It’s no secret the job market is changing before our eyes seemingly with every passing day. “We’re hiring” signs abound, and we’re asked to be patient as restaurants, businesses, and retail shops are consistently understaffed. Reports from the Bureau of Labor Statistics show that the unemployment rate in August was 5.2%, which is up from the pre-pandemic rate of 3.5% in February of 2020. While the news is not all bad, the number of job openings at the end of July hit a record number for the fifth consecutive month and unemployment has not rebounded as quickly as analysts hoped. What gives?
The USA Today paints the picture this way: The country has recovered 76% of the 22.4 million jobs lost last spring as businesses closed to try to contain the spread of COVID-19, leaving payrolls 5.3 million jobs below their pre-pandemic level.
There is a “Musical Chairs” of sorts happening. According to Fortune, nearly two-thirds of U.S. workers are currently looking for a new job. Trying to match these workers with the available jobs is challenging, particularly with so many variables in the search. In some cases, employees who have spent months in a remote role are not ready to give up their newfound autonomy and are job searching instead of agreeing to report back to the office. And for many, the last eighteen months have been a time of reflection about how they want to spend their days and whether they are on the right career path. The New York Times has dubbed this the YOLO Economy, for the acronym – You Only Live Once. Many higher income workers, buoyed by the savings accumulated from more than a year of largely skipping entertainment, travel and big purchases, while enjoying stock market gains, are ready to pursue “riskier” passion projects instead of remaining in a job that feels stagnant. In short, they want a career that taps into their sweet spot.
Research has shown people tend to re-evaluate their job and career choice after a major life event. During the pandemic, this reassessment has happened to a large number of us all at the same time. Some have decided this is the time to switch industries, go back to school, or retire early, in what market analysts have dubbed “the Great Resignation.” LinkedIn reports that 57% of its recorded job switches between May and July were from one industry to another.
Some analysts tend to blame stimulus checks and unemployment payments for de-incentivizing workers to jump back into the labor force, and there may be some truth to this. However, others argue this is much too simplistic a view – and the reasons behind the labor shortage are both varied and complicated. For those forced to exit the job market to protect themselves or their family members from exposure to the virus or to care for kids suddenly at home, there are no easy answers.
Economist Dante DeAntonio of Moody’s Analytics expects the current labor shortage to take some time to resolve, even with school re-openings and progress in vaccination numbers. “The labor shortages will start to abate in September and this fall, but it’s not going to be an immediate fix. This could well play out over two, three years.”