After three years of national health emergency, more than 1.1 million deaths from covid, a wave of retirements and high inflation, the US workforce is smaller and tighter than before the pandemic. For workers, that means continued leverage to secure wage gains and better conditions even as the economy cools.
The job market has rebounded sharply from the blow dealt by Covid-19 when it swept the country in early 2020, thanks to aggressive federal relief measures and the widespread rollout of vaccines. But the health crisis transformed the economy in ways that have persisted throughout the recovery, and analysts expect its ripple effects to persist despite a slowdown in hiring and fears of a simmering recession.
As the world shut down in March 2020, low-wage workers in the hospitality industry and other service roles saw some of the steepest job losses amid the largest drop in employment after World War II, according to a study by the National Bureau of Economic Research (NBER) 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, the demand for labor is back, but we have a smaller workforce.
— Wendy Edelberg, The Brookings Institution
“Spending is back, demand for labor is back, but we have a smaller workforce,” said Wendy Edelberg, director of the Hamilton Project and a senior fellow at the Brookings Institution. “That is one of the reasons why the job market feels tight and why companies have been reporting left and right that they are having a hard time finding workers.”
The population of the United States is 1.4 million people below pre-pandemic projections based on its growth rate before the Covid hit, according to an April Brookings analysis of federal data. Around 900,000 of those «missing» people were expected to be working.
Edelberg attributed roughly 650,000 of those absences to deaths (Covid-related or otherwise) and the remaining 250,000 to immigration policies during the pandemic, particularly Title 42, a Trump administration measure that expires Thursday night along with the federal public health emergency.
Many of the nation’s workers continue to suffer from the health effects that occurred during the pandemic.
A January report from the New York State Insurance Fund, the state’s largest workers’ compensation insurer, found that during the first two years of the pandemic, 71% of patients with symptoms of «long Covid» required ongoing medical treatment or did not return to work for six months or more.
A report by management consultancy McKinsey & Co., also from January, estimated that the economy lost 315 million to over 1 billion business days among US employees due to Covid last year alone, equivalent to 1.3 million to 4.3 million people leaving the workforce.
“At the high end, that is about twice the average number of sick days American workers took in the decade before the pandemic,” the researchers wrote.
A key reason the job market remains so tight is that the pandemic collided with an already aging American population.
Some older workers withdrew from the workforce earlier than planned, as employers cut jobs and laid off staff. As the subsequent recovery kicked off a hiring spree, many recent retirees returned to the sidelines, but others stayed.
A recent study by the Federal Reserve Bank of New York noted a 2.1 million workers “participation gap” which he largely attributed to the aging of the massive baby boomer population and rising retirements.
While job growth is finally cooling off and layoffs have been piling up for months, many employers remain eager to hire. Government data showed 9.6 million job offers in Marchdown from last year’s levels but still much higher than the roughly 7 million openings posted before the pandemic, in what was already a hot market at the time.
Last month, the US 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 Quit to seek better opportunities and work-life balance, or even completely new careers. during the economic recovery. Others have reaped rewards by sticking around, as bosses add incentives to retain employees.
Wage growth at the bottom is really making the job market more equal.
— Arindrajit Dube, University of Massachusetts Amherst
“We’ve had this huge imbalance between the demand and supply of employees for the last several years,” said Paige Ouimet, a finance professor at the Kenan-Flagler School of Business at the University of North Carolina at Chapel Hill.
«It’s slowly starting to change,» he said, «but it’s still a different situation in terms of the bargaining power that employees have relative to their employers.»
An NBER study March found that wage gains among the lowest-paid workers have substantially slowed the growth of income inequality. Arindrajit Dube, a co-author of the study and an economist at the University of Massachusetts, Amherst, said the scale of wage gains for low-income earners was striking: it rose 6% from January 2020 to September 2022.
“Wage growth at the bottom is really making the job market more equal,” Dube said.
Lower-paid workers have earned more income “because they have been able to leave, because they have been able to find better jobs,” he said. The trend has fueled a pandemic-era surge in labor organizing efforts, including at brands like Starbucks and Amazon, as workers test their influence.
There are also signs that strong competition for workers is increasing labor participation among certain groups.
According to Brookings, women ages 25 to 54 increased their labor force participation by 1.5 percentage points since 2019, and black people ages 25 to 64 increased by 1.7 percentage points over the same period.
Some demographics, however, are seeing the opposite trend. “White men of all ages and older white women are participating less” in the labor force, the The Brookings researchers wrote. Labor force participation among white men age 20 and older stood at 70.1% in Aprildown from 71% in March 2020.
The labor force participation rate of 23% among people with disabilities is up from 20.7% in 2019, according to federal employment data. The increase reflects the large number of disabled workers entering the workforce during the job boom, as well as the increase in people working with Covid for a long time.
Remote and flexible work arrangements have made many jobs more accessible to people with disabilities. Government data showed 27.5% of private employers allow full or part-time telecommuting as of last fall, the latest data available.
“I am very confident that the ability to work remotely will continue to affect who is working and who is not,” said Edelberg of Brookings. “Those effects are not fully seated in the data. That’s with us for a long time.»