With labor shortage, NC workers got some power back. That’s about to change

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These days, every day is Labor Day.

The disruption of the COVID-19 pandemic created a shortage of workers and ushered in a kind of holiday from being underpaid and overworked. Unsatisfied workers can command more pay, or quit and find a better job.

In North Carolina, and across the nation, it’s a buyer’s market for workers. There are not enough teachers, nurses, police officers, construction workers, bus drivers, state employees and on and on.

Andrew Berger-Gross, senior economist at the North Carolina Department of Commerce, said that for every job opening in the state, there’s an average of less than one job seeker. “It’s easily the tightest job market on record in the last 20 years,” he said, “and perhaps the tightest job market ever.”

The job market was tight even before the pandemic hit in March 2020. There were only an average of 1.6 job seekers for every job opening. At the height of the Great Recession, there were nearly 11 job seekers per job. Today there are 0.9.

While inflation has blunted wage gains caused by the worker shortage, there’s still a mental payoff for many in having a greater sense of control over where and how one works. Service workers are emboldened to unionize and office workers are balking at orders to get back to their office cubicle.

But now it seems this long overdue sense of empowerment is about to be reversed by a deliberate push by the government toward a recession. The Federal Reserve is aggressively raising interest rates to slow inflation. That medicine means fewer jobs and wage stagnation even though it’s not wages, but supply line disruptions, the war in Ukraine, a housing shortage, high oil prices and corporate profiteering that are the main causes of today’s inflation.

John Quinterno, founder of South by North Strategies Ltd., a Chapel Hill research consultancy specializing in economic and social policy, said solving the worker shortage by encouraging the government to slow the economy is a way for employers to reassert their power over employees.

Quinterno, who is also a visiting professor at Duke’s Sanford School of Public Policy, said, “Workers got a little bit of power back for the first time in decades in America and a lot of employers hate it. They are really trying to do whatever they can to help put workers back in their place, even if that means throwing the economy back into a recession.”

The Fed’s moves are having an effect. The number of job openings in North Carolina dropped from 380,000 in March to 360,000 today. But the labor pool has also shrunk, in part because of early retirements, the fear of COVID in crowded workplaces, curtailed immigration and parents staying home because child care is too expensive.

“We have a problem of not having enough bodies,” Berger-Gross said. To return to the pre-pandemic level of workers per job opening, North Carolina needs 250,000 more workers. To return to the historically normal ratio would require 500,000 to 1 million more workers.

“That’s clearly not going to happen absent a recession,” Berger-Gross said. “When recessions hit, that’s when you see the job market being flooded with available job seekers. That would restore balance to the labor market, but have the unfortunate byproduct of mass layoffs and people not being able to pay their bills. It’s not a situation we would want, but it’s a situation that might be inevitable given the current dynamics in the economy.”

This brief period of worker empowerment seems about to return to employers exercising total control over work conditions and how profits are shared. But it doesn’t have to go back to that. Better wages and flexible hours could lure some early retirees out of retirement. Relaxing limits on immigration would help fill gaps. Subsidized child care would allow more parents to work.

Taming inflation doesn’t require punishing workers.

Associate opinion editor Ned Barnett can be reached at 919-829-4512, or nbarnett@ newsobserver.com