A “Now Hiring” sign outside a store on Aug. 16, 2021 in Arlington, Virginia.
OLIVIER DOULIERY | AFP | Getty Images
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.
Covid
Health risks associated with the ongoing Covid pandemic have clearly played a role in recent months, according to economists.
Job growth slowed in August and September, when caseloads were spiking due to the delta variant. (There were 366,000 and 194,000 new payrolls added those months, respectively, compared to 1.1 million in July and 962,000 in June.)
“The September jobs report is a reminder that the pandemic is still what controls our recovery,” said Daniel Zhao, senior economist at job site Glassdoor. “The pandemic is still keeping workers out of the labor force.”
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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.)
Early retirements
Early retirements have also reduced the pool of available workers.
Older adults are at higher risk of severe illness and death from Covid. They may have opted to start drawing Social Security and live off their nest egg instead of taking a risk at work, economists said. Grandparents may have also offered to watch their grandkids and ease childcare duties for working parents.
“All those things would push especially hard on people in their 60s…