said that pandemic-era labour shortages had made Aflac’s hiring managers more willing to consider candidates from outside the company’s bases in Georgia and South Carolina. That attitude has not changed even as the number of applications for open roles has increased, she said.

Employers are still advertising more positions than they were before the pandemic, so workers still have choices depending on their industry, just “a lot less” than in 2022, said Cory Stahle, an economist at jobs site Indeed.

Samuels said: “The days of the battle for talent are over.”