Hello, I’m Stewart Heath, CEO of Harvard Grace. Coming to you today with the labor market, we all know there’s labor shortages. It’s virtually reported every hour on the hour of the news.
I want to dive into the reasons when the pandemic first started and when this is going to be over, so we can get back to normal. I don’t think we’re ever going back to the way it was; however, last week we had a really good jobs report. We ended up with a declining unemployment rate to 4.6%, which in my lifetime has always been a pretty strong report. It’s not back to where it was just before the pandemic, but I think we’re going to get there. The real questions are what’s the gap between men’s unemployment and women’s unemployment. What’s going on with the labor force participation rate?
The thumbnail to this post is a graphic that was published by the conference board last Friday after last week’s labor report and while labor force participation rates in the seventies. Historically it is not bad. It’s not what it was pre pandemic. The ladies participation rate was near 90% and the men’s was in the high 80%. Now we’re down into the seventies. The real question is why aren’t people going back to work. Now, a lot of my conservative friends and I learned this way, but the research just shows it’s not the case, but people are just staying at home on unemployment benefits, which for the most part have played out. Now that is attributed to the large gains we saw in June. Then again, in September people return to the workforce. What we also saw in July and August was a major number of people quitting their job as some COVID cases were spiking up in certain places. We don’t know for certain, but I tagged a great article from CNBC just last month about why people aren’t returning to work. A fair amount of people my age and olde took advantage of early retirement benefits. They’re not returning the work and eventually the department of the bureau of labor statistics will remove those folks from the participation. A month into the survey, there were 3.6 million people who said they don’t want a job right now who had previously been in the workforce.
Other cases people have had to leave work, perhaps their elderly parents or someone they care for could not return to a nursing home because those were dangerous places and a lot of cases. A worker decided to stay home and give care to their family, and that family made an adjustment in lifestyle and others are living off their savings.
Some people are still afraid of COVID, but part of the real problem is wage inflation. Although we are seeing it in real time it has not quite caught up enough to adjust and cause the people to go back into the workforce. I think that a lot of what’s going on is people have adjusted their lifestyles and we may be living in the new normal, which is 4.6% unemployment. It is not a bad rate,but we do have to solve the problem of needing more workers, somehow. That’s another date that we’ll discuss together.
We’d love to hear your comments about this. Please, feel free to engage. Grab some time with me and lets chat more. Thank you and have a wonderful week! Until next time!