It Is Not All Due To Covid

New research suggests that demographic and other trends existing prior to the COVID-19 pandemic are responsible for most of the remaining shortfall in U.S. labor force participation, and that there is little chance of growth in the number of workers easing the tight American job market.

  • The study, released by University of Maryland economics professor Katharine Abraham and doctoral candidate Lea Rendell, shows that U.S. labor force participation was only about 0.3 percentage points short of where it would have been without the pandemic after accounting for factors such as population aging and changes in education
  • The remaining gap is largely attributed to fear of COVID or the lingering impact of "long COVID" illness

Manufacturing Is Having A Hard Time

However, the labour shortage is not equally spread across all sectors. Some industries are experiencing a scarcity of labor, while others are experiencing an excess of workers.

  • For instance, durable goods manufacturing, wholesale and retail trade, and education and health services are encountering a labor shortage
  • Even if every unemployed person with experience in durable goods manufacturing were employed, the industry would still have 44% of its job openings unfilled

The manufacturing industry suffered a significant setback with the loss of around 1.4 million jobs at the beginning of the pandemic. Since then, the industry has faced challenges in filling job openings. As of January 2023, there were 803,000 manufacturing jobs available.

Source: U.S. Chamber Of Commerce

Comparable To The Second World War

According to the Associated Builders and Contractors (ABC), a construction industry group, there could be a shortage of up to 500,000 workers in the sector this year, resulting in increased project costs and delays in a building campaign that industry executives liken to that of the Second World War.

“It would be difficult to identify a period during which the construction labour market was more constrained than it is now,[...] Demand for construction workers is sky high . . . This is the era of the mega project.” Anirban Basu, chief economist at the ABC. “

  • President Joe Biden has approved spending of over $1.5tn to boost the nation's infrastructure and catch up with China in manufacturing
  • However, after years of outsourcing and discouraging Americans from vocational work, construction companies caution that the country's industrial policies and labor market are on a collision course

To meet labor demand, the ABC estimates that the US will need an additional 546,000 workers on top of the usual hiring pace this year. According to the Bureau of Labor Statistics, construction job openings averaged a record 391,000 in 2022, up 17% from the previous year.


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