“I think that’s really what’s behind some of the big pitch to get people back to the office,” he said.
At the same time, rising unemployment has given employers more bargaining power.
The momentum shift began in 2022, when the labor market was hot and prices were high, said Aaron Sojourner, senior researcher at the W.E. Upjohn Institute for Employment Research. The Federal Reserve started raising interest rates early that year to slow the economy and tame inflation.
The labor market has since cooled but stayed relatively strong, with unemployment hovering at 4% nationally and 3% in Minnesota. Still, economic uncertainty — particularly around President Donald Trump’s ever-evolving trade war — has many employers hitting pause on hiring, leaving people without jobs in limbo and people with jobs feeling stuck.
“It’s the pandemic and post-COVID and Zoom, but it’s also AI and just general uncertainty,” said Kristine West, an economics professor at St. Catherine University. “Maybe COVID was the accelerant that opened up the conversation, but now it’s also about some of these other big, tectonic shifts that we’re figuring out as we go.”
Worker power has declined to roughly where it was pre-pandemic, according to Sojourner’s Labor Leverage Ratio, which measures “quits” — or workers leaving jobs — against layoffs.