Is the Labor Shortage Fixable?

Yes, but there may not be a quick-fix solution. 

July 12, 2021

Cartoon Man Holding Hiring Sign

WASHINGTON—As the U.S. labor market recovers from the pandemic, recovery is not in sight. New insights from Pew Research Center found that since February 2020, unemployment rates soared to new records, and millions of Americans left the workforce. Today, “a full recovery for the labor market appears distant.”

The think tank reports that employment in February 2021 was 8.5 million less than in February 2020, “a loss that could take more than three years to recoup assuming job creation proceeds at roughly the same monthly rate as it did from 2018 to 2019.”

In June, the jobless rate rose to 5.9% from 5.8% in May, and businesses in many sectors are still struggling to fill open positions.

Pew Research cites six areas affecting labor force participation and unemployment from February 2020 to February 2021:

  1. Women vs. men. During the year-long time frame, a net 2.4 million women and 1.8 million men left the labor force. Job losses during the pandemic have been concentrated in service sectors that are mostly made up of women workers, such as leisure and hospitality and education and health services.
  2. Among women, Hispanic and Black workers accounted for most of the decrease in labor force participation. Of the net 2.4 million women who left the labor force, there were 582,000 Hispanic women and 511,000 Black women.
  3. The decrease in labor force participation suggests that the official unemployment rate “understates the share of Americans who are out of work,” according to Pew Research. Therefore the U.S. unemployment rate in February 2021 could have been as high as 9.9% instead of 6.6%, according to the Bureau of Labor Statistics.
  4. The unemployment rate for women was likely on par with the rate for men in February 2021. Early in the pandemic, the unemployment rate for women spiked from 3.4% in February 2020 to 15.7% in April 2020. Men also experienced an unemployment spike but at a lesser rate than women: from 4.1% to 13.3% over this period.
  5. Unemployment remained more elevated among Black and Hispanic workers. “Despite recent improvements, unemployment rates for all major racial and ethnic groups of workers were substantially higher in February 2021 than in February 2020,” noted Pew Research. 
  6. Workers in low-wage jobs experienced the greatest drop in employment. The reason? Jobs in the services sector, which has been hit hardest during the pandemic and accounts for many of the low-wage jobs.

CNBC writes that many employers are looking to bring more workers back into the fold by offering unique benefits like childcare, reduced hours, working from home days and affordable tutoring to help people balance their work life and caregiving responsibilities. These types of benefits are particularly important to women, who left the workforce during the pandemic at a higher rate than men.

Convenience retailers can find the latest industry data, trends and best practices on compensation, benefits, recruitment and turnover in the NACS State of the Industry Compensation Report of 2020 Data.