Here’s an economic question that’s difficult to answer: If the number of jobs in the country are increasing; and national unemployment is below 4%; and there are more job openings then available workers — why is participation in the labor force lower than it used to be?
To put numbers to it: In February 2020, just before covid-19 arrived, 63.4% of people aged 16 or older had a job or were looking for one. Once the pandemic hit, closing businesses and schools, that figure fell to a low of 60.2% in April 2020, but then it rebounded.
But in November of this year, nearly three years after covid-19 hit, the labor force participation was only 62.1%. Taking a longer-term view, the rate was 63.8% in March 12 — 10 years ago — and has been lower ever since.
The reasons for this, as Washington Post columnist Catherine Rampell pointed out, remain unclear. However, there are a couple of possibilities that make sense.
One comes from Federal Reserve Chairman Jerome Powell, who said last week that the number of workers retiring has been higher than expected.
This might be because older people are more susceptible to serious illness from covid-19; or because long-term assets like homes and investments have increased in value in spite of the past year’s decline.
However, setting aside older members of the work force, Bureau of Labor Statistics data still show a smaller percentage of people working.
Using another chart dating back to 2012 that tracks labor force participation for people aged 25-54, it showed a peak of 83.1% in February 2020 — the month before covid-19.
By April of that year it fell to 79.9%, by far the lowest of the decade. It rebounded right away, and in November 2022 was 82.4%. Which is good, but still lower than before covid-19.
Explaining the steep drops in 2020 is easy. Not only did many businesses shut down, but the government increased unemployment benefits and sent people money to help them ride out the storm. There was less incentive to work.
It’s been at least a year since the stimulus and unemployment gravy ended, yet we still have smaller percentage of working-age adults in the job market.
Covid-19 clearly played a role. Some workers died, and others are afflicted by “long covid,” trying to get their bodies past the infection.
Rampell’s most interesting discovery, though, is a significant decline in the number of child-care workers and nursing home workers since the pandemic began.
Federal stats say total employment is up almost 1% since February 2020. But child day-care employment is down 8%. Nursing home employment is down more than 9%.
If a couple has two young children but no day-care available, one parent may have to stay home. This could explain part of the labor force mystery. But it’s also clear that a lot of people still believe they can get by without working. How much longer can that last?
— Jack Ryan, McComb Enterprise-Journal
