Benzinga | Jun 30, 2021 07:36AM EDT

Workers Gain Power In Labor Market: What It Means For Wages, Benefits

Employers are, for the first time in decades, struggling to hire, as employees -- some for the first time in their lives -- are experiencing more power in the labor market.

What To Know In part due to President Joe Biden's $1.9-trillion American Rescue Plan, hundreds of thousands of unemployed persons are receiving an additional $300 per week, allowing them to accumulate enough to barter for a job with higher pay and more benefits.

(It's also possible that, as the pandemic continues, some workers still don't feel safe to return to work.)

This is flipping the economic situation of the pandemic's beginning on its head, as in March 2020, low-paid workers in settings like restaurants were frequently left unemployed with little ability to cover food and housing costs.

Now, they have more freedom to choose the job that they really want, and that's changing how companies operate.

Why It's Important Many top companies are offering increased pay and sometimes better benefits. Over the last few months, some of the nation's largest companies, including Under Armour Inc (NYSE:UA)and Costco Wholesale Corporation (NASDAQ:COST), have increased worker pay to at least $15 an hour.

Waste Management, Inc. (NYSE:WM) has begun offering to pay its employees -- and their spouses and children -- to earn college degrees and professional certificates, and Chipotle Mexican Grill, Inc. (NYSE:CMG) has expanded its debt-free degree program.

The federal benefits run out in September, which means we won't know how employers will respond after that point.

A number of conservative states have already opted out of the $300 weekly top-up payment for the unemployed. Still, the economy is already undergoing several changes. And even as workers gain more leverage over employers, jobs are still being added.

The May jobs report highlighted another 559,000 jobs added during the month, leading to a drop in the unemployment rate from 6.1% to 5.8%. This is the lowest unemployment has been since the global pandemic took hold in the U.S. in March 2020.