

But it would still be awhile before the so-called labor force participation rate catches up to pre-pandemic levels, particularly since the population is larger now. created 845,000 new jobs.Īt that pace, the economy could recover all the jobs lost during the pandemic within a year. Economists polled by The Wall Street Journal predict the U.S. The July employment report to be issued on Friday by the Labor Department might offer some clues. “Americans want to work and it would be a mistake to assume otherwise.” They say people are more likely to return to work soon because hiring is much stronger now than it was after the Great Recession. Some economists argue the nature of the recession and recovery tied to the pandemic means past patterns in the labor market might not apply. “Those transitions may not respond quickly to changes in labor market conditions, since these activities may take time to enter or exit,” the Fed study said. Perhaps they chose to go to college, to stay at home for awhile to care for family members, or to outright retire. The new Fed study also suggests many people who leave the labor force make a conscious choice that they are unlikely to change on the spur of the moment. It could lead to some schools not reopening on time and keep people from looking for work. But the short term presents a problem, starting with a resurgence in the pandemic due to the delta variant of the coronavirus. In the long run, Daly is probably right based on past business cycles. “But there is no reason to expect those to be permanent or even high persistent features of the labor market.” “Myriad factors are tempering labor supply at the moment - the need to care for children, fear of Covid, generous unemployment benefits,” San Francisco Fed President Mary Daly wrote in a blog post on Tuesday. And the pandemic is expected to fade as more people get vaccinated. Extra federal unemployment benefits are slated to expire in early September. Schools are expected to reopen in the fall, freeing parents to return to work. And almost 2 million say they can get by on generous unemployment benefits.Īll of these issues are supposed to start clearing up soon. Others are still scared of the coronavirus, especially those with health problems. Most are caring for children or aging relatives because of school closures and limited nursing-home options. Surveys of the unemployed point to a handful of reasons why they are still at home. economy is bigger than ever, but it’s still got a few big problems People are considered part of the labor force if they have a job or are actively seeking one. The rate of participation in the labor market, meanwhile, was just 61.6% as of June - almost two percentage points below the pre-pandemic peak. The number of unemployed was much lower before the pandemic. And that doesn’t include people who are no longer counted in the jobless rate because they are no longer looking for work. These complaints have erupted even though the government found that 9.5 million people were still unemployed as of June.

Many firms have raised wages, offered bonuses, and in some cases cut back production because they can’t find enough people to fill a record number of open jobs. But if it takes years for the labor market to heal, a period of slower economic growth could set in just like it did after the Great Recession.īusinesses have complained for months about a shortage of labor and said it’s holding back the economy.

The faster people return to work, the quicker the U.S. The speed of the labor market’s recuperation has big implications. The people who took the longest to return to the labor force after 2009, the study said, were “men, younger workers, less-educated workers, and Black workers.” The study’s authors contend the slow recovery in the labor force after 2009 “did not reflect any unusual features of this recession and instead was in line with the typical business cycle patterns.” After the Great Recession of 2007-2009, for instance, it took almost a decade for that to happen. Yet a n ew study by Fed economists suggests it could take several years or even longer for the percentage of people in the labor force to return to normal.
