Next Gen: Young job seekers seek more than good pay

Employers struggling to fill jobs would be better off offering flexible work arrangements and other incentives to younger workers because wages aren’t enough to lure them back to the labor market, according to a study by the Federal Reserve Bank of Atlanta.

Compared with baby boomers when they were the same age, millennials are less responsive to wage inducements, Atlanta Fed economist Julie Hotchkiss said in research posted on the Fed bank’s website.

"These differences are not good news for employers trying to coax workers back into the labor market during a robust pandemic recovery," Hotchkiss wrote. "Employers will likely have to also resort to non-wage incentives to entice workers to fill their open jobs."

Some restaurants, for example, are trying to entice younger workers with financial packages such as 401(k) accounts and profit-sharing plans, benefits almost unheard of in many traditionally lower-pay service industries before the pandemic.

And in jobs where working remotely is feasible, an increasing number of businesses are promoting flexible work arrangements as a recruiting tool. A Richmond Fed survey published last week found that almost 60% of large companies now use work-from-home options to attract new full-time employees.

The U.S. labor force remains about 900,000 below its pre-pandemic level. Meanwhile job openings and quit rates are hovering near record highs.

The Atlanta Fed’s research paper compared the responsiveness to pay changes of the various generations when each was 20 to 40 years old. Millennials, born from 1981 to 1996 and Gen Zers born after 2002 are roughly in that age bracket today.