Businesses in the largest economy are asking: Where have 4.3 million people disappeared?

Autumn should mark the end of the shortage of employees plaguing the world’s largest economy. Additional unemployment benefits are expiring. Schools are opening, allowing many parents to take on the task of looking after their children all day. So economists and entrepreneurs thought there would be a flood of employees, writes The New York Times.

But something else happened: in September, the number of employees decreased. Five million fewer people are working at the end of the ninth month than before the pandemic. Three million less are looking for work.

The slow process creates a headache for the Biden administration, which relies on a strong economic recovery to give impetus to its political plans. Observers do not know how long this situation will last.

Republicans blamed generous unemployment benefits, but states that stopped payments earlier did not see an increase in employment. Democrats believe companies can find workers if they raise wages – but the shortage is not limited to low-wage sectors.

Economists point out that there are many complex and intertwined factors – many of which continue to have an effect.

The health crisis is making work dangerous for some people, and the savings accumulated during the pandemic are helping others to turn down job offers they don’t want. Psychology also plays a role: research shows that the pandemic has made many people rethink their priorities. And the wave of open positions motivates them to wait for better offers.

The end result is that, for the first time in decades, workers across the entire income ladder are setting the rules. And they use their position not only for higher wages, but also for more flexible hours, more generous social benefits and better conditions.

A record 4.3 million left their jobs in August. “It’s like the whole country is in some kind of union negotiation,” said Betsy Stevenson, an economist at the University of Michigan and an adviser to President Obama. “I don’t know who will win, but it seems the workers have the upper hand.”

The Wall Street Journal also asks where 4.3 million workers went missing. The publication estimates that the number of employed would be even higher if the same share of the population over the age of 16 were working or looking for work, as before the pandemic. In February 2020 it was 63.3%, and in September this year. is 61.6%.

The shortage comes at a time when US employers are trying to fill ten million jobs and meet growing consumer demand.

In sectors such as manufacturing, retail, transportation and logistics, utilities, professional and business services, employees are leaving either at or near record-breaking rates. Labor market participation is declining among all demographic groups and sectors, but particularly rapidly among women, workers without a university degree and those working in lower-paid industries – hotels, restaurants and care.

The decline in employment at the start of the pandemic was the largest since at least World War II. A partial recovery was reported last summer, but it has remained around the lowest levels since the 1970s – despite significant economic growth and the strongest wage rise in years.

Some economists speculate that the situation reflects longer-term changes: an earlier retirement driven by the pandemic. Many experts expect the shortage to last for years, and some even speculate that this will be the new normal: of the 52 economists asked by the publication, 22 believe that labor market participation will never return to pre-pandemic levels.

Usually, after a recession, consumers avoid spending frivolously, and businesses avoid inflating the state – and those who were laid off earlier are looking for jobs. This time the demand is stable, employers are looking for new staff under wood and stone, but employees do not want or can not return.

The situation is especially difficult for large employers, who traditionally increase the number of employees during the holidays. Amazon and Walmart are looking for at least $ 300,000, and UPS and FedEx have plans to hire $ 200,000. The good news is that employees are earning higher salaries. Their productivity is also growing: by 5% between the first and second quarters of 2021.

Some of the reasons are related. Kindergartens, where there are not enough employees, return families. The number of people employed in child care fell by 108.7 thousand, or 10.4%. Employee wages are also rising by 10%. This makes it harder to find a place for the child, and where there is one, it is more expensive. Which makes some parents just stay home.

Closing borders has reduced the number of immigrants. A number of baby boomers, who fear the virus and whose condition has risen due to the bull market, are retiring earlier. Aid also plays a role: many people think twice before returning to difficult but low-paid positions.

Employers are starting to adjust: restaurants, for example, are reducing the hours they receive customers. Other businesses are reducing the number of services offered.

Many other businesses see automation as a solution to the shortage: unstaffed gas stations, cashless stores and restaurant ordering tablets are some examples. Overall, investment in such technologies increased by 16% in the 12 months to the end of June, compared to an average of 4% in the last 10 years.

Others make their employees work harder. In production, employees work an average of 4.2 hours more than agreed each week last month, compared to 2.8 hours in April 2020.

The good side of labor market shortages

The power is again on the side of the workers – including those employed in lower paid industries



Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.