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It’s harder than ever to get fired or laid off

Employers aren’t letting go of workers. That’s another indicator of worker power.

A McDonald’s sign advertising jobs for $15 an hour and free meals.
People are quitting, especially in the lowest-paying industries, but they’re not getting fired nearly as much.
Ben Hasty/MediaNews Group via Getty Images

One more sign that American workers are in a uniquely powerful position these days: Layoffs and discharges are at record lows.

In December, just 0.8 percent of all US employees were let go, a record according to Bureau of Labor Statistics data that goes back more than two decades. The low rate of layoffs is yet another indicator that workers have a unique amount of power right now. How long they have it and what they will do with it remains to be seen, but there’s reason to believe that this moment could lead to lasting changes in the dynamic between employees and employers.

The low level of layoffs and discharges, which includes employer-initiated separations like firings, coincides with high levels of job openings. In this difficult hiring economy, employers are loath to lose the employees they’ve got.

Job openings have been at or near record highs in the last year. Faced with changing outlook on work’s place in our lives, millions of people have quit or left the workforce for a variety of reasons, including early retirement and pandemic child care needs. That has left employers struggling to find enough employees to fill the rebounded job market. Job openings are highest in industries like hospitality and food service, which saw tons of layoffs early in the pandemic. Since then, there have been record numbers of job openings in and outside these industries. The problem for those employers is that people who work in these industries are using the demand for their labor to find better-paying jobs in and outside their industries.

Hence the historically low rates of layoffs and firings. Since it’s so hard to find workers, employers are doing their best to retain the ones they’ve got.

“There’s never been a time in the past 20-plus years that you’ve been less likely to get laid off,” Nick Bunker, economic research director at Indeed’s Hiring Lab, told Recode. “If employers are so desperate to hold onto or are, more frankly, not laying anyone off, that’s also another signal to workers of, hey, you have more ability to negotiate with employers.”

All of this has given workers, especially in the lowest-paid sectors like retail and food service, a bit more leverage. Pay is the most obvious area in which workers are seeing improvement. Compensation rose 8.4 percent last year for those in food service and accommodation jobs and 6.3 percent for retail workers, compared with 4.4 for all jobs. Employees should note, however, that wages are rising much more quickly than usual for those who switch jobs than for those who stay at their jobs, according to data from the Federal Reserve Bank of Atlanta.

Some are using the hiring shortfall to eke out better conditions in addition to better pay, like more regularly scheduled hours or health care or even perks like the ability to work from home. Employers could also use this situation as an opportunity to invest in their existing employees through training programs. The need for employees could also change management’s treatment of those employees, though that could take a while. At least anecdotally from sites like the antiwork subreddit, there are still lots of bad bosses out there.

“Yes, the labor market is pretty tight right now, but it might take a long time for there to be structural and cultural changes in how people might be treated at work,” Bunker said.

And this leverage will only last as long as the hiring shortfall continues, and it’s not clear how long that will be. It will depend on a number of pandemic- and nonpandemic-related factors, like schools and day cares staying open and whether those who retired early can afford to stay retired. But for now, the time is ripe to get what you want from your employers.