Global Courant 2023-05-12 20:14:39
After a three-year national health crisis, over 1.1 million Covid deaths, a wave of retirements and high inflation, the US workforce is smaller and tighter than it was before the pandemic. For workers, this means continued leverage to secure wage increases and better conditions even as the economy cools.
The job market rebounded sharply from the blow of Covid-19 when the country was ravaged in early 2020, thanks to aggressive federal relief efforts and widespread vaccine rollouts. But the health crisis has transformed the economy in a way that has continued throughout the recovery, and analysts expect the ripple effects to continue despite a slowdown in hiring and lingering recession fears.
As the world went into lockdown in March 2020, low-wage workers in hospitality and other service roles saw some of the biggest job losses amid the sharpest drop in employment since World War II, according to a National Bureau of Economic Research (NBER) study in March. While some parts of the economy have recovered beyond pre-pandemic metrics, employers in many industries still face staffing challenges.
Spending is back, labor demand is back, but we have a smaller labor force.
— Wendy Edelberg, the Brookings institution
“Expenses are back, labor demand is back, but we have a smaller work force,” said Wendy Edelberg, director of the Hamilton Project and a senior fellow at the Brookings Institution. “That’s one of the reasons why the job market feels tight and why companies left, right and center are reporting that they’re struggling to find staff.”
The American population is 1.4 million people shun pre-pandemic projections based on the growth rate before Covid hit, according to an April Brookings analysis of federal data. About 900,000 of those “missing” people were expected to be at work.
Edelberg attributed about 650,000 of those absences to deaths (Covid-related or otherwise) and the remaining 250,000 to immigration policies during the pandemic — most notably Title 42, a Trump administration measure that expired Thursday night along with the federal emergency on the field of public health.
Many of the country’s workers are still suffering from health effects incurred during the pandemic.
A January report from the New York State Insurer’s Fund, the state’s largest workers’ compensation insurer, found that during the first two years of the pandemic, 71% of patients with “long Covid” symptoms required continued medical treatment or was out of work for six months or more.
A report from the management consulting firm McKinsey & Co., also out January, estimated that the economy was deteriorating 315 million to more than 1 billion working days among US workers because of Covid last year alone, which equates to 1.3 million to 4.3 million people leaving the workforce.
“At the top, that’s about double the average number of sick days of U.S. workers in the decade before the pandemic,” the researchers wrote.
A major reason why the job market remains so tight is that the pandemic collided with an already aging US population.
Some older workers left the workforce ahead of schedule as employers cut jobs and laid off staff. As the ensuing recovery sparked a wave of hiring, many recent retirees returned from the sidelines, but others remained in place.
A recent study by the Federal Reserve Bank of New York highlighted one 2.1 million workers “participation gap”, which it largely attributed to the aging of the massive baby boom population and a wave of retirements.
While job growth is finally cooling down and layoffs have been piling up for months, many employers remain hungry to hire. Government data showed 9.6 million vacancies in Marchlower than last year’s levels, but still much higher than the 7 million or so openings posted before the pandemic – in what was already a hot market at the time.
Last month, the U.S. added 253,000 jobs, continuing a long streak of job gains that have been a boon to workers, with many taking part in the so-called Great Resignation to seek better opportunities and work-life balance, or even completely new careers during the economic recovery. Others have reaped the rewards by staying as bosses add incentives to retain staff.
Wage growth at the bottom really makes the labor market more equal.
— Arindrajit Dube, UMass Amherst
“We’ve had a huge imbalance between the demand for workers and the supply of workers in recent years,” said Paige Ouimet, a finance professor at the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill.
“It’s slowly starting to shift,” she said, “but it’s still a different situation in terms of the bargaining power employees have versus their employers.”
An NBER study March showed that wage increases among the lowest paid workers have significantly slowed the growth of income inequality. Arindrajit Dube, a study co-author and an economist at the University of Massachusetts, Amherst, said the size of low-wage wage increases was striking: a 6% increase from January 2020 to September 2022.
“The wage growth at the lower end is really making the labor market more equal,” said Dube.
Lower-wage workers brought in more income “because they were able to leave, because they were able to find better jobs,” he said. The trend has led to an increase in work organization efforts in the era of the pandemic, including at well-known brands such as Starbucks and Amazon, as workers put their influence to the test.
There are also signs that fierce competition for workers is increasing the employment rate of certain groups.
According to Brookings, women aged 25-54 have increased their labor force participation by 1.5 percentage points since 2019, and black people aged 25-64 by 1.7 percentage points over the same period.
However, some demographics see the opposite trend. “White men of all ages and older white women participate less” in the workforce, the Brookings researchers wrote. Labor force participation among white males age 20 and older amounted to 70.1% in Aprildown from 71% in March 2020.
The employment rate of people with disabilities has increased from 23% to 20.7% in 2019, according to federal employment data. The upswing reflects the many disabled workers who have joined the workforce during the job boom – as well as the increase in people working long-term with Covid.
Remote working and flexible working arrangements have made many jobs more accessible to people with disabilities. Government data showed 27.5% of private employers enabling full-time or part-time teleworking as of last fall, most recent data available.
“I am confident that the ability to work remotely will continue to impact who works and who doesn’t,” said Brookings’ Edelberg. “Those effects are not yet fully reflected in the data. That has been with us for a long time.”
