6 reasons why Americans aren’t returning to work

On the surface, conditions may seem ripe for a boom in the U.S. labor market.

There are still 5 million fewer jobs than before the pandemic but job openings are near record highs. And hourly pay has risen, in some sectors by more than 10% in a year.

Meanwhile, enhanced federal unemployment benefits ended on Labor Day (or sooner) and kids are largely back in the classroom. Both enhanced jobless pay and distance learning, it was thought, had been roadblocks keeping people from returning to work.

However, that boom hasn’t materialized in recent months — at least, not at the rate many expected. Job growth slowed in September after surging in the spring and early summer, and the labor force shrank.

“If you had ever told me we’d have millions of workers still on the sidelines and have wages going up because people couldn’t find workers, you could knock me over with a feather,” said Diane Swonk, chief economist at accounting and advisory firm Grant Thornton.

Early evidence suggests enhanced jobless benefits played at most a small role in keeping people from work. So, why aren’t people rushing back to take jobs?

There are many reasons and complex nuances, according to economists. Here are some of the main drivers.

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A record 4.3 million people quit their jobs in August. Front-line workers in sectors like restaurants, bars and retail quit at the highest rates — lending credence to the idea that fear of contagion and hazards of in-person work are playing a role, Swonk said.

Job growth should re-accelerate as Covid cases abate, according to Zhao. (There were roughly 76,000 average new daily infections as of Oct. 18, less than half their recent Sept. 1 peak.)