Axios Markets

A line of three blocks increasing in height.

September 03, 2022

I hope you're having an excellent Labor Day weekend. To mark the occasion, I tapped Axios' brightest minds to weigh in on the subject of the great American labor shortage, in a newsletter whose 1,169 words should take you about 4.5 minutes to read.

  • Axios Markets will be taking Labor Day off; we'll be back on Tuesday.

1 big thing: Why there aren't enough workers

Illustration of a "help wanted" sign with multiple exclamation points and the words "no, seriously"

Illustration: Sarah Grillo/Axios

Huge forces are keeping would-be workers from taking the jobs that are being advertised in abundance, writes Axios' Courtenay Brown.

Why it matters: Employers continue to post a near-record number of job openings. There are not enough workers to fill those vacancies.

  • Anecdotally, signs of this imbalance are everywhere: A proliferation of help-wanted signs on storefronts and the resurgence of the labor movement, as workers enjoy newfound leverage over increasingly desperate employers.
  • The labor shortage may also explain why your local store doesn't stay open as late as it used to.

Flashback: "If you go through the Wall Street Journal in 2012 or 2013, you'll find businesses complaining constantly about a labor shortage," says Skanda Amarnath, an executive director at research firm Employ America.

  • What's different now: Eye-popping wage gains have been underway, unlike a decade ago, particularly in sectors like leisure and hospitality. That's a clear result of the intense battle for workers forcing businesses to raise pay to lure employees.

The big picture: Folks retired (see item 2). They got COVID (see item 3). They failed to immigrate (see item 4). They couldn't find childcare (see Emily Peck's story yesterday). They couldn't afford housing near millions of the jobs that were open.

  • All those missing workers add up to a historically large labor imbalance.

The bottom line: Don't look for these trends to shift any time soon. As Federal Reserve officials conceded last month, some of these factors could hold down the so-called labor force participation rate β€” that is, the share of people working or looking for work β€” for some time yet.

2. The workers who haven't come back

Data: FRED; Chart: Jacque Schrag/Axios
Data: FRED; Chart: Jacque Schrag/Axios

There was a heartening rise in the labor force of 786,000 people in August, causing an uptick in the overall labor force participation rate. But the rate for Americans over 55 actually fell last month to 38.6%.

Between the lines: Health concerns, caregiving needs and rising investment values were some of the drivers of the Great Retirement, according to the St. Louis Fed.

  • Some older workers have returned, but the rebound in the over-55 crowd has lagged that of the workforce as a whole.
  • About 2.6 million more people retired during the pandemic than predicted.

3. The pandemic isn't over

Illustration of a person in outline with covid particles surrounding her

Illustration: Sarah Grillo/Axios

COVID-19 continues to be a meaningful factor in the labor shortage, writes Axios' Kia Kokalitcheva.

Why it matters: Workers dropping out of the workforce due to long COVID are exacerbating the shortage issues stemming from a perpetual stream of folks calling in sick with the virus.

The big picture: Long COVID could be keeping as many as 4 million Americans out of the workforce, according to a new estimate from the Brookings Institute.

  • By the numbers: In just 13 days between June 29 to July 11, an astonishing 3.9 million workers took sick leave because they had the virus or needed to care for someone who did, per census data noted by the WSJ. That's more than double the 1.8 million people who missed work for those reasons in the same period in 2021.

The bottom line: The pandemic is far from over. While some employers have been able to use technology to reduce the impact of infections (think people working from home with mild symptoms), service sectors and others that require workers to perform tasks on-site continue to be hit hard.

4. Immigration isn't helping

Note: H1B includes H1B1s. Data: U.S. Department of State; Chart: Erin Davis/Axios Visuals

When countries can't produce enough of something to meet demand, they generally import it from abroad, Felix writes.

  • Over the past couple of years, however, the pace at which the U.S. has been importing foreign labor has fallen off a cliff.

By the numbers: If a multinational wants to transfer a worker from a foreign country to the U.S., it applies for an L-1 visa. In 2019, 76,988 such visas were issued β€” along with 80,720 L-2 visas for spouses and dependents, who are also allowed to work while here.

  • In 2021, the number of L-1 visas issued plunged to just 24,863 β€” a 68% drop. Other temporary work visas have seen similar drop-offs.

The bottom line: The decline in nonimmigrant visa issuance is so huge that it seems likely that the number of such visa holders working in the U.S. is actually now declining, on an absolute level, as old visas expire.

  • In other words, far from ameliorating the labor shortage, visa issuance levels are exacerbating it.

Go deeper: Immigrants could help fill America's millions of job openings

5. The paradox of entrepreneurship

A dotted outline of a person in a suit shrugging.

Illustration: Shoshana Gordon/Axios

Americans started new businesses at a record rate during the pandemic, as they reassessed their lives during lockdown, saw their stock market savings expand, and received stimulus checks from the government, writes Axios' Javier E. David.

  • Of note: Women, and especially women of color, became self-employed at even higher rates than men.

Why it matters: The mass exodus from the traditional workforce has contributed to the labor shortage.

The bottom line: Ironically, many newly minted entrepreneurs are suffering from the conditions they inadvertently helped create.

  • The worker shortage has been most acute in the small business sector, where owners have been forced to scale back operations to compensate for the lack of labor, even as they hike pay to attract and retain talent.

6. Missing moonlighters

Data: FactSet; Chart: Axios Visuals

The number of Americans who work more than one job fell sharply when the pandemic struck β€” and still hasn't fully recovered, Axios' Matt Phillips writes.

Details: Household survey data from the U.S. Bureau of Labor Statistics shows that the number of Americans working two jobs β€” 7.7 million β€” is about 4% below where it was before the pandemic.

  • Between the lines: The fields in which people often work second jobs β€” educational services, arts and entertainment, retail services and drinking and dining establishments β€” were particularly hard hit during COVID.

What we're watching: Since last fall, the number of people holding more than one job has risen pretty fast, as the reopening from COVID broadens. Inflation also likely drove some people to pick up extra work on the side.

  • We'll be keeping an eye on whether those trends continue.

7. Teens to the rescue?

Illustration of a dotted outline of a shop worker wearing an apron.

Illustration: AΓ―da Amer/Axios

14- and 15-year-olds are finding themselves in demand in the workforce, writes Axios' Nathan Bomey.

Why it matters: Employers grappling with labor shortages are being forced to get creative to fill positions where they can't find more experienced help.

Between the lines: The U.S. Bureau of Labor Statistics doesn't even track the number of 14- and 15-year-olds with jobs.

  • Insofar as employers are increasingly hiring them, that means the economy has more jobs than the federal government is reporting.

State of play: States have been relaxing labor laws to enable younger teenagers to join the workforce and do tasks they previously weren't allowed to handle.

  • In New Jersey, Gov. Phil Murphy recently signed a bill allowing 14- and 15-year-olds to work up to 40 hours a week, Axios' Erin Doherty reported.
  • Also earlier this year, Michigan became the second state to allow 17-year-0lds to serve alcohol.