According to a monthly survey conducted over the past year, nearly three million workforce quitters say they do not plan to return to pre-Covid activities – be it going to work, shopping in person or dining out To do – even after the pandemic is over. A team of researchers. Among those leaving the workforce are women who do not have college degrees and have worked in low-paying sectors.
The research team has named the phenomenon “long social distancing” and believes it will be one of the enduring signs of the COVID-19 pandemic.
“Our proof is that the labor force isn’t magically going to bounce back,” said Stanford University economist Nicolas Bloom, who oversaw the survey along with Jose María Barrero of the Instituto Tecnológico Autonomo de México and Steven J. Davis of the University of Chicago. . , “We still see no change in these long social distancing numbers, which suggests that this decline in labor-force participation could be quite permanent.”
Should the researchers’ predictions come true – that the labor force will likely remain depressed for years after the pandemic – the implications for the world’s largest economy and the Federal Reserve are substantial. A sharp decline in the labor force at the start of the pandemic led to shortages of workers and products that depressed households, stymied economic growth and helped push inflation to a 40-year high.
The labor force has gained significant ground since March and April 2020, when the pandemic put nearly 22 million people out of work and the labor force – which included both employed workers and job-seekers aged 16 or older – 8.2 million. workers, or fell by 5. ,
The ranks of employed workers stood at 1.2 million shy of their pre-pandemic levels as of this March, recovering faster than economists predicted two years ago. The labor force grew to 1644,000,000 workers, just 174,000 less than its pre-pandemic level. The rebound has been particularly sharp in recent months as the winter outbreak of the Omicron version of COVID-19 has faded.
Despite those gains, there are still about 3.5 million workers missing in the US, according to the team’s calculations. This figure represents the difference between the number of workers in March and how many would be in the absence of the pandemic if the labor force continued to grow at the pace from 2015 to 2019.
And his research suggests that progress may soon stop. If so, the labor force will remain depressed for longer than the Fed anticipates, potentially helping to keep inflation high.
Chuck Legge, 63, is among those who lost their jobs in the first two months of the pandemic in the spring of 2020. The Landenberg, Pa., resident was fired from his position as director of business planning for a non-profit professional association. ,
Mr. Ledge has Common Variable Immunodeficiency, or CVID, a genetic condition that prevents his body from producing antibodies to fight diseases. Worried about getting sick, he retired early and avoided almost all of his pre-pandemic activities such as going out to eat and socializing. He plans to continue doing so for the foreseeable future.
Through a Facebook group for people with his condition, he came to know that there are many people like him. Recently a member posted a photo of a zebra – an animal that has been adopted by people living with CVID as a kind of mascot – looking out the window while sitting in a car.
“The world is moving forward,” said Mr. Lage. “We haven’t been able to yet.”
The fate of people like Mr. Ledge remains one of the economy’s biggest puzzles: whether some adults will re-enter the labor market as the pandemic fades. Employers have struggled to find workers to meet strong consumer demand and have bid up workers’ wages as a result, one of several factors that pushed inflation to a four-decade high of 8.5% in March .
For each month over the past year, the team anonymously surveyed 5,000 people – not always the same – aged 20 to 64 who earned at least $10,000 in the past year. The survey asked whether they plan for a full, partial or no return to normal activities after the pandemic. Consistently, 1 in 10 have said they have no return plans. In the early months of this year, when the Omicron version was on the rise, that share rose to 13%.
After controlling for work status – some of them working remotely – and other variables such as age and gender, the team concluded that nearly three million people were staying out of the workforce to socially distance themselves. Huh. The team did not ask for health details to avoid health-privacy concerns such as whether those people have had a “long-term COVID”.
Other figures show that fear of Covid remains an issue for some workers, but has fallen from high levels earlier in the pandemic.
The Census Bureau has surveyed adults throughout the pandemic, asking among other questions whether they didn’t work last week because they were afraid of getting Covid or spreading it.
That figure reached above six million at the start of the pandemic, fell sharply after vaccines became widely available a year ago, and remained around three million for most of 2021. In mid-March 2022, that figure fell from three million in February to 2.3 million.
Household savings hit record highs over the pandemic as the federal government distributed stimulus checks and increased unemployment benefits. Some economists believe that marginalized workers will rejoin the labor force to counter the rise in inflation as they spend savings.
The Fed is counting on another pickup in labor-force participation as it seeks to bring inflation back to its 2% target over the next two years without overly aggressive rate hikes. The hope is that a larger labor pool will ease pressure on employers to raise wages at a pace the Fed considers unhealthy in the long run.
For reasons that clearly seem to be related to the pandemic, Fed Governor Lyle Brainard said in an interview at the recent WSJ Jobs Summit, “the number of people looking for work has slowed to respond to strong demand for workers.” has been “But what has been encouraging over the past few months of the employment report is that we are seeing a rebound in participation.”
Fed officials have indicated plans to raise interest rates relatively quickly this year to levels close to a supposedly neutral setting that offers no economic stimulus. Ms. Brainard, who awaits Senate confirmation to serve as the Fed’s vice-chair, cited the potential for increased workforce participation as a tailwind that could reduce the need for more aggressive interest-rate hikes. which would otherwise be required to bring about a better balance of supply and demand.
“I expect the supply crunch to rise at the same time as we see demand easing, and that is why we can expect the correction to sustain even if inflation eases,” she said. .
—Nick Timiros contributed to this article.