COLUMN: The workforce is missing 2.9 million workers. Where’d they go?
Hang out in Georgia’s political circles and you are sure to hear policymakers boasting about the Peach State’s low unemployment rate, which stands at around 2.9%. While that’s a brag-worthy stat, it only tells part of the story.
Georgia, like the rest of the country, has other problems with its active workforce. Most notably, employment rates are lower than before the pandemic and employers often struggle to fill open positions.
“There would be 2.9 million more workers [across the country] today if labor force participation was the same as in February 2020 [before the pandemic],” reads an October 2022 U.S. Chamber of Commerce report. That’s a considerable number of potential employees who are seemingly missing in action.
This topic came up at a lawmaker conference I attended where one legislator posed the question, “Where did the [workers] go?” During the lively debate that followed, one commenter asserted, “They’re on the couch,” and “living in their parents’ basement.” While this may be the case in some instances, the truth is more complex than that in what has become a widespread problem.
Georgia’s labor participation rate is hovering around 61.8%, which is slightly lower than the national average of 62.1%. However, Georgia’s labor participation rate in February of 2020 was a full percentage point higher. For all the talk about our apparent economic resurgence following the pandemic, something is amiss — leaving employers in a lurch and policymakers scratching their heads.
Despite questions about the country’s missing workers, they aren’t actually missing. They can be accounted for through anecdotal evidence, polling, and extensive data collection.
“Among workers ages 55 and older, the likelihood of leaving work over the course of a year rose by 7.6 percentage points, a 50-percent increase over the pre-pandemic rate,” according to a 2021 working paper from the Center for Retirement Research at Boston College.
This rings true and is partially responsible for our workforce woes. More than any other age group, people in the 55 and older demographic have been likelier to drop out of the workforce during the after the pandemic — implying that many have opted to retire early.
“For decades, a large generation aging into retirement has been the strongest factor dragging down overall labor force participation,” wrote the New York Times. “The pandemic, which made workplaces particularly dangerous for older people, supercharged that trend. At the same time, the value of homes and 401(k) accounts ballooned in 2021, bringing retirement within reach for many.”
But this only accounts for part of the problem.
A study from the Brookings Institution revealed another trend impacting the workforce, which is particularly related to households with cohabitating adults — either married or unmarried. Brookings discovered a spike in the number of dual-worker families in which one adult has dropped out of the workforce — turning these into single-income households. A leading cause of this phenomenon is likely related to childcare and other forms of caregiving.
“The decline in two-participant couples with young children was larger […] than for their counterparts without children under 13,” reads the report. “For partnered adults, caregiving is the most common reason for being out of the workforce, though it is important to note that this could be to care for children or others, such as elderly relatives.”
Given how expensive professional caregiving can be, it may make financial sense for some adults to forgo their career and care for their loved ones.
One of the final — and most obvious — reasons for the labor shortage is the bleakest. “In simple numbers, some of that […] is due to Covid’s death toll: more than a million people, about 260,000 of them short of retirement age,” per the New York Times. While this isn’t a leading contributor, it certainly factors into the reduced employment rates and might account for around 9% of the 2.9 million missing workers.
The notion that the labor shortage is due to a bunch of lazy couch potatoes who would rather mooch off of their parents seems far from the mark. Sure, there may be some folks who are so work-averse that they’re piddling away their time and living a life subsidized by someone else. However, it seems highly likely that the workforce shortage has more to do with COVID-19 deaths, individuals who are rearing their children or caring for their elderly parents, or those who have opted to retire early.
While there are certainly more variables playing into the complex issue of flagging employment rates, the question policymakers and business leaders face is how to creatively attract the workers that our economy so desperately needs.