It’s hard to believe that we are well into Year 3 of the CV19 pandemic. While cases & fatalities are about the same as this time last year, the lead headlines have moved onto the economy – particularly inflation and unemployment.
The jobs situation is a bit of a question mark to me. The unemployment rate is very low, mostly as a function of less people working. The ‘Labor Force Participation Rate’ fell sharply with the government lockdowns. This Federal Reserve graph shows how much it was impacted – and that it hasn’t yet recovered.
Enter the ‘Great Resignation’ theory. Economic analysts have postulated that much of this decline is driven by people retiring early during the pandemic. The Brooking Institute estimates the dip represents 3-3.5 million workers.
It turns out that the Great Resignation to retirement is a myth. The average age of retirement in 2020 & 2021 was pretty flat with the incoming trend according to Gallup, who has been the authority on retirement age in the US for decades. Look at the black line …
So if it is not people retiring early, why are there fewer workers in the labor force? It looks like younger folks might be a big part of that. Bloomberg shows that the labor participation rate of folks aged 18-34 is down pretty substantially …
So it looks like the Great Resignation may simply be a ‘Late Start’ for young people whose student years were hugely interrupted by the pandemic. That also fits with the reality that it is front line jobs in retail and hospitality that are most likely to be short-staffed.
What has been your understanding of the worker shortage?
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