Labor, Dazed And Confused

This Labor Day weekend, we look at the US labor market, and how the pandemic accelerated decade-long changes into a year or two. As millions of Americans lose extended unemployment benefits this week, we're going to see how long American workers hold out from going back to jobs they gave up for various reasons in the last 18 months.

At heart, there is a massive reallocation underway in the economy that’s triggering a “Great Reassessment” of work in America from both the employer and employee perspectives. Workers are shifting where they want to work — and how. For some, this is a personal choice. The pandemic and all of the anxieties, lockdowns and time at home have changed people. Some want to work remotely forever. Others want to spend more time with family. And others want a more flexible or more meaningful career path. It’s the “you only live once” mentality on steroids. Meanwhile, companies are beefing up automation and redoing entire supply chains and office setups.

The reassessment is playing out in all facets of the labor market this year, as people make very different decisions about work than they did pre-pandemic. Resignations are the highest on record — up 13 percent over pre-pandemic levels. There are 4.9 million more people who aren’t working or looking for work than there were before the pandemic. There’s a surge in retirements with 3.6 million people retiring during the pandemic, or more than 2 million more than expected. And there’s been a boost in entrepreneurship that has caused the biggest jump in years in new business applications.

“The economy is going through a big shift overall and that has ramifications,” said Ben Bernanke, the Federal Reserve chair from 2006 to 2014. “We are reallocating where we want to work and how we want to work. People are trying to figure out what their best options are and where they want to be.”

It doesn’t help that the abundance of job openings right now are not in the same occupations — or same locations — where people worked pre-pandemic.

There is a fundamental mismatch between what industries have the most job openings now and how many unemployed people used to work in that industry pre-pandemic. For example, there are 1.8 million job openings in professional and business services and fewer than 925,000 people whose most recent job was in that sector. Leisure and hospitality, as well as retail and wholesale trade, also have more openings than prior workers, and many workers who lost jobs in those industries have indicated they don’t want to return.

There’s a similarmismatch in education and health services, where there are 1.7 million job openings and only 1.1 million people whose last job was in that sector.

In recent months, heath care workers and educators have quit their jobs at the highest rate on record, stretching back to 2002, Labor Department data show.

“This is typically the time of year we recruit for the upcoming school year, but we literally can’t get enough candidates, and we’re seeing tenured people leave,” said Cindy Lehnhoff, a 36-year veteran of the child care industry who currently heads the National Child Care Association. “If you get one good candidate, there are 10 others contacting that same person. It’s a crisis. People can’t work without child care.”

Lehnhoff has been helping a child care center in northern Virginia recruit more staff. Their infant room remains closed, because they don’t have enough people, and one of their veteran workers was just poached by a nearby elementary school. As she spoke with The Washington Post, Lehnhoff pored over the Indeed.com job portal. It showed more than 2,000 job posts in the Fairfax County, Va., area for child care teaching assistants. Most paid $12 to $13 an hour, a bit less than many nearby fast food restaurants and retail stores.

Nationwide, most industries have more job openings than people with prior experience in that sector, Labor Department data show. That’s a very different situation than after the Great Recession, when the number of unemployed far outstripped jobs available in every sector for years. To find enough workers, companies may need to train workers and entice people to switch careers, a process which generally takes longer, especially in fields that require special licenses.

While companies say they are struggling to find workers, many unemployed say they are having trouble getting hired, especially if they haven’t worked for a year.

Forklift driver Brandon Harvey and his wife used to work in a warehouse outside Atlanta that closed during the pandemic and never reopened. Harvey, 33, searched for a job for months, looking online and driving around South Fulton. He submitted countless applications but rarely got calls back.

“I fear that employers are pretty hesitant to give you an opportunity right now if you haven’t worked in a while,” Harvey said over the summer, when his search seemed especially frustrating.

 

Counting on the market being flooded in September with workers who need jobs now, employers are betting on "everything goes back to 2019" rules, where long-term unemployed have to take near-minimum wage jobs and have to take whatever opportunities they are offered. 

But it won't be that way for everyone. We'll see, but it's going to take time for all this to be sorted out, maybe years.