It was only a report that represented one month of data, but it was still eye-opening for many.
Back in April, the U.S. Department of Labor released a report saying that employers in the country had added about 266,000 jobs, far below the 1 million that were expected.
A second report released by the department was just as jaw-dropping, as it found that there were 8.1 million job openings on the last day of March.
There’s clearly a labor shortage at the moment, and many are blaming it on the fact that people simply don’t want to return to work after being told to stay at home due to the pandemic for so long.
But is this true? Or are there factors preventing people from going back to work?
Reasons why many are hesitant to return to work
Aside from debatable political reasons — some Republicans feel too much stimulus and unemployment money has been handed out that has discouraged people from working, while some Democrats feel the minimum wage and wages in general aren’t high enough, according to The Hill — there are other theories as to why employers are scrambling to find workers.
- Child care issues. With many schools still not meeting in-person, many people have argued that they simply can’t return to work because there’s nobody to watch their young kids at home, according to Harvard Business Review.
- Retirement of workers. As the pandemic came on and shut things down last year, many Baby Boomers at or near retirement age simply decided it was a good time to retire, which has affected manufacturing, construction and even the gas supply. According to Market Watch, qualified and certified drivers of gas trucks that deliver gas to stations have retired, leaving 20-25% of trucks “parked” or “idled.” New drivers aren’t easy to find. If younger people don’t mind doing such work, they have to go through special certification in order to become a driver.
- Unemployment money. It’s been well-documented that during the pandemic, the federal government added $600 more per week to unemployment benefits already provided by the states, according to The Hill. Even as states have worked to cut benefits, the wages received are still comparable to ones at a regular job.
Are there solutions in the works?
There are a few ways the federal government, state governments and employers are trying to solve any labor shortage issues.
- McDonald’s, Target, Chipotle, Costco, Walmart and Amazon are examples of companies that have said they will raise wages in an effort to get more workers.
- At least 14 states have moved to cut increased federal jobless benefits that were originally scheduled to last until September, according to Politico. This is a measure to motivate people to get back to work rather than sitting on unemployment money.
- Earlier this month, President Joe Biden said that those accepting unemployment benefits under the American Rescue Plan must accept “suitable” employment when offered, or else they will lose those benefits.
What is the long-term outlook for a labor shortage?
In February 2020, the unemployment rate was 3.5%, and the U.S. was adding roughly 200,000 jobs a month, according to Business Insider.
In April, the Bureau of Labor Statistics said the unemployment rate was 6.1%.
If more people want to come back to work or have more incentive to in the coming months, there’s a chance that the unemployment rate could inch back closer to what it was before the pandemic, which should help any shortage issues.
However, in April, Federal Reserve Chair Jerome Powell did sound an alarm about people who will try to get back into the labor force.
“The real concern is that longer-term unemployment can allow people’s skills to atrophy, their connections to the labor market to dwindle, and they have a hard time getting back to work,” Powell in a conference. “It’s important to remember we are not going back to the same economy. This will be a different economy.”