Where have all the workers gone?
There are currently 10 million job openings in the U.S. Meanwhile, 4.3 million fewer Americans are employed today compared to the number employed in February 2020 at the start of the pandemic. In technical terms, the labor force participation rate has fallen from 63.3% to 61.6% even as GDP surpasses the 2020 peak.
Why are these workers missing in action? Theories abound.
• Fear of COVID: Some workers are holding back for fear of contracting COVID in the workplace.
VACCINE RESISTANCE >>
Some workers are being terminated for failure to become vaccinated.
• Lack of child care: The participation rate among women has declined steeply as childcare is difficult to find and children are held out of school. Even when child care is available, some women question whether it is worth going to work if most of the earnings simply go for child care payments.
• Above-average savings: With government benefits in their pockets and few places to spend money during the pandemic, surplus savings have allowed some workers to stay on the sidelines longer than would normally be the case.
• Early retirement: Baby boomers have been retiring in droves for years. Unemployed Boomers near retirement age may simply decide that enough is enough and never return to work.
What will get people back to work? Again, theories abound.
• The pandemic ends. • Higher wages: From Amazon to Starbucks to the local restaurant, wages are going up. In some cases, the new pay scale exceeds $15 per hour.
• Better working conditions: For many years, workers have essentially been “on-call” to come into work as needed rather than working regular hours.
• Reduced government support: Ultra-high unemployment benefits have come to an end. Eviction and payment moratoriums are expiring.
• Retraining: In many cases, the skill sets of the unemployed do not match the skills needed by employers
Does the participation rate really matter?
Currently, the shortage of workers is holding back the economy. For example, supply chain bottlenecks have created huge backups of shipping containers at American ports. Auto makers cannot build cars due to a shortage of computer chips. Restaurants cannot fully open due to a shortage of cooks and servers. Houses cannot be built due to lack of carpenters.
As time goes by, some shortages will be overcome with automation. Capital spending is surging as companies automate tasks. Think of all the jobs that have been eliminated through the decades by automation — bank tellers replaced by ATMS, gas station attendants replaced by selfservice pumps, cashiers replaced by self-checkout, food servers replaced by on-line ordering — and you can see the writing on the wall for many of today’s unfilled jobs. This will increase with the advent of self-driving trucks and other inventions yet to come.
The larger question is whether a higher participation rate makes for a healthier society. Many believe that holding down a job and earning a living improves mental health and self-esteem. If this is the case, there is much to be said for creating conditions that will lure the missing back into the workforce.