By Glenn Duhl
In March 2020, the COVID-19 pandemic brought an abrupt and drastic halt to work across the country. To gauge the impact of the pandemic on the labor market, the Bureau of Labor Statistics began including questions about the ability and willingness to work in its monthly survey of American households. By May 2020, the Bureau reported that nearly 50 million people were unable to work because of workplace closures or decreased hours. Even after the delivery of vaccines in early 2021 fostered hope for social and economic stability post-pandemic, economists still forecast a slow recovery from the unprecedented job losses of 2020. What actually happened – a mass labor shortage – was almost a complete upheaval of market expectations and expert predictions.
By the end of 2021, 47 million people voluntarily left their jobs. Only a year earlier, nearly the same number unexpectedly and involuntarily faced lay-offs or reduced hours. How did job opportunities grow from scarcity to surplus in such short time? No single cause explains this rapid transformation of the labor market. To understand the so-called “Great Resignation,” look at the various forces that coalesced to create a historically unique labor shortage.
Although the pandemic forced many workers into unemployment or underemployment, government stimulus programs were successful in preserving consumer spending power. Despite the initial market downturn in the early days of the pandemic, the need for labor to fulfill consumer demands quickly resurged. While manufacturers and suppliers fully or partially closed in response to public health restrictions, consumer purchasing increased. Capacity to meet consumer demand was curbed by the absence of workers because this market revitalization outpaced labor availability. Even if every unemployed person in the manufacturing industry filled a job opening today, there would still be a 65% vacancy.
Many of the 47 million workers who left one job entered a new one. While the pandemic upended the employment prospects for millions of workers, it simultaneously engrained an attractive new model of employment. Citing their interests in flexible hours, remote work, and competitive benefits, workers flocked from in-person work to work-from-home.
For certain industries, however, transitioning employees from in-person work to work-from-home is impossible by nature of the job. The industries hardest hit by an exodus of workers were those that require “hands on” work, such as manufacturing, retail, education, and healthcare. By all measures, hospitality and accommodation services have been among the hardest hit. While the rest of the economy recovers, and society returns to some semblance of pre-pandemic life, employers in hospitality and accommodation services struggle to fill job vacancies.
Just as there was no single cause for the labor shortage, there is no single cure—but three ideas for resolving the labor shortage have gained traction.
(1) Access to childcare has long been cited as a cause for decreased participation in the workforce. The need for childcare services became critical during the pandemic, when schools and daycares closed. The Employer-Provided Child Care Credit gives employers a tax incentive for providing childcare benefits to employees by offering credit up to $150,000 to offset childcare expenses. However, a recent report by the Government Accountability Office shows it is significantly underutilized—only 11% of workers accessed childcare through their employer. Greater utilization of the Employer-Provided Child Care Credit could enable employers to increase their hiring pools by attracting applicants who would otherwise be unable to work.
(2) “Second chance hiring” refers to the employment of persons with a criminal record. Applicants with a criminal record are commonly excluded from the workforce. The U.S. Chamber of Commerce estimates that 70 million Americans have an arrest or conviction record, and that the exclusion of formerly incarcerated job-seekers results in a loss of $78-$87 billion in GDP. It endorses second chance hiring for having the potential to solve labor shortages. The Second Chance Business Coalition offers resources for implementing a successful second chance hiring program, and cites high levels of both employer and employee satisfaction with it.
(3) Another way to increase the hiring pool is to expedite work permits for immigrants. Some of the industries most impacted by pandemic closures employ a high percentage of immigrant workers. The number of immigrant arrivals to the United States plummeted, however, after the country closed its borders to prevent the spread of COVID-19. Government office closures and staffing shortages within the country also exacerbated delays in processing existing work permit applications. There is no influx of new arrivals joining the workforce, and of the immigrants who are living in the U.S., many remain unauthorized until the backlog of work permits is handled.
Perhaps the only clear takeaway is that the pandemic has forever changed the way we work. Some industries adapted quickly. For those that could not, future hiring may rely on creative strategies to attract applicants and fill job vacancies.
Glenn Duhl is a management-side employment and litigation lawyer at Zangari Cohn Cuthbertson Duhl & Grello P.C. Please visit www.zcclawfirm.com. The information contained in this article is general in nature and offered for informational purposes only. It is not offered and should not be construed as legal advice.
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