What Happened to the Workforce? Some Insights

It doesn’t matter where you go or what you do, you see help needed signs. Hiring signs are ubiquitous, I defy you to drive around and not see them.

It doesn’t matter where you go or what you do, you see help needed signs. Hiring signs are ubiquitous, I defy you to drive around and not see them. So, what has happened to all of the workers? As with any issue, there appear to be several factors at work that are impacting the size of the workforce.

A little bit of background is in order to put a bit of perspective on the issue. The pandemic which hit this country in February of last year ultimately caused the loss of approximately 20 million jobs. Through September of this year, we have recovered approximately 15 million of those jobs. However, there are still five million fewer workers today than before the pandemic and three million of those have left the workforce.

The Federal Reserve Bank of Dallas estimates that some 2.6 million people retired during the pandemic. This accelerated or catalyzed the pace of retirement for the baby boomer age group. When the LFPR was at its peak of 67.3% in the year 2000, since then we have seen a steady decline as the baby boomer age group moved into groups that generally exhibit lower participation rates and the teenage group saw a decline as the group saw an increase in the educational enrollment rate. Clearly, retirement decisions were impacted by the pandemic as those over age 60 and those with compromised immune systems stopped working to limit the risk of exposure to the virus.

Women were disproportionately impacted as the burden of childcare usually fell on them. Home schooling became far more prevalent and some children did not return to school due to fear of contracting the virus. Some of the Moms that quit work to take care of kids have not returned to the workforce because of ongoing educational and child care responsibilities at home.

The highly contagious Delta variant of the virus spiked during recent months and the number of people citing the pandemic as a reason for not seeking a job rose to 1.6 million, the first increase in this category since January. This is clearly a core reason for people not working or keeping someone at home to care for children.

Government policies allowed workers to stay at home due to government payments from the various stimulus bills during the pandemic. The government has pumped trillions of dollars of money into the economy, allowing people to survive during the pandemic, creating a disincentive to work for some. While most of those payments were to end this past September, there are still ongoing payments such as the $300 check per child tax credit (how does a tax credit become a check?) rental assistance and food stamps. Perhaps this phenomenon will dissipate over time.

Vaccine mandates by the government and employers that set an ultimatum for workers are having a negative impact. The vaccine mandates first applied to nursing homes and they lost jobs last month. Many states and school districts have also imposed mandates and state and local education employment fell 161,000 last month. We are told that these mandates will boost job growth but they seem to be having the opposite effect.

Clearly, some 700,000 people have succumbed to the virus. How many of those people were in the workforce? While we know those over 65 and with compromised immune systems were the most at risk and accounted for most of the deaths, how many of those were in the workforce? Anecdotally, I sit on the board of an entity that has approximately 100 employees and we lost two people to the virus.

Fortunately, the Delta variant seems to be declining across the country. Hopefully, with a combination of vaccinations, therapies and maybe even a new COVID pill to lessen the impact of the virus, things will return to normal sometime soon. The pandemic has dominated our lives for the last 18 months or so and we are all suffering from COVID fatigue. A growing labor force allows our economy to grow more rapidly as there are some 10 million job openings across the country.

Jeff MacLellan is retired from Landmark Bank. He spent 37 years in banking, and has been tracking local economic indicators since he came to Columbia in 1987.

News Source: Columbiatribune

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What Happened to the Workforce? Some Insights

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Rajesh Tamada

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About the author

Rajesh Tamada