COMP NEWS – The current labor shortage is lending itself to be almost as disruptive as the ongoing pandemic itself. The national shortage of employees is causing supply chain issues and potential inflationary pressures.

Millions of immigrants, older workers and mothers are missing from the labor force. Those labor shortages create problems like supply chain woes, school closures, and skyrocketing child care costs — and some of those problems further exacerbate the worker shortages.

The pandemic has helped sparked a labor reaction that has resulted in many individuals leaving the workforce at rates higher than normal. Among those are older workers retiring at rates higher than pre-pandemic times and mothers leaving the workforce to stay at home with their children.

The Great Retirement: Covid spiked retirement rates. Flush with cash from the booming stock market and fearful for their health in a pandemic, many more older workers left the workforce. There are 3.3 million more retirees as of October 2021, than January 2020 (aka the before time), according to estimates from economists at the St. Louis Fed. The number exceeded pre-pandemic demographic expectations.

 

Beleaguered moms: About 1.5 million fewer mothers of school-age kids are actively working compared with pre-pandemic times, according to Misty L. Heggeness, a principal economist at the Census Bureau. 

In addition, many new immigrant entrants into the workforce have been halted by pandemic travel and immigration restrictions.

Lost immigrants: There are about 2 million fewer working-age immigrants in the U.S. because of Covid immigration restrictions, according to calculations of census data from two economists at University of California, Davis.

These phenomena together have created a labor shortage storm that has many economists concerned for future recovery, yet others are still hopeful.

Economists are hopeful that when it becomes safer to return to work, more Americans will in fact go to work. “The most obvious solutions are public health solutions,” says Aaron Sojourner, a labor economist at the University of Minnesota’s Carlson School of Management. If people are healthy, and risks are low they’ll be more willing to get back to work. “It’s a win win.”

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