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What Workers Want Amid a labor shortage, economists explore the deeper motivations behind why employees stay or leave. By Alli Bily and Lynn MacDonald
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n October 2024, the U.S. Chamber of Commerce reported that there were eight million job openings and only 6.8 million unemployed workers. With more job openings than the number of people looking for work, the U.S. is experiencing a shortage of workers. As of November 2024, The Bureau of Labor Statistics (BLS) reported the U.S. unemployment rate as 4.1 percent, while Minnesota’s unemployment rate is 3.4 percent. Low unemployment is considered a sign of a strong economy, but
many businesses are struggling to fill open positions. In 2022, more than 50 million workers quit their jobs — an increase over the 47.8 million people who quit in 2021. The BLS defines quit rates as the number of quits during the entire month as a percentage of employment. According to the BLS, in September 2024, quit rates for positions in the hospitality and food services sectors were 2 percent higher than quit rates for positions in the information and financial services sector.
Contributors ________
The labor shortage is particularly pronounced in low-wage jobs. According to the Minnesota Department of Employment and Economic Development, the median wage by occupation in Central Minnesota for the first quarter of 2024 was: Healthcare support: $18.05 Food preparation and serving related: $14.80 Sales and related: $17.92 This data from Central Minnesota suggests that wages in traditionally low-wage jobs are rising. When studying wages on a national scale, economist David Autor and a team of researchers found that the earnings ratio between the highest 10 percent of earners and the lowest 10 percent of earners decreased by 8 percentage points from 2020 to 2023. The lowest paid workers are moving closer to the highest paid workers. Real hourly earnings for the bottom 10 percent of income earners increased by 7.8 percent. A Pew Research Center survey of individuals who quit their jobs in 2021 found that, in addition to compensation (cited by 63 percent of respondents), a lack of opportunity for advancement was equally significant. Approximately 50 percent cited childcare issues as a reason they quit, while 45 percent of respondents identified lack of workplace flexibility as a significant factor (though this
Alli Bily is a 2019 economics graduate from St. Cloud State University (SCSU), and a 2020 graduate of University of Illinois. Lynn MacDonald, Ph.D., is associate professor of economics at SCSU.
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varied by education level). Among those with some college education or less, 49 percent cited a lack of flexibility as a reason for quitting, compared to 34 percent of those with a bachelor’s degree or higher. The value of flexibility at work is echoed by finance professor José María Barrero and team whose research found that “ ... on average Americans value the option to work from home two or three days a week at 8 percent of pay.” These findings suggest that, while competitive wages remain important, career growth opportunities and workplace flexibility are increasingly influencing workers’ decisions to stay or leave a job. When there’s a shortage in a market, the simplest answer from economists is to raise the price. For a worker shortage, this approach implies raising wages to attract workers, but that approach is most effective when those looking for work have the necessary skills required for the job openings. If there is a skills mismatch, training and education opportunities may be able to help. When thinking about attracting and retaining talent, workers may be looking for additional value beyond just higher pay. While offering competitive pay is still crucial, research suggests that providing clear pathways for advancement and addressing the growing demand for flexibility — especially as childcare challenges persist — could help employers attract workers in a highly competitive job market.