Four myths about the new US job market

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Daniel Altman is the chief economist at Instawork. follow him up Twitter for real-time insight into hourly workforce trends.

The US job market has undergone a stunning transformation in the wake of the Covid-19 pandemic. The initial shock and subsequent acceleration of existing trends have shifted the links between workers and companies. They have also led to a series of misconceptions worth correcting.

Sure, a few misconceptions have already faded. The ‘great layoff’ has given way to the ‘great reshuffle’, mask and vaccine mandates have not crippled business, and millions of office workers are finding out that remote working won’t last forever. Yet other myths persist. Here are four of the most prominent — and why they’re wrong:

Myth One: Wages are still rising across the board.

Broadly speaking, those who closely monitor the economy agree that: revenues have not kept up with inflation for most employees. But the suggestion that rising wages are driving inflation continues to circulate. This may be true in some in-demand professions, but it is largely false for the watchmakers who make up more than half of the US workforce.

Services booked on my company’s platform, Instawork, showed a sharp increase in hourly wages until about the third quarter of 2021 in different industries. Since then, wage increases have been largely the result of short-term labor supply problems caused by the omicron variant and holiday seasons — and they have been temporary. Many roles not seen sustainable increase in earnings, and I’ve noticed hourly wages in some jobs have actually gone down slightly in recent months.

Myth two: The Great Reshuffling is about employees getting better deals from employers.

The pandemic caused a huge number of labor market disruptions by forcing millions of companies to reduce their workforces or shut them down altogether. But many workers, whether they lost their jobs or not, took the opportunity to reassess their careers and change direction.

We know people have been looking for more flexibility in when they need to work and the ability to work from home. We have also seen a significant number of professionals migrate on the Instawork platform until warmer climates with lower unemployment rates, reflecting the general trend followed by government statistics. But in at least half of those cases, the people who migrated actually got lower wages — even adjusted for local price levels — for the same positions they’d worked in before moving. The choice was often more about lifestyle and personal goals than about pay. (Indeed, I wrote about this trend in one of my books over a decade ago and predicted that lifestyle hubs would replace business hubs for mobile professionals.)

Myth three: Unionization is the only way to bargaining power for workers.

After decades of decline, unions have shown signs of a comeback, with high-profile wins for union workers at Amazon, Starbucks and other major companies. Still, the comeback – which started before the pandemic – has so far been modest and concentrated among part-time workers, about 6.9% of them were unionized in 2021, compared to 6.2% in 2018† So how can workers regain even more bargaining power?

The answer is choice. One of the driving forces behind the declining share of labor in the nation’s income was the employer consolidation As companies took over and merged, there were simply fewer places to get jobs. As a result, employees had less influence at the negotiating table. But new platforms like LinkedIn and Indeed have expanded the employee menu, opening up more options across the country. Now the two sides of the negotiating table are beginning to balance again.

Myth Four: Flexible working is a stopgap solution without career advancement.

Flexible work — taking shifts or jobs based on an employee’s preferences for time, role, salary, and location — has a stereotype as a sideline for extra income or a fallback when full-time work isn’t available. But as many professionals are discovering, it can be much more. Some timekeepers use flexible work apps to work full time and earn well into the six figures. For many others, flexible working is a matter of trial and error, for both employees and companies.

Professionals who work shifts or perform at a local company often work on short notice before getting a longer engagement† Many companies ask employees with whom they have had positive experiences and hire them for long-term assignments. Sometimes these shifts turn into permanent positions, which can be a great result for everyone involved.

At a time of great disruption, the US job market is changing even more than meets the eye. If you look closely enough, it is clear that flexible working is at the heart of the change. For those of us at the forefront, the time has come to create more opportunities.


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