Labor force participation remains below pre-pandemic levels, and the answer to the lingering question of what workers want is as much of a puzzle as it has ever been. Perhaps a better question to ask is, what do workers need?
A recent Minneapolis Fed survey, conducted in partnership with Community Action agencies in Minnesota and North Dakota, revealed that many workers were looking to make some type of work-related move. Many of them shared their need for more skills to reach their goals, while others were constrained by their personal and financial necessities. Across the board, survey-takers saw their cost of living increase due to higher prices and reevaluated their consumption behavior to prioritize their needs.
We heard from 217 individuals employed in a variety of industries, mainly in nonprofit and social services, education, and health care. Eighty percent were of prime working age, and while results are not intended to represent a scientific survey, they provide a snapshot of how current economic conditions may be affecting individuals in the Ninth District and influencing their decisions.
Occupational mobility goals and challenges
Overall, survey respondents were looking to make occupational changes—even if fully employed.
Sixty-eight percent said they wanted to move up the ladder in their current jobs, earn more, have more flexibility, or reach other work-related goals.
Workers in general want to feel productive: “I would really like to go back to school so I can have a career and not just a job,” shared a respondent. But the pursuit of those objectives isn’t always easy. Workers face a variety of barriers (Figure 1).
Many acknowledged that they needed better or different skills to meet job requirements. For others, family needs and responsibilities, like caring for their children—a factor that continues to affect workers and would-be workers—made the pursuit for better opportunities less straightforward.
The great majority of those pursuing occupational changes reported earning less than $50,000 per year; 40 percent made less than $25,000. Getting paid enough to meet their personal and family needs is key when considering a change, and some thought the wages being offered by prospective employers were insufficient.
Self-investing in training or education or simply changing jobs comes with a price tag, and that amount is relatively higher the lower a worker falls in the income-distribution spectrum. Survey results show that 39 percent of those with annual incomes below $10,000 were finding it very difficult to make the changes they wanted; that share decreased to 33 percent for those making between $10,000 and $24,999 and to 20 percent for those making between $25,000 and $49,999 (Figure 2).
Diminished purchasing power
As inflationary pressures mounted, workers across all income levels saw their cost of living rise. The upsurge in prices was felt in every category, but particularly—and with more intensity—at the fuel pump and when checking items off the grocery list (Figure 3).
Many respondents also noted eating out being considerably more expensive as restaurants passed on input costs to their patrons.
In response to the higher cost of living, many are reevaluating their discretionary spending habits. The largest decrease in consumption was seen in the “food away from home” category. “We have become more mindful of eating more home-cooked meals versus ordering food from restaurants,” shared a survey participant.
Reactions to price pressures varied across consumption categories (Figure 4). Less elastic items, such as rent, medicine, and electricity, saw the least change in demand overall. Twenty-five percent reported reducing their use of electricity, and 34 percent were being more mindful of their driving needs and habits to reduce their fuel consumption. “We’re watching our fuel consumption, and driving only when necessary, versus taking trips for leisure,” said a respondent.
More to learn
Today’s labor market has been often referred to as a “worker’s market.” Strong wage increases and the abundance of help-wanted signs suggest that workers have leverage in the labor market not seen in decades. However, not every worker has the upper hand.
Dynamics behind individuals’ labor participation decisions are complex, and they’re tied to a wide-ranging set of needs. The lingering presence of COVID-19 and inflationary pressures have only added to a running menu of items people must consider when deciding to take a job or make a career move.
Income, education, child care availability, and other factors influence people’s ability to work, and the Minneapolis Fed will continue exploring new ways to gain insight into the forces affecting labor decisions from the supply side.
Erick Garcia Luna is a Minneapolis Fed regional outreach director. In this role, he focuses on gathering and analyzing economic intelligence on the regional economy to help inform the work of the Fed. Follow him on Twitter @ErickGarciaLuna.