Surprisingly low labor force participation should be improving, but it is happening more slowly than expected
Second, September’s low numbers were driven by the loss of 166,000 state and local government education jobs. Not adjusted for seasonal fluctuations, there were actually more of those jobs last month than in August, but less than one would normally expect as the school year goes on. Registered hiring decreased as an outright decline in employment after accounting for the Labor Department’s seasonal-adjustment process.
Low recruitment in schools is an example of a more general problem, however: workers are in great demand, but many remain on edge. Indeed, separate figures from the Labor Department show that, as of the end of July (the most recent data available), there were 460,000 seasonally adjusted state and local education job openings. It had about as many unfinished education jobs as at any time before the pandemic.
There are a number of reasons why Covid-19 in particular has reduced school recruitment. It’s a high-contact setting, so those worried about getting sick have opted out. This may be especially true for older teachers who have opted to retire earlier than otherwise. A high proportion of teachers are women, and the child-care difficulties created by the pandemic have been carried on by women to a far greater extent than men.
These issues extend to other work settings as well, to varying degrees, while recently-expired expanded unemployment benefits have also given people a chance to stop looking for work. The share of the population that is either working or looking for work, or the labor-force participation rate stood at 61.6% last month. If it were to return to the February 2019 level of 63.3%, the labor force would benefit by 4.3 million people.
Economists generally suspect that participation rates will return to their old levels in the coming years as an aging population will put more people into retirement over time. But at some point, the labor force should start growing more rapidly.
Clearly, the number of new COVID cases has declined sharply and appears to be decreasing, making people less likely to return to work. The approval for vaccination for children aged 5 to 11, which could come by the end of this month, should help ease child care issues. Extended unemployment benefits to the states that kept them expired on September 6, which could prompt more people to seek work.
But the longer it takes for people to re-enter the labor force, the further away the economy will be and farther away from real recovery. This pandemic is not among us yet.