149 The Financial Implications Of Americans Not Returning To Work After The Pandemic

Millions of lost positions have yet to return to the job market
but there are near-record job openings and job growth has been
slower than expected in recent months. Enhanced unemployment
benefits ended nationwide on Labor Day, and even sooner in many
states. So far, evidence suggests benefits didn’t play a big role
in sidelining workers.


Other factors are at play, according to economists. They include
Covid health risks, early retirements, care duties, built-up
savings, and other frictions. On the surface, conditions may seem
ripe for a boom in the U.S. labor market.


There are still 5 million fewer jobs than before the pandemic but
job openings are near record highs. And hourly pay has risen, in
some sectors by more than 10% in a year. Meanwhile, enhanced
federal unemployment benefits ended on Labor Day (or sooner) and
kids are largely back in the classroom. Both enhanced jobless pay
and distance learning, it was thought, had been roadblocks
keeping people from returning to work.


However, that boom hasn’t materialized in recent months — at
least, not at the rate, many expected. Job growth slowed in
September after surging in the spring and early summer, and the
labor force shrank.
Covid

Health risks associated with the ongoing Covid pandemic have
clearly played a role in recent months, according to economists.


Job growth slowed in August and September when caseloads were
spiking due to the delta variant. (There were 366,000 and 194,000
new payrolls added those months, respectively, compared to 1.1
million in July and 962,000 in June.)  
Early retirements

Early retirements have also reduced the pool of available
workers. Older adults are at higher risk of severe illness and
death from Covid. They may have opted to start drawing Social
Security and live off their nest egg instead of taking a risk at
work, economists said. Grandparents may have also offered to
watch their grandkids and ease childcare duties for working
parents.
Care responsibilities

Care responsibilities have made it tough for some workers —
especially those who can’t work from home — to come off the
sidelines. For example, many schools reopened for in-person
learning for the new academic year, helping ease childcare
constraints for parents. But Covid outbreaks have led to sporadic
quarantine periods that may stress parents’ ability to hold or
commit to a steady job.
Savings

Households across the income scale have been able to amass higher
savings relative to pre-pandemic levels. Cash balances were up
50% for the typical household in July 2021 relative to two years
earlier, according to the JPMorgan Chase Institute.


“People might feel with a little extra buffer on hand, that they
have a little more time to wait,” said Fiona Greig, co-president
of the institute. “They don’t have to find a job this moment.”
Wages

There may be near-record job openings — but that doesn’t
necessarily mean businesses are paying a wage workers will
accept.


ages have risen more than $1 an hour, or 4.5%, in the past year
across all private-sector jobs, according to the Bureau of Labor
Statistics. Some sectors are up more — leisure and hospitality
pay is up 11%, to $18.95 an hour, for example. The Bureau
attributes the upward pressure on earnings to a rising demand for
labor. 
It will take time

It will also take a while to work out some of the frictions that
have built up in the labor market in the past year and a half,
economists said.


Jobless workers have had ample time during the pandemic to
reassess their working lives and what they want from a job. Some
may opt to switch careers. The available jobs may also not be in
a worker’s prior occupational field or in their geographical
area.


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