Nicholas Eberstadt, the Henry Wendt chair in political economy at the American Enterprise Institute, is the author of “Men Without Work: Post-Pandemic Edition,” published this week.
Opinion | Why does the U.S. have a labor shortage after the pandemic?
Since the start of the 21st century, per capita growth dropped to less than half its previous 1950-2000 tempo. With the rate creaking along now at just over 1 percent per annum, incomes would take more than 60 years to double; from 1980- 1999, the doubling pace was 31 years.
A significant factor in modern America’s slower growth — and the lower expectations it unforgivingly imposes — is the drop-off in work. The country is aging, of course, but population graying does not explain the collapse of employment for men of the 25-54 prime working age (women’s labor force participation rates have been declining too, but not as steeply). Nor can it account for the anomalous emergence of a peacetime labor shortage in post-pandemic America, even as workforce participation rates remain stuck well below pre- pandemic levels.
Instead, these are manifestations of a troubling, once unfamiliar but now increasingly entrenched syndrome. Call it the “flight from work.”
Although the unemployment rate for prime-age men in August was a mere 3 percent, only 86 percent reported any paid labor. The remaining 11 percent were labor-force dropouts — neither working nor looking for work. These “not in labor force” men , who now outnumber the formally unemployed by more than 4 to 1, are the main reason that the country’s prime male work rate has been driven below its 1940 level — when national unemployment rates were nearly 15 percent.
Astonishingly, yes, the United States has a Depression-scale work problem.
In academic and policy circles, conventional wisdom holds that declining male workforce participation (ie, Depression-style work rates) is a function of economic and structural change — declining demand for less skilled labor and manufacturing; China in the World Trade Organization; outsourcing and globalization.
But that wisdom is incapable of explaining why the prime male flight from work traces an almost straight line upward since 1965, irrespective of recessions, or such disruptive shocks as China’s joining the WTO.
Nor can that storyline tell us why the US labor market suddenly has 11 million unfilled jobs, with businesses in every sector nationwide desperate for workers, including positions that do not require high school diplomas.
Roughly speaking, about a quarter of the manpower shortfall appears to be immigration-related. Migrant flows, legal and illegal alike, were severely disrupted by the pandemic in 2020 and 2021. (Data for 2022 is unavailable because migrant employment isn’t measured month -to-month.)
The two-year interruption of in-migration offered a natural experiment. Would Americans fill the jobs vacuum these missing foreign workers would otherwise have occupied? We now know the answer: The flight from work prevailed. Moreover, almost all of the residual manpower shortfall appears to be among native-born Americans as foreign-born workforce participation appears to be back up to pre-pandemic levels.
Lingering health woes from the covid-19 catastrophe figure into this post-pandemic flight from work, of course. But that impact on the manpower availability might be less severe than many assume.
The Census Bureau’s real-time Household Pulse Survey started asking adults about “long covid” this summer. Most recently, almost 7 million adults not in the workforce say they are currently affected by long covid.
On the other hand, among those reporting long-covid-associated challenges, the number who gave covid illness as the reason they were out of the workforce, either suffering from it themselves or caring for someone else, totaled about 700,000. That’s a consequential number in its own right, and enough to explain some of the workforce drop-off, but not most of it.
And these reported covid effects don’t entirely match up with workforce losses. Most post-pandemic workforce dropouts were 55 or older, with the 65-74 group especially affected. But according to the Pulse findings, fewer than 200,000 people 55-and- over (and just 50,000 65-and-over) say they are not in the labor force because of long-covid illness or caregiving.
The disproportionate post-pandemic decline in labor force participation by older men and women is troubling, not only because it suggests a new front has opened in the flight from work, but also for what it might presage for the ever-grayer United States that lies ahead.
It might be that some older Americans are just taking a break, spending down some of the wealth bestowed on them through Washington’s pandemic emergency policies. If so, some might be lured back into the labor force after a bout of premature retirement. Some. Might.
Absent a dramatic reversal of the current flight from work, the US labor shortage will probably have to be solved by some combination of immigration, automation and recession. That mix is far from likely to reduce popular angst and discontent.