It’s now a well-known economic fact that job postings are higher than the number of job seekers. Business owners don’t hide their confusion and even disdain for the perceived lack of interest potential workers have in their job openings.
“If people are not working, what are they doing now?” asked a retailer in a recent Minneapolis Fed survey of business conditions. “We want to hire more workers, but many don't want to work.”
Is it that simple? Is the labor conundrum simply a matter of worker motivation?
That’s difficult to know, because there is less research investigating the supply side of the labor market equation.
In that context, the Minneapolis Fed has been asking job seekers and existing workers to share their perspectives on the labor market and the economy in general. We collaborated recently with Community Action Partnership of Montana and South Dakota to survey individuals in those states, and we received insights from 790 respondents in various labor force participation stages.
Responses show that most out-of-work respondents were in fact looking for a job; among employed respondents, half were also pursuing some type of occupational change. Many faced challenges reaching their goals, and the declining value of their dollar brought added pressures and considerations.
Looking for more than just a job
Part of the enigma surrounding current labor conditions may stem from the perception that there is a linear relation between labor supply and demand.
If someone is looking for a job and a business has an opening, it should be just a matter of connecting the dots, right?
Well, it is less straightforward than that. While some job hunters may be simply seeking any job in order to be employed, many have other objectives in mind. As they search, some out-of-work respondents were also looking for jobs that offer better pay, more flexibility, and better benefits. Others were hoping to find remote work opportunities or change their career field, while some were taking the time to find training programs to expand their skills (Figure 1).
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Eighty-nine percent of out-of-work job seekers reported household incomes of less than $50,000 a year. In contrast, only half of employed job seekers fell in that income bracket. The difference in income likely pushes each group’s occupational priorities in different directions.
More than a third of employed job seekers were looking to increase their income, and a similar share wanted to grow in their current job. Finding a job with remote work was a priority of 1 in 5 respondents, a sign that the changes to the labor landscape brought upon by the pandemic may not be quite temporary.
But whether employed or not, the majority found some difficulties and deterrents as they pursued their objectives.
Nearly a third of all respondents looking for a job or other kind of occupational change had at least one young child living at home. For unemployed job seekers, the availability and cost of child care was high on the list of barriers to employment. “Lack of reliable childcare has caused many issues in finding and keeping a good job,” shared a survey taker. Child care concerns were also an impediment for those employed, but it trailed behind insufficient wages and the need for more training and certifications (see table).
Occupational mobility obstacles
Source: Federal Reserve Bank of Minneapolis
|Available jobs don't pay enough
|Need new skills to meet job requirements
|Need credentials or certifications
|Cost of day care for children
|Finding day care for children
|Available jobs don't offer benefits
|Schedules are difficult to keep
|Available jobs are too far
|Need computer knowledge
|Don't have time to undergo training
|Don't know how to find training
|Need computer and internet access
Life and work, a balancing act
Employment decisions aren’t made in a vacuum, and factors like household income, savings, and the impacts from inflation play a role, particularly for those with less income.
“Finding the right job that pays well and [has] affordable housing close by has been impossible. I am having to put more on my credit card,” shared an unemployed educator in Montana.
More than half of job seekers lived in households with incomes below $50,000. To meet their needs, one-third said they are using credit cards and loans. A similar share was using funds from savings, selling possessions, or borrowing from family and friends.
Ninety-two percent of out-of-work job seekers had no savings to rely on; a quarter of them said they had exhausted the little they had during the pandemic. Employed respondents looking for changes were in better shape, but still more than half indicated having nothing put aside.
Recent inflationary pressures have strained household budgets, often requiring tough, even dire trade-offs. “Higher prices have affected my family. We don’t have enough to buy food or fuel to go to appointments, job search, schooling, stores, and so forth,” shared an unemployed health care worker.
More than half of job seekers were concerned with paying for housing and utility bills, and 40 percent felt stressed about being able to secure food for themselves and their families.
Elevated prices, predominantly in food and fuel, have put extreme pressure on many low- and middle-income individuals. “Our budget is $700 over last year due to fuel and groceries for our family,” shared a respondent.
As their cost of living has increased, respondents prioritized essentials over more discretionary items (Figure 2). More than three-quarters reported cutting down on eating out or ordering take-out, and wardrobe updates were put on hold by more than half.
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But the high prices of essentials like groceries are also affecting the types of products people buy; a Montana respondent shared that their family has “gone away from eating fresh foods and have switched to boxed and canned foods because they are cheaper and have also reduced meal sizes to cut costs.” More than a quarter of all job seekers said they are making substitutions to their grocery list.
Higher gasoline prices have translated into mobility restrictions for some, jeopardizing their ability to earn a living. “My 20-year-old daughter had to quit her 20-hour-a-week job because we couldn't afford the gas to get her there since we live 30 miles from town,” said a Montana hospitality worker, highlighting the uneven impacts that higher fuel costs have on rural residents with limited transportation options.
Housing costs have also risen. Among job seekers that rent, nearly 60 percent saw their rents increase, adding yet another challenge to balance. A recently employed health care worker referred to the scarcity of affordable housing in Montana as a crisis. He and his family were homeless for three months after his landlord raised the rent by $400.
Not one solution, but many
Employment and the demands of daily life are in perpetual competition for job seekers’ attentions. As daily life becomes more complicated, employment decisions do too.
“I love my job and the people I work with, but I need to make more money,” shared a 39-year-old single mom who works in the hospitality industry. She recently began looking for a better-paying job. “Higher prices in groceries, gas, and clothing have put a strain [in my budget] because my income has not gone up,” she added.
All told, survey results suggest that workers’ decisions are based more on the alignment of multiple factors than on whether people are willing to work.
Some employers, for their part, are rethinking hiring practices through providing training and allowing more flexibility, but more may be needed. There isn’t a one-size-fits-all remedy to address current labor force participation challenges, but listening to workers is crucial to inform any steps we take toward addressing them.