Worker shortage brings worker leverage

·3 min read

Oct. 17—Many employees have been enjoying something they've rarely felt in corporate America — a sense of power and maybe appreciation.

There's nothing like a severe worker shortage to soften the hearts and pry open the wallets of executives.

Most businesses big and small have been scrambling to increase their employees' pay and perks. Companies that used to think offering flexible schedules to help workers balance work and life was a terrible idea in the past decided it's a great notion now.

In a sense it's a reckoning for all the companies that have in most recent years seen their profits soar to record highs but continued to lag in paying their workers in relation to inflation.

Minnesota-based Target is generally viewed as a pretty good, conscientious corporation when it comes to employees and civic engagement. But management of a Michigan Target distribution center may not have gotten the memo on being extra nice to workers.

The employees had been asking for a raise during the busy holiday weeks and Target said they'd add $2 per hour for a two-week period. The amount of the temporary raise left employees disappointed. But the day after the announcement, management added insult to injury by handing out fortune cookies to employees that seemed to mock the meager raises.

Some of the messages read: "I see money in your future; it is not yours though." Another: "The fortune you seek is in another cookie."

Target officials provided an implausible response to criticism over the cookies by saying they simply wanted to provide snacks to workers and had no hand in what was written on the fortunes.

The worker shortage is a headache for everyone, from employers to everyone seeing delays in orders, shortages on store shelves and longer waits at restaurants.

There are a few things driving the shortage, starting with the fact a lot of older workers are retiring and there fewer younger people, thanks to lower birth rates and big reductions in migrant workers. There was a lot of talk that the bonus money for unemployment benefits was keeping people out of the workforce. Economists are saying the extra money did have an impact on worker shortages but not as much as people may think. Since the extra unemployment ended, there hasn't been any indication of big increases in people jumping back into the workforce.

Some of the worker shortage is due to child care expenses that cost more than many jobs pay.

A bigger factor, though, appears to be that people are just more likely to bail out of jobs they think aren't compensating them well enough or that they simply hate. The restaurant industry had a huge turnover rate prior to the pandemic — 79% — but now there's 131% turnover.

The Labor Department reports that the number of people who quit jobs jumped to a record 4.3 million in August. Those quits were almost entirely in lower-paying industries, not in sectors such as construction, transportation or professional jobs.

Still, people quitting a job isn't a bad sign — unless you're the employer losing workers. Most who quit an existing job have a better job lined up.

The new employment landscape will be in turmoil for a while, but it seems the future — fortune cookies aside — leans toward workers making some gains after many years of lagging behind.

Tim Krohn can be contacted at tkrohn@mankatofreepress.com or 507-344-6383.

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