CVS, the largest U.S. drugstore chain by revenue, plans in March to cut or shift hours at about two-thirds of its roughly 9,000 U.S. locations. Walmart plans to reduce pharmacy hours by closing at 7 p.m. instead of 9 p.m. at most of its roughly 4,600 stores by March.
Walgreens Boots Alliance Inc.
previously said it was operating thousands of stores on reduced hours because of staffing shortages. Combined, the three chains operate some 24,000 retail pharmacies across the U.S.
Walmart last year raised pay for pharmacy technicians.
Photo:
Ryan David Brown for The Wall Street Journal
Earlier in the pandemic, CVS and Walgreens struggled to meet demand for Covid shots and vaccines. The chains cut hours and, in some cases, closed pharmacies for entire weekends. Walmart, which sells a wider variety of goods, cut overall store hours, in part, to cope with Covid-related labor shortages and make time to restock empty shelves as demand for basics such as toilet paper surged.
CVS, in a recent notice to field leaders, said most of its reduced hours will be during times when there is low patient demand or when a store has only one pharmacist on site, which the company said is a “top pain point,” for its pharmacists.
CVS said in a statement it periodically reviews pharmacy operating hours as part of the normal course of business to ensure stores are open during high-demand times. “By adjusting hours in select stores this spring, we ensure our pharmacy teams are available to serve patients when they’re most needed,” the company said, adding that customers who encounter a closed pharmacy can seek help at a nearby location.
At Walmart, the shorter hours offer pharmacy workers a better work-life balance and best serve customers in the hours they are most likely to visit the pharmacy, said a company spokeswoman. “This change is a direct result of feedback from our pharmacy associates and listening to our customers,” she said. Some Walmart pharmacies already close before 9 p.m., which will become standard across the country after the change.
An online community message board for Holliston, Mass., a small town about 30 miles outside Boston, was populated with messages last month from locals venting about the unpredictable hours of the CVS in town, said resident Audra Friend, who does digital communications for a nonprofit. Ms. Friend said she struggled for a week in November to refill a prescription for a rescue inhaler at the store because the pharmacy was sporadically closed.
“I would go in, and there was a note on the door saying, ‘Sorry, pharmacy closed,’” said Ms. Friend, who switched her prescriptions to a 24-hour CVS about 5 miles away. She said it would be better to have consistently shorter hours if that meant fewer unexpected closures. “At least that way we’re not just showing up at CVS to find out the pharmacist isn’t there,” she said.
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A CVS spokeswoman said that in recent weeks the Holliston store has had no unexpected closures.
The drugstore chains have been working to stop an exodus of pharmacy staff by offering such perks as bonuses, higher pay and guaranteed lunch breaks. Pharmacists were already in short supply before the pandemic, and consumer demand for Covid-19 shots and tests put additional strains on pharmacy operations. Walgreens recently said staffing problems persist and remain a drag on revenue.
Retail pharmacies, which benefited from a bump in sales and profits during the pandemic, are now reworking their business models as demand for Covid tests and vaccines decline and generic-drug sales generate smaller profits.
CVS and Walgreens are closing hundreds of U.S. stores and launching new healthcare offerings as they try to transform themselves into providers of a range of medical services, from diagnostic testing to primary care.
This past summer, Walgreens was offering bonuses up to $75,000 to attract pharmacists, while CVS is working to develop a system in which pharmacists could perform more tasks remotely. The median annual pay for pharmacists was nearly $129,000 in 2021, according to Labor Department data, which also projected slower-than-average employment growth in the profession through 2031.
In the past year, the chains have poured hundreds of millions of dollars into recruiting more pharmacists and technicians but staffing up has proven difficult. Pharmacists remain overworked, pharmacy-chain executives have acknowledged, and fewer people are attending pharmacy schools. The number of pharmacy-school applicants has dropped by more than one-third from its peak a decade ago, according to the Pharmacy College Application Service, a centralized pharmacy-school application service.
Meanwhile, many pharmacists who aren’t quitting the field are leaving drugstores to work in hospitals or with other employers.
Walmart raised wages for U.S. pharmacy technicians in the past year, bringing average pay to more than $20 an hour. Walmart said it planned to raise the minimum wage for all U.S. hourly workers in its stores and warehouses to $14 next month, from $12.
CVS and Walgreens last year raised their minimum wages to $15 an hour.
Write to Sharon Terlep at sharon.terlep@wsj.com and Sarah Nassauer at Sarah.Nassauer@wsj.com
Businesses and lawyers are beginning to assess what the Federal Trade Commission’s proposed ban of noncompete clauses in employment contracts could mean for worker mobility, wages and the way future compensation agreements are structured.
While a full or partial ban could expand the pool of potential hires, it also would weaken a tool that employers have come to rely on to retain talent and protect trade secrets and other proprietary information, lawyers say. More companies likely would turn to a patchwork of alternative mechanisms to keep people from leaving and taking valuable information with them, including nondisclosure agreements and employment contracts that reward longevity, they say.
“Employers have operated with an understanding that they can protect their interests through noncompetes,” said Matthew Durham, a Salt Lake City-based attorney with Dorsey & Whitney LLP who advises companies on employment matters. “What you’re seeing, reflected in the FTC proposal and elsewhere, is a growing hostility to the idea that there should be those kinds of restrictions, and it’s changing the environment that employers have been comfortable with in the last number of years.”
The FTC proposed a ban this month on nearly all noncompetes, saying that the clauses—which typically prohibit workers from moving to a new employer or starting new ventures of their own—hamper competition in the labor market, suppress wages and hold back innovation and entrepreneurship. The proposal came in response to an executive order from President Biden in 2021.
Businesses say they impose noncompete clauses on employees to protect trade secrets and other confidential information, including customer lists and financial data.
The FTC contends that noncompete clauses discourage innovation and entrepreneurship.
Photo:
Eric Lee for The Wall Street Journal
Mr. Durham and others say they believe the FTC may narrow its rule after hearing comments from the public, including employers and business organizations that have already signaled their opposition to the current proposal. The agency could, for example, allow noncompetes for highly compensated workers.
Noncompetes are common in employment contracts for senior employees like software engineers, sales representatives and top executives. Over time, they have been applied to many parts of the U.S. workforce, including some janitors, baristas, schoolteachers and entry-level workers. According to the FTC, one in five U.S. workers is currently subject to a noncompete clause.
Noncompetes are regulated at the state level, and many states have already taken action to limit use of the clauses by, in some cases, forbidding employers from imposing them on people earning under a particular wage threshold or for certain types of workers.
“The vast majority of people in America can’t afford a lawyer to defend a noncompete case,” said Jonathan Pollard, an attorney in Florida who represents workers whose employers are trying to enforce noncompete clauses. “Just the threat of enforcement is often enough to restrain talent in the labor market.”
The Federal Trade Commission proposed a new ban on noncompete clauses, which the agency says hurts workers and competition. Companies argue they protect trade secrets. WSJ breaks down what a federal ban could mean for workers and businesses. Photo illustration: Jacob Reynolds
Some states, such as California and Oklahoma, hold that the clauses are unenforceable in all or nearly all employment contracts.
A number of studies suggest noncompetes suppress wages and innovation. A review of Oregon’s 2008 ban on noncompetes for hourly workers found that wages rose an average of 2% to 3%. Another study, examining Hawaii’s 2015 ban on noncompete agreements for high-tech workers, found an 11% increase in job moves and a 4% increase in new-hire salaries.
The clauses restrain not just pay and entrepreneurship, but also professional development, workers and some attorneys say.
Daniel Bachhuber had worked as a software consultant for years when he decided to take an in-house job in the fall of 2018. His new employer required that he sign a one-year noncompete agreement, which he said was so broad it would have prevented him from practicing his core skills if he were to leave the company or be fired.
Mr. Bachhuber balked. Earlier in his career, he had been laid off a few weeks into a new job, just after his first child was born. If that happened at the new job, he recalled thinking, he would be unable to earn a living for a year. “I’m always thinking, worst case scenario, what kind of downstream protection do I have?” the 35-year-old said. “Even if I was employed just one day, I couldn’t go back to the same clients I had.”
Daniel Bachhuber turned down a job after an employer wouldn’t change a noncompete clause.
Photo:
Mason Trinca for The Wall Street Journal
He consulted a lawyer and tried to renegotiate the contract, hoping to salvage a role that would have expanded his skills and given him a chance to work directly with the chief technology officer on special projects. The company declined to change the noncompete clause and, reluctantly, Mr. Bachhuber turned down the position.
Employers have other tools to protect information besides noncompete agreements, including nondisclosure agreements, trade secret laws and nonsolicitation agreements, which prohibit workers from poaching customers or employees of their prior firm.
But those tools generally can only be used after an employee violates the agreement, said Julie Levinson Werner, who represents employers as a partner with law firm Lowenstein Sandler LLP. “Once someone goes to another company, you’re really on the honor system. You have no way to monitor what information is being disclosed or not,” she said.
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Observers on both sides say that limitations on the clauses will compel employers to get more creative about how they retain talent, using everything from compensation to career advancement to keep workers engaged and loyal to the company. Some companies use deferred compensation—such as retention bonuses or rolling stock options that vest after, say, three years—to give people incentives to stay.
“Do you get better results with honey or vinegar?” said Ms. Werner. “If you want to motivate people and have them happy to stay, you have to look at compensation, the overall environment, how you treat them.”
The fate of the FTC’s final rule is up in the air. After a 60-day comment period, the commissioners will consider potential changes to the initial proposal and then issue a final rule. That rule will likely be challenged by business groups or individual companies, and courts will determine its trajectory, attorneys say.
The U.S. labor market is losing momentum as hiring and wage growth cooled in December, showing the effects of slower economic growth and the Federal Reserve’s interest-rate increases.
After two straight years of record-setting payroll growth following the pandemic-related disruptions, the labor market is starting to show signs of stress. That suggests 2023 could bring slower hiring or outright job declines as the overall economy slows or tips into recession.
Employers added 223,000 jobs in December, the smallest gain in two years, the Labor Department said Friday. Average hourly earnings were up 4.6% in December from the previous year, the narrowest increase since mid-2021, and down from a March peak of 5.6%.
All told, employers added 4.5 million jobs in 2022, the second-best year of job creation after 2021, when the labor market rebounded from Covid-19 shutdowns and added 6.7 million jobs. Last year’s gains were concentrated in the first seven months of the year. More recent data and a wave of tech and finance-industry layoffs suggest the labor market, while still vibrant, is cooling.
“I do expect the economy to slow noticeably by June, and in the second half of the year we’ll see a greater pace of slowing if not outright contraction,” said
Joe Brusuelas,
chief economist at RSM U.S.
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Friday’s report sent markets rallying as investors anticipated it would cause the Fed to slow its pace of rate increases. The central bank’s next policy meeting starts Jan. 31. The Fed’s aggressive rate increases aimed at combating inflation didn’t significantly cool 2022 hiring, but revisions to wage growth showed recent gains weren’t as brisk as previously thought.
The Dow Jones Industrial Average rose 700.53 points, or 2.13%, on Friday. The S&P 500 Index was up 2.28% and NASDAQ Composite Index advanced 2.56%. The benchmark 10-year Treasury yield declined 0.15 percentage point to 3.57%. Yields fall as bond prices rise.
The unemployment rate fell to 3.5% in December from 3.6% in November, matching readings earlier in 2022 and just before the pandemic began as a half-century low. Fed officials said last month the jobless rate would rise in 2023. December job gains were led by leisure and hospitality, healthcare and construction.
Historically low unemployment and solid hiring, however, might mask some signs of weakness. The labor force participation rate, which measures the share of adults working or looking for work, rose slightly to 62.3% in December but is still well below prepandemic levels, one possible factor that could make it harder for employers to fill open positions.
The average workweek has declined over the past two years and in December stood at 34.3 hours, the lowest since early 2020.
Hiring in temporary help services has fallen by 111,000 over the past five months, with job losses accelerating. That could be a sign that employers, faced with slowing demand, are reducing their employees’ hours and pulling back from temporary labor to avoid laying off workers.
The tech-heavy information sector lost 5,000 jobs in December, the Labor Department report showed. Retail saw a 9,000 rise in payrolls, snapping three straight months of declines.
Tech companies cut more jobs in 2022 than they did at the height of the Covid-19 pandemic, according to layoffs.fyi, which tracks industry job cuts. On Wednesday,
Salesforce Inc.
said it would cut 10% of its workforce, unwinding a hiring spree during the pandemic. The Wall Street Journal reported that
Amazon.com Inc.
would lay off 18,000 people, roughly 1.2% of its total workforce. Other companies, such as
Facebook
parent
Meta Platforms Inc.,
DoorDash Inc.
and
Snap Inc.,
have also recently cut positions.
Companies in the interest-rate-sensitive housing and finance sectors, including
Redfin Corp.
,
Morgan Stanley
and
Goldman Sachs Group Inc.,
have also moved to reduce staff.
Months where overall jobs gained
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By the end of 2022, the U.S. had added nearly 2 million jobs since the end of 2019
More than 20 million jobs were lost near the start of the pandemic
Employment returns to prepandemic level
A monthly gain of more than 4 million jobs
Months where
overall jobs gained
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overall jobs declined
By the end of 2022, the U.S. had added nearly 2 million jobs since the end of 2019
More than 20 million jobs were lost near the start of the pandemic
Employment returns to prepandemic level
A monthly gain of more than 4 million jobs
Months where
overall jobs gained
Months where
overall jobs declined
By the end of 2022, the U.S. had added nearly 2 million jobs since the end of 2019
More than 20 million jobs were lost near the start of the pandemic
Employment returns to prepandemic level
A monthly gain of more than 4 million jobs
Months where
overall jobs gained
Months where
overall jobs declined
By the end of 2022, the U.S. had added nearly 2 million jobs since the end of 2019
More than 20 million jobs were lost near the start of the pandemic
Employment returns to prepandemic level
A monthly gain of more than 4 million jobs
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overall jobs gained
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overall jobs declined
By the end of 2022, the U.S. had added nearly 2 million jobs since the end of 2019
More than 20 million jobs were lost near the start of the pandemic
Employment returns to prepandemic level
A monthly gain of more than 4 million jobs
Other data released this week point to a slowing U.S. economy. New orders for manufactured goods fell a seasonally adjusted 1.8% in November, the Commerce Department said Friday. Business surveys showed a contraction in economic activity in December, according to the Institute for Supply Management. Manufacturing firms posted the second-straight contraction following 29 months of expansion, and services firms snapped 30 straight months of growth in December.
Economists surveyed by The Wall Street Journal last fall saw a 63% probability of a U.S. recession in 2023. They saw the unemployment rate rising to 4.7% by December 2023.
“We’ve obviously been in a situation over the past few months where employment growth has been holding up surprisingly well and is slowing very gradually,” said
Andrew Hunter,
senior U.S. economist at Capital Economics. “There are starting to be a few signs that we’re maybe starting to see a bit more of a sharp deterioration.”
Max Rottersman, a 61-year-old independent software developer, said he had been very busy with consulting jobs during much of the pandemic. But that changed over the summer when work suddenly dried up.
“I’m very curious to see whether I’m in high demand in the next few months or whether—what I sort of expect will happen—there will be tons of firing,” he said.
Despite some signs of cooling, the labor market remains exceptionally strong. On Wednesday, the Labor Department reported that there were 10.5 million job openings at the end of November, unchanged from October, well more than the number of unemployed Americans seeking work.
Some of those open jobs are at Caleb Rice’s home-renovation business in Calhoun, Tenn., which has been consistently busy since the start of the pandemic. The small company has raised pay and gone to a four-day week in an effort to hold on to workers.
“If I could get three more skilled hands right now, I’d be comfortable,” Mr. Rice said. “The way it goes is I’ll hire five, two will show up and of those two one won’t be worth a flip.”
Fed officials have been trying to engineer a gradual cooling of the labor market by raising interest rates. Officials are worried that a too-strong labor market could lead to more rapid wage increases, which in turn could put upward pressure on inflation as firms raise prices to offset higher labor costs.
The central bank raised rates at each of its past seven meetings and has signaled more rate increases this year to bring inflation down from near 40-year highs. Fed officials will likely take comfort in the slowdown in wage gains, which could prompt them to raise rates at a slower pace, Mr. Brusuelas, the economist, said.
“We’re closer to the peak in the Fed policy rate than we were prior to the report, and the Fed can strongly consider a further slowing in the pace of its hikes,” he said. “We could plausibly see a 25-basis-point hike versus a 50-basis-point hike at the Feb. 1 meeting.”
Write to David Harrison at david.harrison@wsj.com
Corrections & Amplifications A graphic in an earlier version of this article showing the change in nonfarm payrolls since the end of 2019 was incorrectly labeled as change since January 2020. (Corrected on Jan. 6)
Workers who stay put in their jobs are getting their heftiest pay raises in decades, a factor putting pressure on inflation.
Wages for workers who stayed at their jobs were up 5.5% in November from a year earlier, averaged over 12 months, according to the Federal Reserve Bank of Atlanta. That was up from 3.7% annual growth in January 2022 and the highest increase in 25 years of record-keeping.
Faster wage growth is contributing to historically high inflation, as some companies pass along price increases to compensate for their increased labor costs. Prices rose at their fastest pace in 40 years earlier in 2022. Inflation has cooled in recent months but remains high. Federal Reserve officials are closely monitoring wage gains as they consider future interest-rate increases to slow the economy and bring down inflation.
Employees who changed companies, job duties or occupations saw even greater wage gains of 7.7% in November from a year earlier. The prospect that employees might leave for bigger paychecks is a main reason companies are raising wages for existing employees.
Many workers aren’t feeling the pay gains, though. Wages for all private-sector workers declined by 1.9% over the 12 months that ended in November, after accounting for annual inflation of 7.1%, according to the Labor Department.
Workers in sectors such as leisure and hospitality can easily find job openings that might pay more, making it more enticing to switch jobs, said
Layla O’Kane,
senior economist at Lightcast.
“If I can see that the Burger King down the street is offering $22 an hour, and I’m making $20 an hour at the Dunkin’ Donuts that I work at, then I know very clearly what my opportunity cost is,” she said. “Employers are reacting to that and saying, ‘Well, we’re going to increase wages internally because we don’t want to lose the staff that we’ve already trained.’”
Employee bargaining power has increased as the economy rebounded from the pandemic, likely emboldening some employees to ask for wage increases from their current employers, Ms. O’Kane added.
Alexandria Carter,
a billing specialist and accountant at an insurance company in Baltimore, received a promotion and a small pay bump earlier in 2022. After her year-end performance review, she received another 7% pay increase to reward her for her progress, and her bosses told her about their plans for her to keep moving up in the company.
That was a contrast with some previous jobs she has held, where praise and pay raises were less forthcoming.
“They were telling me that I’m excelling in my position, and I just got it,” she said. “To have that recognition and that they notice the work I’ve put in and to be rewarded, it’s just nice.”
Alexandria Carter, a Baltimore billing specialist and accountant, got a promotion and two pay increases this past year.
Photo:
Alexandria Carter
There are signs wage gains are beginning to ease as the tight labor market loosens a bit. Average hourly earnings were up 5.1% in November from a year earlier, slowing from a recent peak of 5.6% in March. Many analysts expect wage growth could cool further in coming months.
In industries with high demand for workers, “companies are prepared for wage growth to match inflation,” said
Paul McDonald,
senior executive director at Robert Half, a professional staffing company. “As inflation comes down, it will be more in line with what wage growth has been.”
The consumer-price index, a measurement of what consumers pay for goods and services, climbed 7.1% in November from a year earlier, down from 7.7% in October. The pace built on a trend of moderating price increases since June’s 9.1% peak.
Still, wage pressures will likely continue in a competitive job market where poaching remains common. More than half of professionals feel underpaid, and four in 10 workers would leave their jobs for a 10% raise elsewhere, according to a Robert Half survey released in September.
Famous Toastery, a Charlotte, N.C.-based breakfast, brunch and lunch chain, is raising pay faster than ever before, said
Mike Sebazco,
the company’s president. Across the eight company-owned locations, wages for existing kitchen staff members are up about 15% from a year earlier.
“We didn’t want to be as easy to poach,” he said. It isn’t uncommon for managers from other companies to come to Famous Toastery’s dumpster pads to tell the breakfast chain’s workers, “‘Hey, come work for me, and I’ll give you an extra $2 an hour,’” Mr. Sebazco said.
To help coverhigher labor costs, Famous Toastery raised menu prices in August for items such as the Western omelet composed of ham, roasted peppers, caramelized onions and American cheese.
“Bacon and eggs and a lot of produce items will go up and down, and you can weather that,” Mr. Sebazco said. “We’ve never really experienced labor increases such as this.”
Many businesses in the Boston Fed district cited labor costs as a bigger source of inflationary pressure for 2023 than other types of expenses, according to the central bank’s collection of business anecdotes known as the Beige Book.
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Most business executives remain confident that they can pass along wage increases to consumers in the form of higher prices, said
Lauren Mason,
senior principal at consulting firm Mercer LLC. “This makes compensation investments somewhat easier to absorb,” she said.
Wage and price increases can feed off each other. In fact, higher inflation is pushing some workers to seek cost-of-living increases, helping contribute to wage growth among job stayers, economists say.
More broadly, pay is rising for both job stayers and switchers because companies can’t find enough workers. Across the economy, job openings—at 10.3 million in October—far exceeded the 6.1 million unemployed Americans looking for work that month.
Companies are using merit-pay increases to hold on to employees and minimize the potential productivity drain of recruiting and training new hires. Firms are budgeting more for merit-pay increases in 2023 than they have in 15 years, according to a Mercer survey of more than 1,000 companies.
Daniel Powers,
a recent college graduate, received a 10% year-end raise at a management consulting firm in Chicago, after starting out with a six-figure salary when he was hired in September.
“They understand the realities of the market—there’s no false illusion of, ‘we’re family here,’” Mr. Powers said of his firm’s management.
Write to Gabriel T. Rubin at gabriel.rubin@wsj.com and Sarah Chaney Cambon at sarah.chaney@wsj.com
Most laid off tech workers are finding jobs shortly after beginning their search, a new survey shows, as employers continue to scoop up workers in a tight labor market.
About 79% of workers recently hired after a tech-company layoff or termination landed their new job within three months of starting their search, according to a
ZipRecruiter
survey of new hires. That was just below the 83% share of all laid-off workers who were re-employed in the same time frame.
Nearly four in 10 previously laid off tech workers found jobs less than a month after they began searching, ZipRecruiter found in the survey.
“Despite the widespread layoffs, hiring freezes, and cost-cutting taking place in tech, many tech workers are finding reemployment remarkably quickly,” said
Julia Pollak,
chief economist at ZipRecruiter. “They’re still the most sought-after workers with the most in-demand skills.”
Job openings across the economy—at 10.3 million—are down from record highs but far exceed the number of unemployed Americans, providing opportunities for workers who lose their jobs and those who choose to seek another.
Workers previously employed in other industries, including entertainment and leisure, transportation and delivery, and manufacturing, also found new jobs quickly, the ZipRecruiter data showed.
The job market for tech workers is slowing as the broader economy falters under the pressure of Federal Reserve interest rate increases and high inflation. Layoffs and hiring freezes are occurring at startups and large tech companies such as Amazon.com Inc. and
Facebook
parent Meta Platforms Inc. that hired aggressively early on in the pandemic. The cuts are hitting workers in tech jobs—such as software engineers—and other corporate roles including recruiters.
Still, tech firms making cuts are outnumbered by those that are hiring.
A smaller share of tech workers is spending long periods searching for work after a layoff. About 5% of laid off tech workers who found jobs from April to October had spent more than six months hunting for work, down from 26% of those hired between August 2021 and February 2022, ZipRecruiter said.
Wen Huber, age 23, was laid off from a videographer job at a real estate tech startup in late July. Mr. Huber, who lives near Seattle, thought it would take awhile to land a new position, given he didn’t have a four-year-college degree and many other job seekers were flooding the tech job market.
“When I was applying, to be honest, I didn’t feel very confident because there was such an influx of competition with a lot of people also being laid off,” he said.
Mr. Huber had built up a savings buffer, allowing him to be more selective in his job hunt as he sought to pivot into social media. He documented his unemployment experience in a series of videos on LinkedIn. The videos helped him land an interview—and ultimately an offer—for a social media manager job at a software startup, Mr. Huber said. He started in September.
“I was surprised at how quickly I was able to secure an offer for a job,” he said.
Wen Huber landed a job offer for a social media manager position within one-and-a-half months of his layoff.
Photo:
Devon Potts
Short job searches in tech have become slightly less common as the labor market slows from earlier in the year. Among people who recently lost a job and worked in tech previously, 37% found a new position within one month of starting to look, according to ZipRecruiter. That compared with 50% in February’s survey.
“We’ve definitely seen a slowdown in hiring, but the reason why is that the job creation level was beyond record highs because of the slingshot effect of the pandemic,” said Ryan Sutton, district president at Robert Half, a global recruitment firm. “From August 2020 to May 2022, it wasn’t red-hot. It was lava-hot.”
Usually when mass layoffs hit, there is an influx of tech candidates contacting his company to help with their job search, Mr. Sutton said.
“We have not seen it yet—we haven’t seen more candidates coming to market,” he said. “Our recruiters are having to hunt and hustle just as much as they had to in the last couple of years.”
Client firms in tech also haven’t mentioned any plans to cut jobs, Mr. Sutton said.
About 74% of workers recently hired after losing or leaving a job at a tech company remained in the industry, according to ZipRecruiter. Others who previously worked at tech companies switched to firms in industries such as retail, financial services and healthcare in the six months ending in mid-October.
The recent headlines about tech layoffs don’t seem to match broader economic indicators, which show a strong job market and a historically low unemployment rate. WSJ’s Gunjan Banerji explains the disconnect. Illustration: Ali Larkin
Pinnacol Assurance, a 650-person workers’ compensation insurer, saw a 46% increase in job candidates from big tech companies including Meta, Microsoft and Twitter between September and mid-December, said Tim Johnson, the company’s chief human resources officer.
The influx of applicants has helped Pinnacol fill tech-related roles such as data scientist, machine-learning engineer and cloud architect in recent months. In mid-December, Pinnacol’s recruiting team made an offer to a job candidate from Google, Mr. Johnson said.
Ayanna Chapman, 42, started a systems-engineering job job at Pinnacol overseeing its computer systems in mid-November after she was laid off from another systems-engineer position this spring.
“‘Our recruiters are having to hunt and hustle just as much as they had to in the last couple of years.’”
— Ryan Sutton of global recruitment firm Robert Half
A generous severance package allowed her to take several months to freshen skills and study for certifications including in the Python programming language. When the Atlanta–area resident began looking for work in the second week of October, recruiters quickly reached out with interview opportunities, she said.
Ms. Chapman was keen on finding a job with stability and thought Pinnacol would fit. She received an offer from the Denver–based company about two weeks after beginning the interview process, much faster than previous experiences, she said.
“I literally cried tears of joy like, ‘Oh, my God, I got the job. I can’t believe it,’” Ms. Chapman said.
Employers broadly are responding to job candidates fast, likely for fear of losing them in a competitive market with a historically low jobless rate of 3.7%. Nine in 10 ZipRecruiter survey respondents said they heard back from a recruiter or hiring manager within a week of applying for a job.
ZipRecruiter’s most recent survey was drawn from 2,550 U.S. residents who had started a new job within the six months ending in mid-October. The data align with other job-market figures that signal the hot labor market is cooling.
Of the ZipRecruiter survey respondents who said they previously worked in tech, most of them likely worked for tech companies regardless of their occupation, Ms. Pollak said. In other words, a recruiter at Amazon would likely be classified as a tech-industry worker in the survey. But a data scientist at
Home Depot
would be a retail-industry worker.
Separate labor-market figures suggest employers across industries are still seeking to hire tech workers, though less so than earlier in the pandemic. Postings on job-site Indeed for tech occupations are still well above prepandemic levels, but have fallen steeply over the past year.
Software developer job ads on Indeed are down 34% from a year earlier, and ads for mathematics roles—which include data scientists—are 28% lower. Overall postings are down 7.7% from a year ago.
“With tech workers, it’s a much bigger pullback,” said
Nick Bunker,
an economist at Indeed Hiring Lab. “It’s still above prepandemic levels, but if the current trend keeps up, I don’t imagine that talking point will be true anymore at some point next year.”
The uncertain economic outlook is likely weighing on employers’ appetite for white-collar workers, since they tend to base hiring plans for higher-paid workers on the longer-term business outlook, said Mr. Bunker. By contrast, firms usually gear hiring for waiters, deliverers and other lower-paid jobs according to immediate business needs, he said.
Many companies with among the highest shares of new tech job postings on Indeed in late November were in industries such as consulting, financial services and aerospace.
“For tech jobs, it is still a relatively healthy economic climate and relatively healthy labor market,” said Scott Dobroski, Indeed career expert. “A lot of bright spots for tech workers currently lie outside of traditional tech companies.”
U.S. aerospace companies cut more than 100,000 workers during the pandemic, but have been hiring back at a fast clip and struggling for a year with staffing shortages that have crimped supply chains.
Raytheon Technologies Corp.
CEO
Greg Hayes
said during the summer he was optimistic that layoffs among tech companies would start to ease his own hiring challenges. There are signs that is happening.
“We are starting to see an uptick in interest from the tech layoffs,” said
Mike Dippold,
chief financial officer of
Leonardo DRS Inc.,
which is based Arlington, Va.
Mr. Dippold said the defense-sensor specialist, like many peers, still had more open positions than it would like, but the staffing situation was starting to improve.
—Doug Cameron contributed to this article.
Write to Sarah Chaney Cambon at sarah.chaney@wsj.com and Gwynn Guilford at gwynn.guilford@wsj.com
The tight U.S. labor market loosened some in August as employers hired fewer workers, more people sought work and wages rose at a slower pace.
Employers added 315,000 jobs last month, down from the prior month’s revised 526,000 jobs, the Labor Department said on Friday, with new jobs spread across the economy. The deceleration marked a pullback from robust gains that characterized much of the past two years. Still, job growth remained well above the prepandemic trend.
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“The labor market is still very strong,” said Rhea Thomas, senior economist at Wilmington Trust, adding the August report “shows an initial step towards some cooling of what has been a very tight labor market.”
The jobless rate rose to 3.7% in August from a half-century low of 3.5% the prior month. The increase in the unemployment rate reflected more workers entering the labor force. The share of adults working or seeking a job rose to 62.4% in August from 62.1% in July, as participation among women ages 25 to 54 jumped to the highest level since 2000.
The rise in labor-force participation—along with other signs such as lower average weekly hours worked—suggested employers are finding it easier to hire. That could help ease wage pressures in the coming months. The Federal Reserve is closely watching the health of the labor market and wages trends, an important factor in the outlook for inflation.
Average hourly earnings rose 5.2% in August from a year earlier, in line with the previous month and down from a recent peak of 5.6% in March. Wages rose 0.3% in August from a month earlier, down from July’s increase.
The figures keep the Fed on track to raise interest rates by either 0.5 or 0.75 percentage point at its meeting later this month to combat high inflation.
Stocks turned lower Friday after an initial surge following the release of the August jobs figures, and Treasury yields fell.
“In all, the data suggest labor market conditions are beginning to slow more markedly, which we expect will contribute to weaker economic growth over the coming years,” said
Michael Pearce,
senior U.S. economist at Capital Economics.
Some signs point to an economy that is rapidly cooling under the weight of high inflation. The Fed is raising interest rates to slow the economy and curb price increases. Some major employers, including
Ford Motor Co.
, Snap Inc.,
T-Mobile US Inc.
and
Wayfair Inc.,
have announced job cuts in the past few weeks. Gross domestic product shrank in both the first and second quarters of the year, according to the Commerce Department.
This year’s tight labor market followed steep pandemic-driven job cuts in early 2020 that left the U.S. economy with about 22 million fewer jobs. As employers clawed those jobs back, payrolls grew by a monthly average of about 800,000. Now that payrolls are slightly above their prepandemic peak, rehiring is set to fade as a source of job growth in many sectors, according to economists.
Leisure-and-hospitality might be an exception. The industry—which includes restaurants, bars and hotels—was particularly hard hit by shutdowns earlier in the pandemic and continues to recoup jobs lost in early 2020.
Unemployment rates rose last month across racial groups and ethnicities, with particularly large increases among Black and Hispanic workers. Fewer Black adults were working or seeking a job in August.
Job growth remains historically strong as the labor market holds up better than many other parts of the economy. Hiring remained solid last month in interest-rate sensitive sectors such as construction and manufacturing. Job gains were strong in professional and business services, healthcare and retail.
In Winston-Salem, N.C., Jennifer Coulombe has yet to see any indication of softening labor demand. Ms. Coulombe, an associate vice president at Forsyth Technical Community College, said graduates have little trouble finding a job. “We are now at a point where employers are knocking on our doors begging us for students,” she said.
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One of the school’s recent graduates, Stephen Hendrix, 20 years old, started working while in college as an apprentice for a firm manufacturing furniture-door hinges and drawer slides. The company paid him for the hours he worked and those he spent in class.
By the time he graduated with an associate degree, he was making $18 an hour. After graduation, his pay jumped to $23 an hour.
“I was honestly kind of surprised,” he said. Now Mr. Hendrix is saving up to buy land on which to build a house.
The job market could weaken in the coming months, as the Fed tries to tame inflation that is running near a four-decade high. Fed officials have raised their benchmark interest rate by 0.75 percentage point at each of their past two meetings.
Higher interest rates are intended to make it more expensive for people and businesses to borrow and spend money, which could lead to slower economic growth and an easing of price pressures.
Fed Chairman
Jerome Powell
warned in late August that the Fed’s moves would hurt the labor market and the overall economy.
“While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” he said.
Professional and business services
Trade, transportation and utilities
Education and health services
Professional and business services
Trade, transportation and utilities
Education and health services
Professional and business services
Trade, transportation and utilities
Education and health services
Professional and
business services
Trade, transportation
and utilities
Education and
health services
Professional and
business services
Trade, transportation
and utilities
Education and
health services
Write to Sarah Chaney Cambon at sarah.chaney@wsj.com and David Harrison at david.harrison@wsj.com
California’s Legislature passed a bill Monday to create a government panel that would set wages for an estimated half-million fast food workers in the state, a first-in-the-U.S. approach to workplace regulation that labor union backers hope will spread nationally.
The bill, known as the Fast Act, would establish a panel with members appointed by the governor and legislative leaders composed of workers, union representatives, employers and business advocates. They would set hourly wages of up to $22 for fast food workers starting next year and can increase them annually by the same rate as the consumer-price index, up to a maximum of 3.5%.
A previous version of the bill passed by the state Assembly in January also allowed the council to oversee workplace conditions such as scheduling and made restaurant chains joint employers of their franchise’s employers, potentially opening them to liability for labor violations.
Representatives for companies including
McDonald’s Corp.
,
Yum Brands Inc.
and
Chipotle Mexican Grill Inc.
succeeded in having those provisions removed in the state Senate via amendments over the past week, though they still oppose the bill.
“This is the biggest lobbying fight that the franchise sector has ever been in,” said
Matthew Haller,
president of the International Franchise Association, a trade group whose members own many fast food restaurants.
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A University of California, Riverside School of Business study commissioned by the franchisee association found that setting minimum wages between $22 and $43 would generate a 60% increase in labor costs and raise fast-food prices by about 20%.
California’s current minimum wage is $15 and is set to increase by 50 cents on Jan. 1.
The final version of the Fast Act passed both houses of the Democratic-controlled state Legislature on Monday. In both the Assembly and the Senate, all of the “yes” votes came from Democrats and every Republican who voted opposed the bill.
Democratic Gov.
Gavin Newsom
now has until Sept. 30 to decide whether to sign or veto the bill.
Mr. Newsom hasn’t taken a public stance on the current version of the bill, but his Department of Finance opposed the original version.
Labor unions backing the measure have long struggled to organize fast food workers, in part because the industry’s franchise model means there are so many different employers.
California lawmakers first floated the bill last year, with proponents arguing that tighter regulations were needed to protect fast food workers, who are overwhelmingly Black or Latino and who they say experience unpaid overtime and other labor violations.
The average U.S. home earned more last year than the average American worker. Prices for homes, groceries and gas are rising faster than Americans’ wages and that may be why sentiment and confidence have been so low recently. WSJ’s Dion Rabouin explains. Photo: Joe Raedle/Getty Images
Despite the recent changes, proponents said the bill is still a significant step forward. Lorena Gonzalez Fletcher, a former Democratic legislator who introduced the bill when she was in the Assembly, said it moves California closer to a labor model used in Europe where unions negotiate for wages and work conditions in an entire sector, rather than company-by-company.
“It’s still a big bold idea. And just the notion of giving workers a voice at the table will be fundamentally different for those workers,” said Ms. Gonzalez Fletcher, who now leads the California Labor Federation, the state’s largest union umbrella group.
The recent amendments call for the council to shut down in 2028 unless it is renewed, though inflation-adjusted wage increases for workers would continue.
The bill covers fast food restaurants that are part of a chain, that have limited or no table service and where customers order their food and pay before eating. The chain must have 100 or more locations nationally, up from 30 in a previous bill version.
California accounts for around 14% of total U.S. restaurant sales, and policy in the state tends to affect the rest of the sector, Citigroup Global Markets Inc. analysts wrote in a client note earlier this month.
Service Employees International Union President
Mary Kay Henry
said she hoped the bill would be a catalyst for similar movements across the country.
Investors have begun to ask about the act’s potential implications for restaurant chains at a time when companies are struggling with high food and labor costs, Wall Street analysts said.
“Obviously, we think it’s problematic on many, many fronts,” said
Paul Brown,
chief executive of Dunkin’ and Arby’s owner Inspire Brands Inc., in an interview. “I think it’s actually trying to solve a problem that doesn’t exist.”
have together spent more than $1 million to lobby lawmakers between 2021 and June 30 of this year, primarily on the Fast Act, state records show.
The International Franchise Association, which represents some 1,200 franchise brands, has spent $615,000 lobbying against the Fast Act and other legislation in that time.
Disclosures for lobbying spending since July 1 aren’t due until later this year, but industry advocacy against the bill has ramped up considerably during that time, people familiar with the effort said.
Labor unions have collectively spent more than $5 million to lobby the Legislature since the beginning of 2021, mostly on the Fast Act, state records show.
McDonald’s has encouraged franchisees around the country to email California lawmakers urging them to vote against the bill, according to a message viewed by The Wall Street Journal.
State Sen. Shannon Grove, a Republican, said on the Senate floor Monday that McDonald’s representatives told her that if the Fast Act becomes law, the company could stop expanding in California or leave altogether.
“Could we really survive without the golden arches?” Ms. Grove said.
Write to Heather Haddon at heather.haddon@wsj.com and Christine Mai-Duc at christine.maiduc@wsj.com
President Joe Biden is expected to continue to work from his office Tuesday as he isolates for at least five days in accordance with Centers for Disease Control and Prevention guidelines for people who test positive for COVID.
The President tested positive again on Monday in a ‘rebound’ case, a rare outcome of the antiviral Paxlovid with which he was treated last week.
Don’t miss: Paxlovid has been given to Biden and millions of Americans infected with COVID-19. In the U.K., it sits on the shelf.
Experts are concerned, however, that the CDC’s guidelines on isolation are confusing and do not reflect the changing nature of the virus some two-and-a-half years into the pandemic, the Washington Post reported.
The CDC recommends a timeline of five days of isolation, but does not insist on a negative test that would prove that a patient is no longer shedding virus and unlikely to infect another person. Yet new research shows that people often remain infectious for longer than five days, meaning it’s vital that when ending isolation, they continue to wear a well-fitting mask around others at home or in indoor spaces through day 10, the paper reported.
“Given that a substantial portion of people do have a rapid positive test after 5 days, I think an updated recommendation should include people having a negative rapid test before coming out of isolation for COVID,” Tom Inglesby, director of the Johns Hopkins Center for Health Security, and the Biden administration’s senior adviser on testing from December until April told the Washington Post.
The CDC is expected to unveil new recommendations in the coming weeks after an internal review, according to the Post, citing three officials and advisers who spoke on the condition of anonymity. However, a draft of the update does not include a test requirement before ending isolation, they said.
Read also: Campus COVID-19 vaccine mandates had the biggest impact on colleges with low-income students. Here’s why they were so effective.
The daily average for new U.S. cases remains close to 130,000 a day, but not all data are being captured as many people are testing at home. The average stood at 121,313 on Monday, according to a New York Times tracker, down 4% from two weeks ago.
The daily average for hospitalizations rose to 43,653 up 5% in two weeks. The daily average for deaths is up 4% to 446.
Coronavirus Update: MarketWatch’s daily roundup has been curating and reporting all the latest developments every weekday since the coronavirus pandemic began
Other COVID-19 news you should know about:
•Japan is considering altering its COVID-19 reporting protocols, including a change in how it collects case numbers, in a bid to lessen the burden on hospitals as they strain under a new wave that has spread across the country, The Japan Times reported, citing government sources. Medical facilities and public health centers currently cooperate to report the total COVID-19 cases to the government, but the change may limit the reporting of cases to designated establishments. With the prevalent omicron variant having less risk of causing severe illness compared with previous strains, some government officials have questioned the need to report every case. The government is expected to start formal discussions after the seventh wave of the pandemic dies down.
• President Joe Biden is set to name top officials from the Federal Emergency Management Agency and the Centers for Disease Control and Prevention to serve as the White House coordinators to combat the growing monkeypox outbreak, the Associated Press reported, as the illness replaces COVID in headlines. Biden will announce Tuesday that he has tapped Robert Fenton, who helped lead FEMA’s mass vaccination effort for COVID-19 as the agency’s acting administrator when Biden first took office, as the White House coordinator. Dr. Demetre Daskalakis of the CDC will be named his deputy. Daskalakis, the director of the agency’s HIV prevention division and a national expert on issues affecting the LGBTQ community, previously helped lead New York City’s COVID-19 response. Separately, California Gov. Gavin Newsom declared a state of emergency to speed efforts to combat the monkeypox outbreak, becoming the second state in three days to take the step, after New York.
The continuing spread of monkeypox has prompted the World Health Organization to declare a global health emergency. WSJ’s Denise Roland explains what you need to know about the outbreak. Photo: Kena Betancur/AFP/Getty Images
• Apple
AAPL,
-0.71%
is dropping its face-mask mandate for employees at “most locations,” The Verge reported, citing an internal email from the company’s COVID response team that it obtained. “Don’t hesitate to continue wearing a face mask if you feel more comfortable doing so,” the email reads. “Also, please respect every individual’s decision to wear a mask or not.” The move comes amid a surge in the highly transmissible BA.5 variant of COVID-19. Earlier this week, the Bay Area transit system BART brought back its mask mandate.
• The number of companies filing for voluntary liquidation in England and Wales hit a record in the second quarter after COVID support programs were removed, Reuters reported. Total company insolvencies surged by 81% compared with the April-June period last year, the bulk of them creditors’ voluntary liquidations (CVLs) which were the highest since records began in 1960, the government’s Insolvency Service said. Total company insolvencies were 13% higher than in the January-March quarter.
President Joe Biden posted a video clip to Twitter on Saturday afternoon after he tested positive for COVID-19 on Saturday morning in what his physician called a rebound case. Photo: AP Photo/Susan Walsh
Here’s what the numbers say
The global tally of confirmed cases of COVID-19 topped 578.5 million on Monday, while the death toll rose above 6.40 million, according to data aggregated by Johns Hopkins University.
The U.S. leads the world with 91.5 million cases and 1,030,554 fatalities.
The Centers for Disease Control and Prevention’s tracker shows that 223.2 million people living in the U.S. are fully vaccinated, equal to 67.2% of the total population. But just 107.9 million have had a booster, equal to 48.3% of the vaccinated population, and just 19.9 million of the people 50 years old and over who are eligible for a second booster have had one, equal to 30.9% of those who had a first booster.
Worker pay and benefits are rising this year at the fastest pace on record, keeping pressure on historically high inflation.
Business and government employers spent 5.1% more on compensation for workers in the second quarter compared with the same period a year earlier, without adjusting for seasonality, the Labor Department said Friday. That marked the fastest annual pace on records back to 2001, eclipsing the 4.5% annual increase in the first quarter.
Wages and benefits for civilian workers increased a seasonally adjusted 1.3% in the second quarter, a slight slowdown from record-high growth of 1.4% in the first quarter as employers pulled back on benefits this spring. Wages and salaries for private-sector workers accelerated, growing 1.6% in the spring versus 1.3% during the first three months of the year.
The growth in compensation shows that employers continued to seek workers and increase wages in a historically tight job market, even as the economy shrunk in the second quarter.
“The rest of the economy might be slowing down, but wages are speeding up,” said
Nick Bunker,
economist at jobs site Indeed. “Competition for workers remains fierce as employers have to keep bidding up wages for new hires.”
A separate Commerce Department report Friday showed consumers boosted their seasonally adjusted spending by 1.1% in June, up from a revised 0.3% increase in May. Personal income rose by 0.6% last month.
The report showed that inflation as measured by the Federal Reserve’s preferred gauge, the personal-consumption expenditures price index, rose 6.8% in June from the year before, up from the 6.3% increase in the 12 months through May.
Economists say the latest employment-cost figures are a discouraging sign for Federal Reserve officials as they try to bring four-decade high inflation down to their target of 2%. Companies often pass on price increases to consumers to compensate for higher labor costs.
On Wednesday, the Fed lifted its benchmark interest rate to a range between 2.25% and 2.5%.
“The Fed is closely tracking the data for signs of a wage-price spiral,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics, in a note, describing when rising prices cause workers to demand higher wages, which in turn causes companies to raise prices. “These readings, which are showing no sign of easing, will only strengthen the Fed’s resolve to keep moving interest rates higher.”
Richard Moody, chief economist at
Regions Financial Corp.
, thinks wage growth will cool only gradually because employers are competing for a limited pool of workers. Job openings, at 11.3 million in May, have held well above prepandemic levels, and there are fewer workers seeking jobs than before Covid-19 took hold in the U.S.
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Workers are also changing jobs at high rates. That dynamic is contributing to wage growth, as job switchers tend to reap bigger pay increases and put pressure on employers to raise pay for existing employees.
Jerry Pugh,
who owns 15 locations of suburban Atlanta-based gym franchise Workout Anytime, said many long-term employees have left for other industries or higher pay over the past year and a half, keeping the gyms in constant hiring mode. Mr. Pugh said the facilities need general managers, sales staff, personal trainers and fitness directors.
Workout Anytime gyms are dealing with staff turnover and higher wages—factors also affecting employers in other industries.
Photo:
Kevin C. Cox/Getty Images
“You can still get quality employees, but the price you’re having to pay is much higher than it was before Covid,” said Mr. Pugh. “Everybody wants more money than they’ve ever wanted.”
Mr. Pugh’s gyms are paying higher commission rates to personal trainers than a year ago, and they also are paying trainers $12 to $14 an hour for “floor hours,” in which they try to pull in new members for their services. That is up from an hourly rate of $10 a year ago. The gyms recently started offering other incentives, including paying for some high-performing employees’ personal-training or nutrition certifications.
To offset some of the higher labor costs, the gyms raised rates for new members by 99 cents a month at the end of last year. The basic monthly membership price is now $19.99. Mr. Pugh said the company is weighing another price increase.
Workers’ wage gains are largely falling behind inflation. Adjusted for inflation, private-sector wages and salaries fell 3.1% in the second quarter from a year earlier.
Wages for leisure and hospitality workers started surging last year as restaurants, bars and hotels reopened and struggled to find workers. There are signs that wage growth in the sector remains strong but is cooling as more workers trickle into the labor force.
Carrols Restaurant Group Inc.,
which operates more than a thousand Burger King locations and dozens of Popeyes restaurants, is seeing some slight easing of wage pressures. Average hourly wages for team members increased 13.6% from a year earlier in the company’s fiscal first quarter, compared with 14.2% in the fourth quarter, said
Anthony Hull,
chief financial officer of the Syracuse, N.Y.-based company.
“Hiring pressures are stabilizing as we are seeing an increase in application flow,” Mr. Hull said in an earnings call in May. The company has paid more to team members who acted as managers by opening and closing the restaurants. Mr. Hull said he expects those cost pressures to cool as turnover among managers declines.
Write to Sarah Chaney Cambon at sarah.chaney@wsj.com
Amy Faust Liggayu, 32, a market-research project manager based in Tinley Park, Ill., mother of a 7-month-old son, never imagined she would have a life where she could spend five days a week with him, while also working full time. But that was before March 2020, when the COVID-19 pandemic forced offices across the country to tell their employees to work from home.
She had previously spent $20 a day commuting four days a week, and worked the fifth day from home, but when her manager called employees back full time, a move many other businesses are making now that vaccines are widely available and the worst days of the pandemic appear to have receded, she was not willing to give up all that freedom remote work had given her.
Those early months of COVID-19 when millions of people worked from home gave them a rare opportunity to reevaluate the role of work in their lives. And in 2022 they have leverage: Unemployment is falling and wages are rising, as companies struggle to attract and retain workers. In fact, there are two job openings for every unemployed American, the highest level on record since 2001.
But many companies want workers back. Google parent company Alphabet
GOOGL,
-1.34%
GOOG,
-1.29%,
Apple
AAPL,
+0.17%,
Facebook parent Meta
FB,
+1.18%,
and Microsoft Corp.
MSFT,
-0.23%
have requested workers go back to the office at least a few days a week. Jefferies Financial Group
JEF,
-0.98%,
JPMorgan Chase
JPM,
-0.82%
and Goldman Sachs Group
GS,
-0.45%
are among the financial institutions that have also asked workers to return.
Amid these efforts, Faust Liggayu counts herself among the Great Resistance. “I’m very outspoken about my desire to never work in an office again,” she said. “The quality of life is so much better when you can cut out that commute or spend your lunch break with your family.” She would often not arrive home until 6:30 p.m. if she left the office at 5 p.m. Those were precious hours lost with her son.
When she received news that all employees were going to be back in the offices, she told MarketWatch that she was frustrated. “They haven’t been listening to me,” she recalls thinking. “They know I don’t want to go back.” So she took a stand. “Job recruiters were reaching out to me on LinkedIn. All the jobs they reached out to me about were working from home.”
The outcome was a win-win for her: She found a new job two months ago that paid more money, while working full-time from home. “I went from making $50,000 a year to $80,000. When I get to stop at 5 p.m., I’m done. I get to spend that time with my son. Time moves quickly. It means so much at this age. It means so much to get those extra two hours a night with him.”
Amid labor shortage, employees flex their muscles
The Great Resignation — regarded by some observers as more of a Great Negotiation for better pay and working conditions — has led to the Great Resistance, a battle of wills between senior management and, well, everyone else. For those who are fortunate enough to have the option to work remotely, which other figures put at 40% of the workforce, they’re not giving up.
“There is definitely a sense of resistance amongst employees against the full-week, all-day, in-person work concept,” said Vanessa Burbano, associate professor of business at Columbia Business School in New York. “Remote working enables a degree of flexibility in the day that is practically impossible to recreate in a physical co-working space.”
Faust Liggayu said her breakup with her former employer was respectful and without animosity. She had worked at that previous job from 2017 to March 2022, and it was a small team. But the standoff between some employees and their companies has not always been so free of drama. Apple, for one, has suffered at least one high-profile resignation as a result.
“The Great Resignation has led to the Great Resistance, a battle of wills between senior management and, well, everyone else. ”
A group, “Apple Together,” signed an open letter to the tech giant, claiming over 3,000 signatures from workers, rejecting a hybrid work model and asking the company to allow them to make their own decisions. “Stop treating us like school kids who need to be told when to be where and what homework to do,” they wrote. (Apple did not respond to a request for comment.)
Thus far, workers have successfully dug their feet into their sofas. Some 64% said they would consider looking for a new job if they were required to return to the office full time, a survey by ADP, a provider of human resources management software and services, found. Younger people (18- to 24-year-olds) are the most reluctant (71%) to return to the workplace full time.
“This shift from the traditional 9-to-5, office-based model cannot be undone and has long-term implications for the jobs market,” the report said. “As companies — and employees — re-evaluate their approach to the workforce, it is clear that having a flexible approach is key, as there are advantages and drawbacks to both exclusively, whether fully remote or fully in office.”
Last month, Airbnb acknowledged that the era of full- or even part-time office working is over, telling workers they could work from home or the office, if they choose, and they can work from anywhere in the U.S. without a change in pay. Starting in September, they can also live and work in over 170 countries for up to 90 days a year in each location.
Ken Steinbach: ‘There is a special connection when we are in the same space together face to face.’
There’s no such thing as a free lunch
Chris Herd, CEO of Firstbase, which helps companies go remote, said there’s no such thing as a free lunch. “Workers don’t want toys or free food, they want a higher quality of life. Forcing people to commute two hours a day — where they carry laptops to an office to sit in a chair for eight hours and then Slack or Zoom
ZM,
-1.32%
people who aren’t in the office all day — has created broken ways of living.”
He said the Great Resignation reflects people’s desperation for better work-life balance and believes that giving ultimatums will lead to “armageddon” inside companies. “Over the last two years, companies have found out people don’t need to be in the office for great work to keep happening,” he said. “Now, companies are pushing back for employees to return to office again.”
Nicholas Bloom, professor in the Department of Economics at Stanford University, said neither hard nor soft nudges will work. His own poll of 3,000 people revealed a “fiendishly hard” task for managers to get people back. “Nobody commutes for one hour for a free bagel or box or to use a ping-pong table,” he said. “They come in to catch up with friends and work in person.”
“‘If you have to force somebody to come to the office it is not in their interests to come in.’”
— Nicholas Bloom, professor in the Department of Economics at Stanford University
Indeed, some Silicon Valley companies pulled out all the stops to entice people back and foster a sense of community, he told MarketWatch. “Google got so desperate they hired Lizzo to give a concert, which is great for one day, but unless you are planning on getting Katy Perry, Taylor Swift and then Justin Bieber after that, this is not a permanent solution.”
“The resistance is there when employees do not see the point in coming in,” Bloom said. “If you have to force somebody to come to the office it is not in their interests to come in. To avoid forcing people you need to make it benefit them to come in. That means setting up typically two or three days a week of office time on anchor days when everyone comes in.”
He said it makes more sense to create a hybrid environment where team members show up on the same day rather than enforce a five-day week and fail. “So I see resistance to returning to the office a symptom of over-ambitious return to office plans. Realistic plans centered around anchor days, probably two to start off with, can work well and firms can build on this.”
For those who can work from home, this may be a luxury problem. The Labor Department says only 7.7% of employees teleworked in April. Millions of jobs necessitate in-person interactions. Retail, manufacturing and essential-services workers such as supermarket and hospital staff and public-transport employees put their lives at risk during the pandemic.
Remote work is a tradeoff for everyone
As managers negotiate with office workers, companies are negotiating with landlords about their office leases. In Manhattan, monthly leasing activity decreased by 11.5% month-over-month to 2.7 million square feet in April, Colliers said. However, companies seem to be betting on some kind of return to office life: Demand more than doubled year over year.
Herd, however, said managers will soon see the advantage of remote work. “E-commerce killed physical stores because people prefer to shop online, it gave them more choice, it was more efficient and costs less,” he said. “E-companies kill office-based companies because workers prefer to work online, it gives them more choice, it is more efficient and costs less.”
It’s obviously not a one-size-fits-all question, even for those who have had the luxury of working from home. “For me, in the mental-health counseling field, I can see both sides,” said Ken Steinbach, a Portland, Ore.,-based counselor. “There is a special connection when we are in the same space together face to face, and I would love to be able to connect that way again.”
“The reality is that most of my clients might not be able to have therapy if they had to block out time to go into an office,” Steinbach told MarketWatch. “Working virtually has made my services much more accessible to a great many people and I can’t see that changing. So yes, I love the idea of being in person, but that may not be the world we live in.”
Peter Gray, professor of commerce at the University of Virginia, said workers miss out on the emotional, social and intellectual stimulation that comes with being around others. For that reason, he favors a hybrid work model. “Employee resistance is to me perfectly natural when people believe that they can be just as effective at home as in the office,” he said.
But spending all that time working from your sofa or kitchen table or — if you’re lucky enough to have one — a home office may be a more expensive tradeoff for employees and management than they anticipate. “What they don’t realize is that their networks will slowly shrink as they spend more time at home, and this can hamper their effectiveness long term,” Gray said.
“Once they realize that some of the rich interactions they used to have in the office have faded, they start to wonder if they might be missing something important,” he added. “And as their broader networks shrink — the ones that expose them to creative new ways of thinking outside of their main work stream — their performance can suffer.”
The resistance appears to be winning
Another obstacle: An empty or half-empty office doesn’t help new employees or interns who rely on those face-to-face interactions for honing their skills and, critically, building a professional network so they can move up the corporate ladder and/or put their name in the hat for a promotion. For every seasoned employee who knows the ropes, there are others who need to be given a helping hand.
Skeptics also worry that some people may be tempted to take advantage of remote work, spend an hour or two catching up on their favorite TV show, while keeping a casual eye on their work emails, or — worse — take the entire day off and go to the beach, while answering the occasional Slack message from under an umbrella. In fact, eight out of 10 workers have admitted to slacking off.
Burbano, the Columbia Business School professor, is not surprised by such polls. “Remote work also comes with increased opportunities for worker misconduct, worker shirking and putting in less effort, as my research has shown, which is likely part of the reason that there is a desire amongst employers to bring people back to the physical office.”
Social media is filled with people claiming they will point-blank refuse to commute again. “I’m not going back to the office with these gas prices,” one person recently wrote on Twitter
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“The gas people and the commercial real-estate people are just gonna have to fight it out amongst themselves.” Another added bluntly: “Not in the mood to work or be around people.”
Recent research suggests such resistance is winning. The Conference Board, a nonprofit organization, says only 4% of companies are requiring staff to return to work full time and only 45% were requiring them to work five days a week from the office — even if a few days a week appears too much for some Apple employees and workers like Amy Faust Liggayu.
Faust Liggayu doesn’t fully buy the brainstorming-by-the-watercooler argument. “At my previous job, we had a meeting every morning to go over the workload for the day. That meeting would sometimes last an hour because we would just bulls*** about everything. But if you have enough calls where you can be spontaneous and a good team that works together well, you can still have that environment.”
And now? She is much happier at her new fully-remote, better-paid job. “I make a point of remembering what people are up to and ask them about their plans for the weekend to keep that community together,” she said. “I love it. I officially turned one of our extra bedrooms into an office. I get to spend my lunch with my son, feed him when he’s hungry. The flexibility is incredible.”
Amy Faust Liggayu: ‘I officially turned one of our extra bedrooms into an office.’
