By David M. Greenwald
Executive Editor
They are calling it the great resignation – large numbers of people have left the workplace and not returned. Numerous reports have noted what appears as labor shortages despite the fact that overall employment remains well below pre-pandemic levels. Some studies are suggesting this might be permanent.
Some have blamed this on the enhanced unemployment benefits that they said were reducing the incentive to accept jobs – but those extra benefits have long since expired in almost all states and has not triggered a change in employment or labor force participation.
A story in CNET this week finds: “Historically low unemployment claims, historically high quit rates, millions of baby boomers suddenly retiring. All of it is remaking work in America.”
Moreover, the experts they talked to believe it is here to stay.
“Experts say all of this will likely continue far into 2022 and beyond,” CNET reports. “Already, the numbers are staggering. In April, the number of people who quit their job in a single month hit 3.8 million, an all-time record, according to the US Bureau of Labor Statistics. In August, it hit 4.2 million. And then September, 4.3 million.”
They are quitting their jobs and not filing for new unemployment claims either, belying the belief that enhanced unemployment is driving the trend. The NBLS reports the lowest number of unemployment claims in more than half a century, but there are 11 million open jobs out there.
What’s going on?
A lot of speculation.
One expert that CNET talked to merely believes that this is an extension, perhaps an acceleration of existing trends – “retiring baby boomers, low birth rates and the shift to remote work.” Julia Pollak, chief economist at employment marketplace ZipRecruiter said, “The pandemic accelerated them at least 20 to 30 years.”
Others note this is actually multiple trends at once. There is the pandemic. As I have pointed out, there is a high percentage of people who simply are high risk either due to age or preexisting condition, or they have to care for their children or others who are vulnerable to COVID. Even before Omicron, even people who are vaccinated have not been willing to take chances.
There is also a demographic trend with the pandemic encouraging those remaining baby boomers in the workforce to retire while the number of people turning 18 is shrinking.
According to CNET, “without immigrants to fill in the gaps, there aren’t enough people to replace the baby boomers who are leaving. Further, the birth rate in the US has been declining for nearly half a century, and the United Nations predicts that won’t meaningfully change for the foreseeable future.”
Pollak told CNET, “If birth rates continue declining, a tight labor market is here to stay.”
A few weeks Business Insider looked at Kentucky to understand what was behind that state’s labor shortage.
“It’s too soon to say why the so-called labor shortage keeps raging on with no end in sight, but a few theories have emerged,” they write.
They posit the following: “Childcare is keeping people home. More retired early. Workers haven’t returned yet because there’s a mismatch between the jobs open and the ones they want, and some are permanently rethinking what work means to them. In the background, the climate crisis is reshaping the economy.”
Kentucky’s quit rate “has been especially high compared to most other states during the pandemic, but it was higher than the national average long before.”
“The truth is that something has been amiss for a long time,” the Kentucky Chamber Foundation wrote in September.
Business Insider found four key drivers in Kentucky: (1) workers betting they can find another job with better pay and life-work balance; (2) kids in a state with “childcare deserts” (3) safety in an undervaccinated state, and (4) “systemic inequalities and long-term impacts from the climate crisis are holding others back.”
By the numbers Kentucky has a quit rate of 4.4 percent compared to a national rate of 2.9 percent. Moreover, labor force participation was at 56.7 or 5.1 percent below the national rate. That put Kentucky at 49th in the nation out of 51 (with DC included).
Kentucky minimum wage workers earn just $7.25 an hour, which hasn’t changed for 12 years as the federal minimum wage has not increased. Most other states have raised their minimum wage.
“Not increasing the minimum wage all those years I think really sets the state up for a big problem once workers had more leverage, as they do now,” Jason Bailey, executive director at Kentucky Center for Economic Policy, said. “Employers are having to scramble to respond.”
Childcare is another big problem. From July 2012 to 2021, the number of childcare centers declined in Kentucky by 46%. Writes the Insider, “That worsened what’s called childcare deserts, areas where the number of children outnumbered licensed care slots by at least three to one. Half of the people in Kentucky live in one. “
They note that has pushed people out of the state entirely.
They also write: “The lack of childcare centers is another consequence of the state’s low wages. Over a quarter of early childcare workers in Kentucky are earning below the poverty line.”
There is also the persistent pandemic. As of December 19, Kentucky had about 64 percent of adults fully vaccinated, compared to 72 percent nationally.
One of the more interesting findings is, “In the more vaccinated states, people flocked back to work; the same wasn’t true for the less vaccinated states, even without federal support. “
Finally, “Drugs, systemic inequality, and climate change are all separate economic crises that have been swelling under the surface of the Bluegrass state for years, and they were brought to a head by the pandemic.”
Just one measure: “Kentucky’s underlying opioid epidemic is hurting its labor market. A 2019 University of Kentucky economic analysis found the drug crisis may be reducing Kentucky’s workforce participation by 23,100 to 55,200 workers.”
While some of these factors are exclusive to Kentucky, put this all together and I think we have a decent picture. One is probably the generational change with Boomers leaving and fewer 18-year-olds replacing them. Add in reduced immigration and you have a labor shortage.
Then you have the pandemic which is combined with other factors and has reduced participation because some people do not want to risk going back to work, some people were induced to retire, and others need to take care of children and family.
Finally, low wages are probably reducing the incentive to work as well – people don’t want to deal with these other issues while making low wages.
A lot of valid points were made in this article until “systemic inequalities and long-term impacts from the climate crisis are holding others back” got thrown into the mix. It’s always the same old agenda.
I wonder how many jobs are offering only the federal minimum wage? I wonder how many people commute to jobs just outside Kentucky (it is not that big of a state.) I wonder how prevalent and the size of the under-ground economy is in Kentucky?
Good point. You know there are an untold amount of people who are working under the table and gaming off of the system while still collecting benefits.
Yes and, you know there are an untold amount of people/corporations who are working under the table and gaming off of the system while still collecting profits and avoiding taxes. The (one who is not to be named) is one of these individuals/corporations… that’s why the tax records have never been released, unlike those of their predecessors… a ‘precedent’
Both true. One group is marginally poor/middle class, the others have billions in assets… same behavior… either both are ‘right’ or both are ‘wrong”
Other causes may include:
Maybe they are living off of stolen unemployment benefits?
Trump hindered immigration both legal and undocumented.
800,000 people have died, most were elderly, but many were working age. Many survived but have lingering issues from long Covid.
In Kentucky, does climate change mean fewer coal related jobs?
I saw an article that said that the three states with the most job openings had only the Federal minimum wage.
As Johnny Paycheck sang “You can take this job and shove it.”
A majority of those have died under the Biden regime.
Biden has opened the floodgates so saying immigration is down is a non starter.
Typical.
Someone does not act when a fire starts… then someone who follows is blamed for the damage of the fire that could have been quenched early.
Typical.
Who was President is immaterial to the issue at hand. What is relevant is how many had jobs?
Did the article raise burnout as a cause? Or people not wanting to put themselves at risk for infection?
There may be another factor… a sense of “entitlement”… see also UBI, universal health care, affordable housing, etc., with no personal commitment to contribute time, talents, treasure from themselves… have a family member who feels they are “entitled”…
This “entitlement” thingy started with the late “boomers”, and has progressed to many in the following generations…
I believe that if folk try to better themselves, and their world, they should be supported, financially, medically, etc.
But can’t get from “I think, therefore I am”, to “I am, and society owes me everything, with no effort on my part.”
Don’t know how many that applies to in KY or anywhere in particular… suspect the number is small, but possibly significant…
Some folk expect ‘reparations’ or “free rides” because of past inequities… their right to feel that way… but not my duty to assuage that, even when I could claim the same.
Say WHAT ?!??!!!
So instead they make no wages (except subsidy). There’s the solution 😐
The “entitlement” solution… no ‘work’, all ‘pay’ (or, ‘play’)… there are many who would espouse that… I’m not one of those.
Am not disagreeing with you Alan M… my intent was to affirm… however clumsily…
“So instead they make no wages (except subsidy). There’s the solution ”
Maybe they can earn better wages so that low paying jobs go vacant.
Interesting… and may well be “spot on”… basic ‘market theory’… usually works…
Read in a Sac Bee article that grocery workers are leaving because they are “underpaid, underappreciated” … I do not doubt that, and they should be paid in accordance with their contributions… fully support that, even when it costs us more when we shop… and I am clear that I appreciate their service when we interact.
But, it is a two-edged sword, as we have seen in the past… in a ‘consumer economy’… higher wages + higher prices (to accommodate) + higher expectations for profit (‘opportunity’) = ‘inflation’… which hits the workers, the consumers, etc. It is what it is…
No judgment, recommendations… that it (“great resignation”) is race/class-based is questionable, at the least…
This labor shortage we have is self-induced we as a society created it if you want to figure out where the workers are go to downtown Portland or Seattle or even San Francisco that’s where our potential labor force is sleeping on sidewalks defecating in the streets.
Then we have the ones that are mentally capable of working but why should they work they can steal from the stores whatever they want so why should they work and our society created that one also
And Lastly we have the ones that make money scamming the system.
This problem is going to persist for many many years maybe even decades until we fix the problem.
I kind of hope we have a country left in 20 years but its not looking too promising. ?
Just one person’s opinion
“We know from the past that the jobs that require low skills are more likely to be automated,” said Tyson. “I worry about income inequality.”
Just what is wrong with lower skilled people getting less income? Or inversely, what’s wrong with paying higher skilled people more? You should be paid based on what you bring to the table. If all you offer is a warm body that’s nominally slightly smarter than a chimp, we should pay you slightly more than we would a chimp.
I found this in some newsletter I get my email.
I heard this morning about how millions of boomers retired during the pandemic. I guess those at high risk for serious Covid who were near retirement chose life over the risk of working.
If I was still a teacher who was near retirement but at risk of serious infection from kids that didn’t yet have the ability to practice good transmission reduction behavior I would have retired too.