Today, the first Friday of August, is jobs day and the Labor Department reports that unemployment is unchanged at 3.5%.
As the labor market remains tight, companies may hasten to settle contracts and new graduates might not take the first job they’re offered. Last month, more workers said “take this job and shove it” and quit before snagging another job.
In July 2023, the “job leavers” share of total unemployed people jumped sharply to 14.6% from 13.2% in June, still way down from a high of 15.8% in September 2022. (The job leaver share rose despite the July 2023 quits rate in JOLTS staying flat at 2.4%, which was way down from a record of 3% in April 2022.)
Another sign of worker power is that the share of job losers has decreased sharply from over 48% to near 44%.
I mine job day numbers for trends in worker power. Worker power can raise living standards through higher wages and improved working conditions. The July 31, 2023 UPS Teamster contract for 340,000 workers increased base pay to $20 per hour and added air-conditioning to fleet trucks. And the company settled without taking a strike!
Rising Worker Confidence May Indicate More Real Wage Growth
Based on the jump in the voluntary job leaver share, real wages may still increase. The correlation between real weekly earnings and the job leaver share is pretty tight — they move together (except after Covid when prices quickly outpaced wages for two terrible years, March 2020 – May 2022 prices).
When the share of the unemployed who are voluntary job leavers fall, wages soften and decline.
Will Wages Push Up Prices?
Today’s report shows nominal weekly earnings up from $1,155.84 last month to $1,157.28 in July. What matters, though, is real earnings adjusted for inflation. We won’t know those numbers until August 10, when the Labor Department releases its real earnings report for July 2023.
Some watchers worry that more worker power will force firms to push up prices and cause more inflation. We will see if the highly productive workers at UPS will force up UPS rates.
There may not be cause for worry, though last month real wages did increase a bit — in June 2023 real (adjusted for inflation) weekly earnings rose one half of one percent. Yet that rise could be temporary and shallow. A July 2023 survey of business economists revealed that most economists surveyed (53%) said their firms did not increase wages in the last 3 months. And, further indicating a wage slowdown, only 47% of respondents reported rising wages — significantly lower than the 63% reported in the April survey. What’s more, yesterday the Labor Department posted productivity gains, which can absorb a nominal wage increase.
Labor Unrest is Rising
Crushed buying power seems to have sparked a wave of labor organizing and strikes. The Cornell University labor action tracker revealed that in the year before July 31, 2022, 17 strikes involved more than 2,000 workers. That number rose this year to 22 large labor actions. There were 407 strikes in 656 locations in the most recent 12 months, up 12% from the prior year, which saw 364 labor actions in 538 locations. Actors and writers in LA and NY, Starbucks
SBUX
UPS worker Jane Fallon wrote before the new UPS Teamsters labor contract was signed, “I’ve been with UPS for 12 years and make $21 an hour … It’s not an easy job. I wake up at 3 a.m. to start my workday at 4. Around the holidays, when demand increases, UPS shifts my hours.” All the while, UPS profits soared during the pandemic. No wonder UPS was worried about a massive strike.
For three years pay hikes fell behind inflation and profits soared. According to the AFL-CIO, worker strikes are at an all-time high because CEOs claim they can’t afford to boost worker pay. Yet, the average CEO-to-worker pay ratio is at its second-highest level ever — 272-1 — and the Economic Policy Institute reports worker productivity has outpaced pay gains by 3.7 times for the last 40 years.
Pay and profits are numbers we should pay attention to to predict stability and prosperity.
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