Three key numbers that explain America’s labor shortage

Three key numbers that explain America's labor shortage
Written by Publishing Team

This makes it difficult for companies to keep pace with the increasing demand. Economists worry about how long it will take for people on the sidelines to return to the workforce.
For most of the pandemic, economists agreed that childcare challenges and concerns about the virus are preventing people from returning to the job market.
But lately, it’s becoming clear that another dynamic is at work here: early retirement.
The percentage of Americans who are in the labor market, either as workers or job seekers, is measured by the labor force participation rate. This rate is not close to the pre-pandemic level. As of November, the measure is 61.8%, having regained about half of what was lost at the height of the pandemic compared to the February 2020 rate in 63.3%.

This difference may not seem like much, but it represents millions of people. The participation rate of men also recovered more than women, likely due to more women dropping out of the workforce last year for childcare-related reasons.

But the above graph does not show the recovery of the labor force for different age groups.

For example, the group that considers workers of “peak age” age—between the ages of 25 and 54—is on a steeper recovery path. Since May of this year, their participation rate has been consistently higher. I stood at 82.1% in November, compared to 83.1% in the pre-pandemic period.

Meanwhile, share rate tracking Workers over the age of 55 remained significantly lower: they remained at 38.4% in November compared to 40.3% in the pre-pandemic period In February 2020.

Perhaps most importantly, the participation of older workers fell to its lowest level in the era of the pandemic in May 2021, when it fell to 38.2%, not far from the current rate. Overall, the participation of this group has remained largely constant through 2021.

Lack of recovery in the participation of older workers It leads to the conclusion that early retirement—whether forced or voluntary—is a big part of the participation rate puzzle.

Forced to retire early

While retiring early may seem like a dream to some, it isn’t necessarily a happy story for everyone.

Certainly some older workers, categorized as 55 and over, have found themselves benefiting from the strong stock market in the past years, or rising home prices, so early retirement may be a conscious decision.

But others have found themselves forced to leave the workforce. These workers left their previous jobs after being furloughed or laid off, finding themselves not only in a high-risk group for Covid but also out of work.

Returning to work at an older age can be difficult.

Linda Plaza of California found herself fired from her job as a cloud consultant in October 2020 when her employer reorganized her.

“I was planning to retire at 65,” she told CNN Business.

Now she’s 64, and she says it’s nearly impossible to find another job like her old one: “And if they were to hire anyone, they would hire someone younger with more education.”

And other jobs around it in retail or food service, which carry infection risks.

For Linda, having to retire early turned her personal finances upside down, not least because her husband has already retired and she has to pay out-of-pocket health insurance now. The couple also defaulted on the mortgage.

“I want people to know things are not right,” Linda told CNN Business.

The emergence of the highly contagious variant Omicron has put workers’ health concerns front and center once again. It can make it more difficult for older workers to get back into the workforce even if they need to.


About the author

Publishing Team

Leave a Comment