Where did all the workers go? From lower wage earners to top talent, it feels like everyone is scrambling to find help. It seems there’s a perfect storm of so many factors in play, all on a national, even global, scale.
Opinions about the cause abound:
- Traditionalists, those born between 1928 and 1945, and boomers, those born between 1946 and 1964, are retiring in droves.
- Of the COVID deaths in the U.S., almost 49 percent were of working age.
- Unemployment support keeps people out of the job market.
- Declining birth rates have been evident for years and we’re now paying the price.
- Severe immigration restrictions are impacting a historic source of workers.
More thoughts:
- Women have left the job market, and aren’t coming back anytime soon.
- People are evaluating work/life balance and changing their job focus and aspirations.
- A reduction in consumerism has people feeling less need for two-income families or higher paying, stressful jobs.
- Many don’t want to return to work until COVID fears subside.
All of the above are true to one degree or another. It’s no wonder no single research group has been able to offer a concrete explanation. It also explains why some people call the labor shortage a myth, referring to those choosing not to return to work.
The National Bureau of Economic Research tracks the labor force participation rate. They group labor force participation into two groups: those actively seeking employment and those not pursuing jobs.
The conclusion? There’s a shocking decline in the number of people who want to work.
Why? Unemployment benefits have had an impact, particularly on lower paid workers, but are not considered a major factor. JP Morgan Chase and others point out that 26 states cut off the benefits early and didn’t notice a subsequent uptick in job growth.
In a survey by Indeed, a popular job search company, only 9.5 percent cited unemployment checks as a reason for their lack of urgency in returning to work. Bigger issues were related to COVID fears (23 percent); having an employed spouse or financial cushion (20 percent); and family care duties (18 percent).
Stephanie Aaronson, a senior fellow at Brookings Institution, points out there are 1.8 million fewer women in the workforce: “Staying home with children may result in staying out of the workforce for years, women tend to stick to their decisions.” Re-evaluating their work/life balance may cause a long-term shift.
Meanwhile, a Harris Poll survey for USA Today revealed about 40 percent of workers want to continue to work from home. As more employers allow new hires to work remotely, this intensifies labor force competition.
It’s been primarily the younger worker groups, Generation X or millennials, and Gen Y and Gen Z that welcomed telecommuting or flexible schedules. They were the ones quick to embrace the latest communication technology. Now it’s pretty much all generations.
The lessons of remote working that came from COVID are here to stay and will impact recruitment and retainment going forward.
At the same time, knowledge and trust is expanded by proximity to one’s colleagues in the workplace. We learn from one another and develop loyalty.
It’s going to be a challenging balance going forward.