Glassdoor Senior Economist Daniel Zhao breaks down how prospective employees can take advantage of the labor shortage.
SEANA SMITH: Let's turn back to that September jobs report, the number that we got out this morning. 194,000 jobs added to the US economy in the month of September, far below what the Street was expecting. But if you're out there looking for a job, let's talk about what the environment is like right now.
And for that, we want to bring in Daniel Zhao. He is a senior economist and data scientist at Glassdoor. And Daniel, it's good to see you. We know the competition out there for employees is extremely stiff. Employers are doing all they can to lure the top talent. In terms of what it's like right now for those looking for jobs, give us a sense of that.
DANIEL ZHAO: Yeah, thanks for having me. So I would say that right now, job seekers do have the power. They have the leverage in order to actually look for jobs that are going to be a good match for them and their skills, and then also offer the wages and benefits that are appropriately compensating them.
There was a little bit of a slowdown in August and September in the labor market. But the fact of the matter is, is that demand for workers is still red hot. And so I expect that we're going to see jobs growth to continue to reaccelerate into the end of the year. And fundamentally, the situation is still a good labor market for job seekers.
BRIAN CHEUNG: Hey, Daniel, it's Brian Cheung. It's great to have you on the show. I wanted to ask about what you're seeing in labor force participation, because that's been going sideways. But then the employment to population ratio did tick up noticeably between August and September. So what are you seeing in terms of the composition of the labor force and whether or not there could be structural damage as a result of COVID to maybe even women in particular, who might be kind of staying at home compared to the trend before the pandemic?
DANIEL ZHAO: Yeah, there are really two components to why labor force participation might be lower than where we were before the pandemic. So the first, as you mentioned, is structural. It has to do with the aging of the population, more workers retiring, that sort of thing. And then, there are COVID specific challenges. So for example, for women, many women have had to leave the workforce and have to stay out of it because they're taking care of kids or taking care of elderly family members. And that's a challenge that we saw in September in particular, where women's labor force participation dropped, as school reopenings were disrupted.
So I think that on the one hand, we should start to see some of those factors become less of a factor as the pandemic eases. There are going to be some structural drops in labor force participation, but I think the lesson learned over the 2010s is that we can actually get a lot of workers back into the labor force. We can even attract workers who are retired back into jobs, assuming that the labor market is tight enough.
SEANA SMITH: Daniel, how do we do that, though? What needs to happen?
DANIEL ZHAO: Well, right now, the situation is going to start to do that as the labor market is really tight. And so, we do see more workers who are willing to return because wages are rising aggressively. But the flip side is, is that the pandemic is still going on. And so for many workers, especially when you think about older workers who have retired, for them, health risks are especially salient. And so, it's harder to get them back into the workforce.
Once the pandemic is over, though, the hope is that a tight labor market will be able to pull in workers who are more marginally attached to the labor force. So ultimately-- I mean, this is something we've been saying for the last year and a half-- we need to get the pandemic under control in order to make sure that we have a full labor market recovery.
BRIAN CHEUNG: Now, a lot of the focus of the impact of COVID was on those specifically younger lower wage workers. What's been interesting, too, is the focal point on those that might be eligible for retirement or thinking about retirement through the COVID recovery.
And I saw some Kansas City Fed research that suggested that even though there's this narrative that people are retiring early, actually, the lack of older people in our workforce might be attributable to people who were older that aren't coming back into the workforce, which was a trend that we saw pre-pandemic. I guess, I'm just wondering if that lines up with what you were seeing in Glassdoor in terms of the older side of the labor force.
DANIEL ZHAO: Yes, and I think that Kansas City Fed research was great as well. It really does highlight how every story in the labor market is two-sided, right? You're talking about both inflows and outflows. And that is what we are seeing with some of the older workers who are not willing to return to work right now, whether it's because their retirement portfolios are performing pretty healthily or because they're just concerned about the actual physical health risks associated with COVID.
So it's definitely a concern moving forward. I think that when the pandemic is over, if the labor market is still tight, that is going to start to pull in some of these more marginally attached workers. But it might not be retirees. It might be workers who are disadvantaged in other ways, like workers with disabilities or workers with a criminal history. That's really the benefit of having a tight labor market.
SEANA SMITH: And Daniel, speaking of the tight labor market, what kind of advantage does this give employees right now with their employers, even if they're not looking to move, just in terms of the negotiations that they could raise right now, whether that's on salary or some of the other issues with the contract?
DANIEL ZHAO: Yeah, I would say now is the best time to ask for a raise or to even look for a new job. Because worker power is so high right now, that leverage is there because of the tight labor market. It means that now is a good time to ask for that raise or to even ask for more benefits or more flexibility in the work arrangements. Because employers right now are not just raising wages, they're also throwing everything in the kitchen sink at offering new benefits or experimenting with new perks.
And so, employers are willing to actually meet workers where they are. And quite frankly, if your employer is not willing to meet you where you are and what you want, then right now, there are other opportunities out there. Like, the grass is actually greener. And so, I would just encourage job seekers and employees alike to consider whether now's the right time to ask for a raise or to look for a new job.
SEANA SMITH: All right, Daniel Zhao, senior economist and data scientist at Glassdoor, thanks so much for taking the time to join us.