A recent article by Howard Schneider and Jonnelle Marte, published by Reuters, takes a closer look at how the COVID-19 pandemic is changing the economy and workforce of the United States. Many of the changes we all assumed would be temporary have become indefinite or permanent, and that is having a noticeable impact.
The authors looked at detailed monthly jobs data from labor economists and Reuters and found some interesting trends. A few of the trends they discovered are an increase in retirement, a decrease in women reengaging with the job market, and temporary furloughs becoming permanent. All of these factors are slowing economic growth.
Women and Older Workers’ Impact
Prior to the pandemic, women and older workers contributed heavily to the strong economic growth of 2018 and 2019. Having a historically low unemployment rate during that time meant more people were drawn back into the labor force.
Now, however, Labor Department data shows that women and workers over age 65 are disproportionately represented in those workers unemployed since the beginning of the pandemic.
Nick Bunker, economic research director at the Indeed Hiring Lab, analyzed pandemic employment data and found that women were more likely to leave their jobs or stay unemployed because of child care or family responsibilities. Although workers of all demographics were affected by a spike in the number of people who became unemployed during the initial pandemic layoffs, Bunker’s data shows that the number of women citing child care or family responsibilities as the reason for their unemployment increased by 178%. The number of men citing that same reason increased, but by less than double. Bunker also notes that the same reasons women cited for leaving the workforce are also preventing them from re-entering the workforce at a much higher rate than is the case for men.
As economists had anticipated, the Center for Retirement Research at Boston College shows data that reflects a higher number of workers aged 65 and older going into retirement. A large number of older workers have decided to retire earlier than they had originally planned, and that number continues to rise. These workers who may have re-entered the workforce pre-pandemic are now deciding to not return to the workforce at all.
Women and older workers not being able to return to the job market means fewer people working, which, in turn, slows economic growth.
How does this compare to the 2007-2009 Recession?
The pandemic has made the long-term economic effects a bit more complicated. The workforces most effected by the 2007-2009 recession were male-dominated construction and manufacturing industries. The pandemic is affecting a much less focused workforce population, on a much broader scale.
Unfortunately, labor economist Kathryn Anne Edwards is also reporting that people are having more difficulty regaining employment: “Of 7.6 million people “temporarily” laid off as of June, the number who had found jobs by July – 2.4 million – was eclipsed by the 2.8 million who either left the labor force altogether or said they were no longer expecting to get their jobs back.”
These are definitely uncharted waters for us, and it may take a very long time to understand the scars the pandemic has left on our economy. You can read the entire article here.