Where Have All the Workers Gone?

images of individual workers, labor shortage, Sheaff Brock Investment Advisors

Where Have All the Workers Gone?

“Millions are out of a job. Yet some employers wonder: Why can’t I find workers?” reads a recent NPR Morning Edition headline. Post-COVID, some industries are thriving and eager to hire. After the loss of 22 million jobs over the course of the pandemic, with only a little over half of those since recovered, one would think that workers would be clamoring to fill those remaining employment openings. Employers are certainly looking to hire; NPR cites Labor Department statistics showing jobs openings are at a five-month high. So, why the labor shortage? Where have all the workers gone???

  • In-person “poison”?
    Much of the labor shortage is in industries requiring in-person work, such as construction, delivery services, warehousing, hospitality, heating and air conditioning, and food services. “There’s a huge gap between the kinds of conditions under which people are prepared to work,” NPR quotes a ZipRecruiter labor economist saying. Even today, as pandemic mandates are being eased, there’s a fear of getting sick and infecting family members.
  • Government benefits?
    Many opine that the unemployment benefits offered by COVID relief packages are what is allowing workers to make a choice to stay home. While there are criteria to be met to qualify for those subsidies, they represent one possible factor influencing the labor shortage.  Meanwhile, a number of states have announced their intention to end accepting the subsidies.
  • Child, elder, and sick care conflicts?
    For both those working from home and for the unemployed, the value of staying at home is enhanced by the savings in childcare costs. Undeniably, staying home avoids the need to pay for daycare or the cost of hiring professionals to care for elderly or sick family members.
  • Employers’ fear of wage “fairness”?
    Ironically, employers may themselves be contributing to the labor shortage. How? For employers with some flexibility in setting wages, they may not raise wage offers to new hires because internal equity then pressures for raises to incumbents and that reduces their profit, a New York Times article posits.

The stock market and labor shortages

“The volatility in global markets in the past month was largely a result of developments in the U.S. labor market,” Gad Levanon ventures in The Conference Board. “Labor market conditions are translating faster into upward pressure on wages.” At the same time, the globalization of labor, with numbers of people in Asia and Africa willing to work for a lower wage, will keep a lid on the pressure to raise wages here in the U.S.

“Spiking inflation, disappointing jobs gains, and shortages of labor and commodities have investors wringing their hands,” observes Sarah Hansen in Forbes. Yet Sheaff Brock Managing Director Dave Gilreath tends to agree with Moody’s chief economist Mark Zandi that there’s no cause for alarm, and that any inflationary pressures caused by labor shortages will ease as the economy returns to normal.

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