Power Dynamics in the U.S. Labor Market: Exploring Employer-Employee Relationships

MESSAGE FROM THE RESEARCHERS

Despite the Labor Shortages, Many Workers Feel Employers Hold the Power

by Justin Ladner, Ph.D., and Ragan Decker, Ph.D.

An analysis of traditional labor market metrics reveals ongoing favorable conditions for workers. For example, at the end of April 2024, there were about 8.1 million job openings in the U.S. labor market, according to the U.S. Bureau of Labor Statistics. Although that number has fallen significantly from its March 2022 peak of 12.2 million, it is still high by historical standards (see chart below).

Furthermore, there continue to be more job openings than there are unemployed people, the quit rate among employees remains elevated, and concerns about labor shortages persist among employers. It is intuitive to assume that this tilt in favor of workers would strongly influence power dynamics in the workplace. New research from SHRM explores this question, with findings that underscore the critical role that perceptions play in shaping employer-employee relationships.

Views of Job Market Vary Based on Age and Job Level

During May 2024, SHRM surveyed U.S workers, unemployed job seekers, and HR leaders on their beliefs about current employer-employee power dynamics. As noted in the charts on the prior three pages, attitudes across these three groups are deeply divided regarding the balance of power among employers and employees.

The attitudes of HR leaders largely align with the realities of the tight labor market conditions described in the numbers above. In other words, labor is scarce, and workers are able to capitalize on this scarcity when engaging with their employers.

As one might expect, unemployed job seekers do not share this view. More than 80% of this group stated that the current balance of power in the labor market moderately or strongly favors employers. More surprisingly, over 60% of U.S. workers agree with this opinion, and only 18% feel that current labor market conditions moderately or strongly favor workers. 

The collective perception of U.S. workers is clearly that employers have the upper hand. However, it is important to note differences in views among various subpopulations of workers.

Most notably, workers ages 50 and older are significantly more likely to view the labor market as favoring workers (26%) relative to their younger counterparts ages 18-34 (18%) and ages 35-49 (14%). Similarly, managers (22%) are somewhat more likely than individual contributors (15%) to feel that labor market conditions currently favor employees. Older workers and managers are correspondingly less likely to feel that employers are moderately or strongly favored in the labor market, though a clear majority do in both cases.

Power Is Perception

Why are workers so likely to feel that current labor market conditions favor employers, and why do we observe these differences across age and experience levels?

It is critical to consider that—although workers may be aware that the labor market is tight and their skills are in demand—perceptions of power are likely based on a complex mix of expectations, personal experience, and other factors that are not captured in official statistics.

For example, older workers may have lived through periods with fewer worker protections and less control over their working conditions, which makes the current labor market seem comparatively favorable. Similarly, the lack of power that workers feel in general may reflect broader economic concerns, such as inflation.

Understanding these nuances is a key area for future research efforts. In the meantime, our findings underscore the reality that—for all their value—the metrics most commonly used to measure U.S. labor market health do not necessarily align with the perceptions of individual workers. Organizations should be mindful of this gap when developing strategies to attract and retain talent. 

Justin Ladner, Ph.D., is SHRM’s senior labor economist. Ragan Decker, Ph.D., is the manager of EN/ES Research at SHRM.