Generous jobless benefits have ended, but worker shortages persist. Goldman Sachs offers an analysis of why only 20 percent of the 7.5 million Americans who lost benefits on September 5 have re-entered the traditional job market. There are 10.9 million jobs waiting to be filled in the United States.
Citing the latest Census Household Pulse Survey, Goldman Sachs analysts said the most obvious reason given for staying off the job is lingering fear of contracting COVID-19 in the workplace. Tied to that reason is a persistent lack of childcare resources and concerns about children at risk returning to school.
Vaccinations and employer mandates may be easing concerns over safely returning to work, as the number of jobless people voicing concern dropped to 3 million in September, down from 6.5 million in August.
Other reasons cited in the Goldman Sachs analysis are less obvious – a sharp rise in self-employment, a staggering number of retirements and continuing restrictions on immigration and temporary workers. Many people liked working remotely or on gig jobs. As many as 1.5 million Americans receiving federal jobless benefits during the pandemic decided to retire. Another 900,000 aged out of the workforce.
“While generous unemployment benefits have contributed to the labor shortages, reports of labor shortages are widespread across developed economies, suggesting that common global factors – for example, elevated health risk – also play significant roles,” the Goldman team said. The cut-off of federal unemployment benefits, which was supposed to spur workers to return to work, was a concept “tied to politics, not economics”.
Employers may have unwittingly incentivized remote work and the growth in gig workers. For some companies, it was easier to hire gig workers than recruit new employees.
Worker shortages, Goldman Sachs says, have played a role in production delays that resulted in price hikes and inflationary fears. Eighty percent of small businesses blame hiring difficulties for their slumping profits.
Shortages may not end as soon as businesses hope. New unemployment claims have risen in each of the past three weeks. The labor market last month only added 235,000 jobs, far short of forecasts of 1 million returning workers. Economists believe around 8 million Americans remain unemployed. Goldman Sachs predicted as many as 1 million jobless benefit recipients may remain off the job into next year.
Department of Labor data released this week shows 4.3 million Americans, or roughly 2.9 percent of the total US workforce, quit their jobs in August. There were 892,000 departing workers in the hospitality sector, 721,000 in retail 706,000 in professional services and 534,000 in health care and social assistance. The exodus was attributed to newfound worker leverage to find jobs with more convenient hours, better compensation and safer working conditions.
Goldman Sachs analysts noted the number of visas issued to immigrants and temporary workers “collapsed” because of pandemic restrictions. They said that reduced the available labor pool by at least 700,000 workers, who are often the workers willing to accept minimum wage jobs.
Closed or physically restricted workplaces led to an expansion of remote work, made possible by digital technology. Zoom and other digital meeting platforms enabled people to collaborate with team members and “meet” with clients on a regular basis without direct contact or travel.
That same freedom, plus reclaimed time from no commuting or business travel, led many people to experiment with gig jobs or freelance assignments. They could work productively at home with more time to spend with family members.
Employers may have unwittingly incentivized this transition and the growth in gig workers. For some companies, it was easier to hire gig workers than recruit new employees. Flexible work arrangements suited employers and workers. Returning to a 9-to-5 work life bookended by commutes lost its appeal.
The US labor report comes out Friday that will indicate job growth and the national unemployment rate, which dropped to 5.2 percent in August from 5.4 percent in July.
