Labor Shortage in the United States: COVID-19 Long Standing Economic Repercussions

The COVID-19 pandemic has unearthed a labor shortage the likes of which the nation has never seen. At this point in the pandemic, despite no longer suffering from high unemployment rates, America is facing a severe shortage of workers. At first, this lack of workers was accredited to the general public’s fear of the virus, but many other reasons are now becoming apparent. 

One reason for the lack of workers is due to the need for childcare now that they are spending more time at home; around 1.5 million less mothers are in the workforce.

Katie Bach, senior fellow at the Brookings Institution, also found that around 1.6 million people out of the estimated 2.2 million who are missing from the workforce are gone due to lasting symptoms of COVID-19. Dr. Phillip Chan, an associate professor of medicine at Brown University, states how the long lasting symptoms of COVID-19 can also cut the hours and effort people can put into their jobs. Bach estimates 1.1 million people quit their full-time jobs while 2.1 million more have cut their hours due to the illness. 

Two economists estimated, due to the lack of immigration during the pandemic and the Trump administration, 2 million fewer working-age people were in the workforce. Giovanni Peri, an economist at the University of California, said, “we have lost two years of immigration and there is nothing in our system that allows us to catch up.” 

Another reason for the lack of workers is the boom in retirement—In October 2021, there were 3.3 million more retirees than in January 2020. While some of this is voluntary, many are forced into an early retirement (often without proper retirement pensions). 

In a survey done in January, CEOs of major companies in the United States detailed how the shortage of workers put their companies in danger. Because of the labor shortage, production is at a low while consumption is still at a high. There are crates forced to stay at harbor due to a lack of workers available to unload them, delaying supplies and goods from getting to their destinations. This backlog is casting ripple effects into the consumer world, causing shelves to be empty in grocery stores. Those who grow produce are having to pay nearly triple the amount for shipping and trucks, and any grocery stores are operating with only 50% of their workers. The short-term effects of this labor shortage is an increase in wages, while, in the long-term, the shortage would affect GDP growth and a possible recession. Additionally, this could limit and hinder the expansion of manual work.

By: Emory Wilson