- Anecdotes about labor shortages have been cropping up for months amid America’s slow recovery.
- But the increased unemployment has expired and it has not helped end the labor shortage.
- Insider spoke to five economists and experts about the reasons workers don’t come back and the hiring issues.
America is tired of labor shortages. September was supposed to be quick fix month when the end of improved unemployment benefits coincided with the reopening of schools and other child care services and immunization rates facilitating a return to power. But if you’re not back at work, you’re far from the only one.
That’s because the reality of September could perhaps be summed up in two words: Womp womp. There are two other words, almost as scary: The month told a “story of the delta,” according to Jesse Wheeler, economic analyst at Morning Consult.
“We still expect this improvement in jobs and continued economic recovery going forward, but it’s basically on hold,” Wheeler said.
So if you have not yet returned to work or are wondering if returning to work is the right decision right now, you are not alone. In a note released this week, JPMorgan found that only half of people who lost their jobs during COVID return to work.
As Bloomberg reports, the end of unemployment benefits did not force people back into the workforce, echoing several studies showing no link. Schools are struggling with Delta waves and are closing temporarily. Childcare faces its own labor shortage, pushing back families who need it. Vaccinations are on the rise, but corporate mass vaccination mandates have only recently become a reality.
“I see no evidence that the slowdown in growth was due to labor shortages. It was due to Delta,” Heidi Shierholz, president of the Left Institute for Economic Policy, told Insider. She added: “Employers were really demanding a lot fewer people in August than they had asked the month before.”
Insider spoke to five economists and experts about the current messy state of the job market and why it makes sense some people haven’t returned yet.
At the heart of the current labor shortage are major disconnections – what economists call “mismatches” – between what employers want.
But employers are responsible for another disconnect: They say they scramble to find workers but are unwilling to pay the price the job now demands.
Hiring is a mess
As Vox’s Rani Molla and Emily Stewart report, the hiring system is also a bit broken. Today’s job market presents an “incongruity” between what job seekers hear about the abundance of roles and their actual experiences, according to Vox. It could be a more subtle fourth shift.
On the one hand, the Wall Street Journal reports that some candidates may be screened out by the recruiting software that many employers have adopted. If your resume doesn’t have the exact keyword or, like many employees, you’re trying to move on to a related role, you might even miss the initial screening.
A criterion by which employers filter: if the candidates have a university degree. That could leave out the 70 million workers who are “STAR” – qualified by alternative routes, according to Papia Debroy, senior vice president of ideas at Opportunity @ Work. According to the Census Bureau, two-thirds of American workers do not have a bachelor’s degree, with the percentage higher for black and Hispanic workers.
Debroy said STARs have been increasingly excluded from middle-wage jobs in recent decades – roles that are crucial for them to rise through the ranks.
“In many ways, failing to recognize that skills are acquired through alternative routes is not only a failure for these workers. It prevents employers from finding the talent they are looking for, but it also prevents increased mobility for workers. this population, ”Debroy said.
Erica Groshen, senior economics adviser at Cornell University School of Industrial and Labor Relations and former commissioner of the Bureau of Labor Statistics, told Insider that employers may not be working quickly to fill the record number of job openings.
“They can say, ‘Well we have an opening and we’ve listed it,’ but they might not rush to fill it out if they don’t know how the pandemic is unfolding in their area,” he said. Groshen said. “So they can leave the post, but not rush. “
There is still the pandemic to consider
In July, Morning Consult found that 3.5 million people who left the workforce planned to return to work the following year; two-thirds wanted to start working again within three months.
“However, a few months later a lot of those people put it on hold,” said Wheeler of Morning Consult. The intelligence firm’s September outlook revealed that consumer confidence in August hit its lowest level since February 2021.
That’s because taking a job right now still faces all the calculations of the health risks and childcare considerations of the pandemic, which many believed would have been resolved by now. These are what Shierholz calls the “baby echoes” of the early days of the pandemic.
There is, of course, something we have now that we didn’t have at the start of the pandemic: vaccines. But, as Insider’s Aylin Woodward reports, the United States has fallen behind in vaccination rates, ranking 39th in the world.
“In places where the pandemic is still hitting many people with low immunization rates, this could still keep some people at home,” Brian Riedl, budget expert at the right-wing Manhattan Institute, told Insider. “States that are relatively unvaccinated and see more cases of Delta variants may still see a lag.”
As President Joe Biden continues to ramp up vaccination efforts and the Delta wave eases, people may come back for more. JPMorgan predicts that 2 million Americans “will continue to return to work,” especially as their pandemic-related savings dwindle.
In the meantime, companies have turned to a method of making the return to workers profitable: increasing wages.
“There is always someone talking about a labor shortage, and yet in a free market economy, the price is supposed to make the adjustments so that the quantity demanded matches the quantity supplied,” he said. Groshen said. “What they are really saying is that I am not offering enough to get the workers I need.”
For the record, it seems to work. The New York Times reported that Jason Hammel, a chef in Chicago, increased base salary from $ 18 to $ 24 an hour; he said he had no problems hiring. But some restaurants have raised salaries and still haven’t seen a flood of applicants, Insider’s Grace Dean reported.
Groshen said offering more is not just about wages, but also working conditions and benefits.
“If I decide I don’t want to pay the price for an Audi, I can’t just announce that there is an Audi shortage and that requires government intervention,” Groshen said.
Joseph Zeballos-Roig contributed reporting.