More than half of employed job seekers think their current employer will ask them to stay and make a counteroffer if they resign
Employers to Employees: Please Don’t Go!
Instead of asking workers to leave, employers are increasingly begging them to stay.
In December of 2021, for example, 3% of all payroll employees quit their jobs, while just 0.8% were laid off or discharged. That’s a big change from the normal pre-Covid labor market, where 40% of all job separations were initiated by employers.
Record-low layoffs in recent months have coincided with record-high numbers of job openings and record-low numbers of unemployed job seekers per opening.
These unusually favorable labor market conditions have given job seekers and workers a boost in bargaining power—and their answers in a nationally representative monthly survey conducted by ZipRecruiter suggest they know it.
Consider the following survey findings:
- 54% of employed job seekers think their current employer will ask them to stay and make a counteroffer if they resign, up from 47% in February and 43% in January.
- 50% of job seekers who hope to find a new job in the next six months already have at least one other offer in their back pockets, up from 42% in February and 42% in January.
- 17% of job seekers say they have ghosted an employer at some point during their current job search, up from 16% in February and 16% in January.
- Among hourly workers, the share earning less than $15 per hour fell to 44% from 46% in February and 50% in January.
- Among hourly workers, the average reservation wage rose to $21.13 in March from $20.62 in January.
- 62% of job seekers either said they prefer or only want remote work (19% only want a remote job; 43% would prefer it but accept in-person work), much the same as in February.
In a market where so many job seekers have outside offers or are able to secure counter-offers from their existing employers, job seekers have substantial leverage and can make their demands known—whether for higher pay or for more remote work opportunities.
Businesses that delay in adjusting compensation or that insist on employees returning to the office five days a week may find it increasingly difficult to overcome powerful market forces in the opposite direction.
What is Job Seeker Bargaining Power?
The bargaining power of job seekers refers to the pressure that candidates can put on businesses to get them to provide higher wages and better working conditions. Job seeker bargaining power is strong when:
- There are few job seekers relative to job openings.
- It is easy for workers to switch jobs.
- Job seekers have alternative sources of income.
- Job seekers’ skills are in high demand.
What are Reservation Wages?
A worker’s reservation wage is the minimum wage that the worker requires in order to participate in the labor market and accept a new job. Past research on pay expectations and reservation wages shows that:
- Job seekers are much more likely to accept job offers that are equal to or exceed their reservation wage than to accept jobs offering less.
- An unemployed job seeker’s reservation wage tends to fall slowly as their unemployment spell drags on.
- Job seekers reduce their reservation wages as they run out of savings and exhaust their assets.