In the past decade I’ve occasionally employed my children to work for my business. I got assistant work done, they got some job experience and spending money. Everybody won. My pay rate was $10 per hour because I’ve felt strongly that the minimum wage was ridiculously low. But sometimes I worried that I was spoiling my kids for real entry level jobs. I couldn’t have anticipated the current job market. My son has a fast food job and is currently earning almost $16 per hour. That is entry level right now. Because my brain wants to understand these sorts of shifts, I’ve done a bunch of digging into what is causing everyone to be short staffed. Note: this includes package delivery services who have been accustomed to hiring seasonal staff. Place your online holiday orders early!
Obviously the shift is caused in large part by the pandemic. As of today the US has lost 750,000 people to Covid-19. That is 3/4 of a million people dead. (Source) All of those people who died had roles they filled in life and the workforce. That is 750,000 holes that other people have to cover. It is 750,000ish families who are now grieving and thus not working as efficiently as they did before. It is children who need new caretakers. Jobs that are seeking new employees. The impact of this alone is significant.
But on top of that, 3 million US women left the workforce in 2020. (Source) Each of these women did a cost-benefit analysis based on their situation and decided that their situation was better off if they stopped working. Many of them shifted to unpaid work in childcare.
Then there are the 2 million people who decided to retire early. (Source) Again, people are deciding that their lives are better if they just bow out of the workforce. In an interesting trend, many of them have stopped working but have not yet started taking their social security benefits. Much analysis is trying to figure out what is going on there.
Harder to calculate are the effects of long covid on employment. Studies have shown that anywhere from 25% to 75% of people who get Covid-19 have symptoms that last six months or more. (Source)(Source) Some long haulers have been struggling for a year or more and may be permanently disabled. This has long term implications for the US disability system. (Source) Long Covid is already recognized as a valid disability under ADA guidelines. (Source) If 1% of covid cases result in permanent disability, that’s half a million people no longer able to work. If 5% then that is 2 million people. And we’re still collecting them because the disease is still actively making new people sick. Though vaccination does seem to reduce the incidence of long covid by a lot. (Source) However for every household dealing with long covid, you have workers who are distracted by care of a loved one and, depending on how bad the disability is, might need to leave the workforce to concentrate on care.
EDIT: New article landed today that estimates between 1.3million and 6million people out of work because of Long Covid. (Source)
All of this leads to today where we have 2.1 million people collecting unemployment (Source) and around 10.4 million job openings. (Source) This ratio is not what we usually see. (Source) Over the summer some employers thought it was the result of increased unemployment benefits, but the benefits ended and the job market stayed skewed. (Source) (Source)
The result for my family is that my 18yo lucked into a very good time to join the workforce. He is stashing money away for college at a much higher rate than he ever expected. My other two young adults will also be able to enter the workforce in ways that are advantageous for them when they’re ready to do so. It also means that every where I go the quality of service is down because all of the stores and restaurants are under staffed. I worry about the compounding effects of all these small delays. I watch store shelves have empty sections because of shortages caused by production or transportation. Most products return the next week or two, but then something else is missing. All of it makes the world feel unstable to me. Like I should be cautious with my resources and careful in my purchasing.
Ultimately this shortage of workers isn’t likely to last more than a couple of years, however I fear that the rebalancing will happen, not by an increase of available workers, but by a decrease in ongoing businesses. Sort staffing will cause some businesses to fail, releasing their workers to go take jobs with their competitors. I don’t know how it will shake out. And that is the part that scares me.
If you’re in reasonably good health and can afford to do so, waiting until 70 to claim your benefits will probably give you more money over the remainder of your life. In theory it’s supposed to be the same average payout regardless of when you retire; but improving healthcare means that the actuarial tables are always lagging behind. OTOH if you’re in poor health or while outwardly health are high risk (ex smoked for most of your adult life) it can make more sense to take them early even if you’re still working.
The most glaring sign I’ve seen of the labor shortage locally is a gas station/convenience store chain advertising not just pay well above minimum wage, but also paid maternity leave. That one blew my mind since a significant fraction of women don’t return to their old employer after having a baby, and gas stations are already a very high turnover business.