The Pandemic’s Labor Market Myths

Remember “Her Breakaway”? What about the early retirement wave, or America’s quiet army of retirees?

For economists and other forecasters, the pandemic and post-pandemic economy are lessons in humility. Time and time again, predictions about how the labor market will change permanently have proven to be temporary or illusory.

Women lost their jobs early in the pandemic but are returning in record numbers, making female exodus a short-lived phenomenon. Retirees have surged along with coronavirus deaths, but many older workers have returned to the job market. Even the person who sparked a national stir by posting a TikTok video about doing the bare minimum at work suggests that “quietly quitting” may not be the way of the future. stop loud This day.

That’s not to say nothing has changed. In a historically strong labor market with very low unemployment, workers have far more power than usual, earning better wages and new perks. And the shift of many white-collar jobs to working from home is still reshaping the economy in subtle but important ways.

But the big takeaway from recovery from the pandemic is simple. The U.S. labor market is not permanently damaged by the blows it has taken. This mirrored the aftermath of the 2008 recession, when economists were equally skeptical of the labor market’s ability to recover, and proved to be just as wrong as the economy strengthened.

“The industry has not fully digested the lessons of the Great Recession recovery,” said Adam Ozimek, chief economist at the Economic Innovation Group, a research firm in Washington. As one of his lessons, he said, “Don’t bet against American workers.”

Here, we summarize the story of the ups and downs of the labor market during the pandemic recovery process.

Women lost their jobs significantly early in the pandemic, and people feared they would be left behind forever. Deteriorate However, that has not been proven to be the case.

Employment has actually recovered faster for women than for men after the pandemic, with record high employment rates for women in their prime working age, generally defined as ages 25 to 54, as of June. (Employment among middle-aged men has returned to pre-pandemic levels, but is still below record.)

Another popular story early in the pandemic was that it would trigger a wave of early retirement.

Historically, when people lose their jobs or retire late in their working life, they tend not to go back to work, effectively retiring, call it that or not. So when millions of Americans in their 50s and 60s left the workforce early in the pandemic, many economists were skeptical that they would come back.

But the wave of early retirement never really materialized. Americans aged 55 to 64 are returning to work as quickly as younger generations and are now employed at higher rates than before the pandemic. Inflation may have forced some to return to work. Others always planned to return and did so as soon as they felt safe.

The retirement narrative wasn’t entirely wrong. Many Americans past the traditional retirement age (65 and older) are still not returning to work. This is partly driving down the size of the overall workforce, especially as the number of Americans in their 60s and 70s is growing rapidly as baby boomers enter retirement.

Due to the reduction of technology personnel in large companies, white collar recession, or those that primarily affect wealthy technology and information sector workers. While these layoffs are undoubtedly painful for those who have experienced them, they do not show up prominently in the overall employment statistics.

For now, the country’s highly skilled workforce appears to be moving to new and different jobs fairly quickly. unemployment It remains very poor in both information and professional and business services. This is characteristic of white-collar industries that encompass much of the technology sector. And job cuts in the tech industry have slowed recently.

For a while, young and middle-aged men between the ages of 25 and 44 didn’t seem to be returning to the labor market as they used to. But in recent months, it is finally returning to pre-pandemic employment rates.

Its recovery occurred much later than the other groups. Male aged 35-44 Women have yet to consistently maintain employment rates that match the 2019 average, but they were there last year. age group exceeded Pre-pandemic employment rate. But recent progress suggests that men are recovering slowly, if at all.

All these stories have something in common. While some warn against jumping to conclusions too soon, many labor market experts are skeptical that the labor market will fully recover from the shock of the pandemic, at least in the short term. Rather, the economic recovery is swift and broad, ignoring the dark narrative.

This is not the first time economists have made such a mistake. It’s not the first time this century. The devastating recession that ended in 2009 forced millions of Americans out of the workforce, and many economists accepted so-called structural explanations for the slow return to the workforce. . Perhaps workers’ skills and professional networks were eroded during long periods of unemployment. Maybe they were addicted to opioids, were receiving disability benefits, or were trapped in areas of the country with few job opportunities.

But in the end a simpler explanation turned out to be correct. People were slow to go back to work because there weren’t enough jobs. As the economy recovered and opportunities improved, employment recovered in nearly all demographic groups.

The recovery from the pandemic recession has progressed much faster than the 2008 recession. The 2008 recession was exacerbated by the global financial crisis and the collapse of the housing market, which left long-lasting scars. But the basic lesson is the same. Most people go to work when jobs are plentiful.

“People want to adapt, people want to work. These are generally true,” said Julia Coronado, founder of research firm Macropolicy Perspectives. She noted that the pool of workers available has expanded over time, as immigration remains strong. She said, “People are resilient. They figure things out.”

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