The Limited Labor Market
The labor market should be awash with job seekers swamping demand for work, but that is not happening. The Wall Street Journal recently published a very revealing article on this topic.
- Median wage growth was 3.4% in February
- Earnings were up 2.8% for Q4 2020
- This month’s Federal beige book reported a shortage of applicants for many lower-paid positions from drivers, child-care, nurses, landscapers, and restaurant staff
- 4 million jobs were open in February
- 5 million fewer people are looking for jobs than before the pandemic
Why?
- Many available workers are in the wrong part of the country, or have the wrong skills. Workers laid off in Florida from Disney World can’t apply for a position in New York.
- A significant number of potential employees have withdrawn from the labor market to look after their children.
- Covid-19 itself is keeping lots of workers out of the job market. In March, 2.6 million people were not working because they were sick or caring for someone who was sick.
- 2 million people were staying at home because they were afraid of catching or spreading Covid-19.
- Stimulus checks and extended/enhanced unemployment benefits, which was extended to gig workers, may have kept potential job seekers on the sidelines. However, several studies in 2020 found the aid didn’t depress employment, rather, the above factors mattered most. Many potential employees simply are not “available”.
That is likely to change if vaccination rates continue to rise as virus-related obstacles to working should recede. Economists expect the labor force to rebound during 2021.
Either way, contractors can’t do much about the economy, but having the best systems in place for attracting applicants, hiring and retention is key.
