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Finding Missing Workers — Ever since C-19 emerged, the American labor force has been a shell of its former self.
Whether it was due to virus fears, needing to stay at home, or just plain burnout, hundreds of thousands of people bid adieu to traditional work in the last couple of years. Some have returned, but so many haven’t that it’s created a huge hole in the workforce.
Here’s some context—back in 2000, the labor force participation rate was hovering around 67%. That means that about 2/3rds of citizens of working age were actively employed.
In April ‘20, right after the C-19 shock, it sank to about 60%.
A little over two years later, it recovered to about 62%. That 5 percent difference equates to hundreds of thousands of people.
It’s hard to draw any permanent conclusions from these figures.
Maybe that rate will tick up again if the economy goes into recession. Maybe we need a better way to measure those working in the gig economy and other non-traditional work arrangements.
Whatever the reason, this reduced labor force size will put a lid on growth in the near term.
Opening up immigration and outsourcing production overseas could help alleviate the problem, but many are already suspicious of globalization raising American living standards.
The unemployment rate is just one part of the bigger employment picture.
When you combine it with the labor force participation rate, it shows that those looking for work can easily find a job.
Reduced participation is harder to explain and could be a bigger structural issue going forward.
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