The Economist - USA (2022-01-22)

The Economist January 22nd 2022 19

United States

Labourshortages

Help wanted, now and in the future

F

or newtruck  drivers  in  Portland,  Ore­

gon, a $30,000 signing bonus. For new

recruits  in  the  army,  a  $50,000  bonus.

Route closures for public buses from Texas

to North Dakota. An end to automatic daily

housekeeping at most Hilton and Marriott

hotels.  Offers  by  Amazon  and  Walmart  to

cover college tuition for their employees.

The  thread  that  runs  through  all  these

snapshots—a tiny sample of such stories—

is  a  remarkable  imbalance  between  the

need  for  workers  and  their  availability  in

America  today.  The  economy  has  surged

beyond its pre­covid­19 level of gdp. Com­

panies  in  just  about  every  industry,  from

hospitality to finance, are desperate to hire

people  to  keep  up  with  demand.  But  the

numbers willing to work for them are way

down: America has about 3m fewer work­

ers now than on the eve of the pandemic, a

2% contraction in the labour force.

That  is  great  news  for  jobseekers.  It  is

easy to find work. Wage growth (at least in

cash  terms)  is  strong,  especially  for  those

on  low  incomes.  For  America  as  a  whole,

though, it is a bigger concern. If the popu­

lation  is  near  to  full  employment—mean­

ing that just about anyone who wants a job

can find one—then economic growth is al­

ready straining at its upper limits. An over­

heated  jobs  market  would  add  fuel  to  the

inflation  already  spreading  through  the

economy,  making  it  that  much  harder  to

stabilise prices.

For much of the past two years, a fair as­

sumption was that as the pandemic ebbed,

people  would  go  back  to  work  in  droves.

That looks less plausible today. Some of the

decline in the number of workers appears

likely to be permanent. This, in turn, could

constrain  America’s  economic  potential,

since a shrinking labour pool will be a drag

on growth, says Marianne Wanamaker, an

economist at the University of Tennessee.

“I  think  that  we  have  shifted  to  another

plane here, unfortunately,” she says.

Those who have left the jobs market can

be divided into three broad groups: people

in  their  prime  working  years  who,  for  va­

rious  reasons,  would  rather  be  at  home;

older people who were heading towards re­

tirement and have speeded up their depar­

tures;  and  immigrants,  whose  flow

through legal channels has dried up.

It  is  easiest  to  be  optimistic  about

prime­age  workers.  Every  month  brings

more of this group—those aged between 

and  54—back  into  the  jobs  market.  At  the

current pace, their participation rate in the

labour  force  will  return  to  the  pre­pan­

demic level of 83% by the end of this year. 

The resumption of in­person schooling

since  last  summer  has  freed  up  parents,

which is especially important for the wom­

en who have been carrying out extra child­

care duties. (The Omicron wave, which has

led  some  schools  to  go  back  to  remote

learning,  is  a  setback,  but  a  temporary

one.)  The  expiry  of  generous  unemploy­

ment benefits, provided at the height of the

pandemic,  has  also  helped  to  coax  people

off  the  sidelines.  As  more  Americans  eat

into  their  pandemic  savings,  pressure  to

WASHINGTON, DC

Even as the pandemic ebbs, the pool of potential workers in America may be

permanently smaller than once assumed

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