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The tight U.S. labor market hasn’t benefitted workers equally, Fed study finds

David Brancaccio, Alex Schroeder, and Ariana Rosas Jun 2, 2023
Heard on:
Even with all of the talk about ample job openings, some workers aren't taking them. Why? This Federal Reserve survey asked workers just that question. Courtesy of the Federal Reserve Bank of Philadelphia

The tight U.S. labor market hasn’t benefitted workers equally, Fed study finds

David Brancaccio, Alex Schroeder, and Ariana Rosas Jun 2, 2023
Heard on:
Even with all of the talk about ample job openings, some workers aren't taking them. Why? This Federal Reserve survey asked workers just that question. Courtesy of the Federal Reserve Bank of Philadelphia

Despite low unemployment and rising wages, some workers say they’re experiencing burnout, still struggling to make ends meet and feeling locked out of higher-paying jobs. It’s all part of a new study from the Worker Voices Project — led by the Federal Reserve Banks of Philadelphia and Atlanta — documenting workers’ changing expectations when it comes to employment.

From conversations with workers, the Fed has been able to add nuance to the story that we’ve heard most often about a rock-solid jobs market. Even when as jobs have been available, there were still folks unwilling to take them, and the Fed study aimed to understand why.

“It’s a really complex situation,” said Patrick Harker, the president and chief executive of the Philadelphia Fed. “And it wasn’t just about wages. I mean, we often think as economists, just pay more, you’ll solve the problem. It’s not that easy.”

Harker spoke with “Marketplace Morning Report” host David Brancaccio about the new study. The following is an edited transcript of their conversation.

David Brancaccio: We get fixated on all the hiring and the very low unemployment rate these days. But your team has been listening to workers in, I think, low-wage positions and people looking for work without four-year college degrees. What do you think? Do they regard the times we live in as a golden age for prosperity?

Patrick Harker: So we’ve been listening to those voices for quite a while through our research, as you know, for years, but we undertook a more substantial and methodological approach to asking workers all around the country — I mean, literally all around the country, in 147 zip codes — what they thought, why they weren’t taking the jobs. There was this question, right? There a lot of open jobs relative to every unemployed person. But why weren’t they taking these jobs? And that’s why we undertook this work, to really listen to, in a methodologically sound way, what these people were saying, why they weren’t taking those jobs.

Brancaccio: I mean, this is one of the great conundrums. What are they saying? Jobs aren’t as good as they’d like to see, probably, right?

Harker: It’s a really complex situation. And it’s not one thing. One is the complexity of their lives, right? They were balancing, particularly through the pandemic, many things: child care, elder care, a whole host of things. And it didn’t affect everybody equally. It definitely affected, mainly, the people who were in low-wage jobs. We wanted to understand that. And, again, some of them were looking for better job quality. They were looking for just more balance in their lives. And it wasn’t just about wages. I mean, we often think as economists, just pay more, you’ll solve the problem. It’s not that easy.

Brancaccio: So it’s other things, too, like you mentioned child care. But it’s also probably being given work schedules that are somewhat predictable. I mean, some would also say, “I want meaning in my work, I want dignity.”

Harker: That’s the word. I met with a group of these workers recently to go through our findings. And what I heard over and over again, right: “I want to have a boss that understands … I’m a single mother with two kids, you can’t tell me my schedule just a day or two ahead of time. I need to plan. You don’t understand where I’m coming from.” And what we know from other research, in human resources, is that one of the main reasons that people leave a job is not necessarily wages. It’s their direct manager.

Brancaccio: But if it’s not only about compensation, it’s also partly about compensation, how big the paycheck is.

Harker: Absolutely, it’s a piece of it. They clearly want to be paid fairly for the work they do. But also they need to have people understand certain things. Like there was one individual who said to us, “Look, you know, I’m here working, and it takes me quite a while to get to work back and forth. I’m spending the equivalent of two hours’ wages each day just to be able to drive back and forth to work. Either I get paid more or I can’t work here.” I mean, those situations are facing many people across the country.

“And I think it’s really important: This group wants to not be called ‘low-wage workers.’ They’re workers who are currently in low-wage occupations.”

Patrick Harker, president and chief executive of the Philadelphia Fed

Brancaccio: Did you hear calls for, “I’d like to have new skills, I can see that technology is just around the corner, and if I don’t beef up what I can do, AI is going to take my job?”

Harker: Yeah, so what we heard was, people took the time and they had a little bit of time through the pandemic, particularly if they were laid off and they had some financial support in that period through unemployment insurance to go back to get new skills. That was clearly one of the things we heard. We didn’t hear directly AI, but it was the fact that, “I want to upskill myself, so I have better opportunities for myself and for my family.”

Brancaccio: Yeah, and when I talk to people myself, I don’t often hear, “I’m just trying to get by.” I hear … they’re looking to go up the economic ladder. They want to lock in gains somehow. If not for themselves, then maybe for their kids.

Harker: Yeah, that’s one thing we heard. And I think it’s really important: This group wants to not be called “low-wage workers.” They’re workers who are currently in low-wage occupations. They want a career, right? They want to move up, they want their skills to get better. They want to have a better life, for themselves and for their family. And so that really resonated with me, and I stopped calling them low-wage workers. They’re just workers who happen to be right now in a low-wage job, but that doesn’t mean that’s their future.

Brancaccio: Let me pivot here just for a moment. President Harker, you and I are speaking on Thursday, the day before the government’s closely watched payroll and unemployment reports are out. But I suspect nearly the whole world wants me to ask if you and your team are going to raise interest rates again this month. What’s your thinking now?

Harker: I am in the camp right now, and we’ll see how the data evolve, whether it’s the employment data or also the inflation data. Absent any changes, any significant changes, I am in the camp of wanting to take a skip not a pause, but a skip, in this coming meeting. Let the data continue to evolve a little bit and see if we need to do more. We may need to do more. But, also, we can take our time, take a pause — again, a skip — at this meeting, and then see how the data evolve over the subsequent weeks and months.

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