Vendors, food servers, postal workers – “Help Wanted” ads are proliferating across the United States, as businesses struggle to deal with a labor shortage caused by the pandemic, a wave of early retirements and restrictive immigration laws.
More than 10 million jobs went unfilled in June, government data shows, while fewer than 6 million people were looking for work, even as employers desperately try to boost hiring amid a consumer spending spree.
“We have lots of jobs, but not enough workers to fill them,” the US Chamber of Commerce, which represents US businesses, said in a statement.
Many of those who stopped working when COVID-19 first ravaged the US economy in early 2020 have never returned.
“There would be 3.4 million more workers today if labor force participation” – the percentage of the working-age population currently employed or actively seeking work – were at the rate of before the pandemic, the House calculated. It went from 63.4% to 62.1%.
And where have all these people gone? Many simply took early retirement.
“Part of that is because the US population continues to age,” Nick Bunker, labor market specialist for job board Indeed, told AFP.
Too few immigrants
The huge cohort of baby boomers had already started to leave the workforce, but there has been an “acceleration in retirements” since the pandemic hit, economist Diane Swonk told AFP. chief at KPMG.
Millions of people opted for early retirement, health-conscious and with enough assets – thanks to a buoyant stock market at the time and high house prices – to leave work.
In the short term, Bunker said, “we’re unlikely to return to exactly pre-pandemic labor force participation levels due to an aging population.”
Adding to that, Swonk said, “We haven’t had immigration at the pace needed to replace baby boomers.”
Restrictions imposed under President Donald Trump, along with the impact of COVID, have sharply reduced the number of foreigners entering the country.
“He’s rebounded a bit, but still not to the levels we were seeing several years ago,” Bunker said.
The Chamber of Commerce also highlighted the impact of the government’s generous aid during the pandemic, which “has enhanced people’s economic stability – allowing them to continue to be absent from the workforce”.
Large numbers of women quit their jobs in 2020, in part because prolonged school closures forced many to stay home to care for children.
Those who wanted to place children in child care were often frustrated, as labor shortages also affected the child care sector.
Swonk noted that not only COVID infections, but also the debilitating effects of long COVID had a serious impact.
It’s “really one of the most underestimated and misunderstood issues” that keeps workers on the sidelines, she said.
To attract workers, many employers increased wages and benefits.
And if Americans’ buying spree slows, analysts say, businesses will need fewer workers.
The labor shortage should ease somewhat as the Federal Reserve continues to aggressively raise interest rates in its effort to fight inflation.
In the meantime, the employees have taken advantage of it. Over the past year, millions of people have changed jobs, often lured elsewhere by higher wages and better working conditions.
This “Great Resignation” resulted in higher hourly wages. The private sector average is now $32.27, up 5.2% year-on-year, adding to inflationary pressures.
The US labor market showed new signs of vitality in July.
The 22 million jobs lost due to COVID-19 have returned and the unemployment rate is at a historic low of 3.5%.