The Biden administration’s efforts to control the spread of the virus and bolster the economy are working. In fact, job growth has been historically high since President Biden took office, as the economy has recovered 4.5 million jobs. Economists expect that as the delta variant surge wanes, vaccination rates increase, and schools and daycares can reliably stay open, labor markets will further tighten.
However, as the August 2021 jobs report from the U.S. Bureau of Labor Statistics shows, our nascent labor market recovery is still vulnerable to setbacks from surges of the virus. The roaring pace of new jobs early in the summer is not a guarantee that all workers will find employment after historic job losses.
What’s more, new research shows that time and a booming labor market do not a guarantee a fully inclusive recovery. For a multitude of reasons, the non-college educated, workers of color, women, and less experienced workers suffered disproportionate job losses early in the pandemic, and they have historically been last in line for job gains. Policymakers will need to wield every tool to ensure that as the recovery progresses, that we work toward an inclusive and equitable labor market that brings all workers along.
The reconciliation package working its way through Congress with elements of the American Families and Jobs Plans would certainly help working families and individuals affected by the pandemic. In addition, our pandemic strategy should also include new investments in training workers with sought after skills in the marketplace and new steps to empower workers after decades of wage stagnation and growing economic inequality. We cannot be satisfied with a partial recovery that leaves whole communities behind. This paper offers policymakers at all levels of government evidence-based approaches for creating a more inclusive labor market after the pandemic.
Recommendations:
The latest data from the U.S. Bureau of Labor Statistics for this past August shows a labor market recovery slowing under the strain of the coronavirus delta variant wave. As case rates increase across the states, and especially in counties with lower vaccination rates, businesses and individuals have had to grapple with mask mandates, canceled events, delayed returns to in-office work, school and daycare quarantines, and other disruptions that have cumulatively led to decreased economic activity.
While the unemployment rate is down significantly from 14.8% in April 2020, the labor market recovery remains uneven, and the experience of past recessions shows that some workers will need extra support to land good jobs. The unemployment rate for Black workers ticked up to 8.8% in August 2021 compared to 4.5% for white workers. The percentage of long-term unemployed workers (LTU) — those out of work for 27 weeks or more and actively looking — is very high at 37.4%. That figure is trending downward as the labor market tightens, but data from previous recessions suggests that workers with a high school degree or less will struggle to find jobs. And women, hampered by child care and school closures and quarantines, made up only 28,000 new jobs or 11.9% in August 2021, compared with gains of 207,000 for men.
There are also signs of a realignment in our workforce. Employee preferences on how and where to work are changing, while companies are shifting their hiring, technologies, and supply chains to reflect the new pandemic economy. As recent analysis from The Washington Post points out, there is a “massive reallocation” of labor that is leading to a surge in job openings, quit rates, retirements, and redistribution of employment opportunities. Certain sectors, such as education and health care, are having a hard time filling job openings. Opportunities might also shift regionally due to the rise of telework and these differences will have profound policy implications for workers of different races, ethnicities, and backgrounds.
Employers report that workers seem to be pickier about the types of jobs they are willing to accept. One reason may be that they are sitting on increased personal savings, which reflect both government payments during the pandemic and reduced opportunities for consumption in a locked down economy. Some labor analysts have suggested that unreliable access to child care and health concerns may still be holding back some workers. In addition, nearly five million workers seem to have dropped out of the labor market during the pandemic recession. The good news for workers is that wages have been on the rise in certain industries desperate to fill openings and that trend is expected to continue.
However, for a percentage of unemployed workers, their career trajectories might be hampered in the same way as some did during the Great Recession and they will not reap the benefits of a tight labor market. Additionally, analysts predict that not all jobs will come back and that some industries might be permanently changed by the pandemic. The difficulties for those who struggled to find jobs after the last recession serve as a lesson for how to help unemployed workers recover faster during this downturn. As the economy improves during the pandemic, policymakers have several options for building an inclusive recovery. To prevent further economic scarring and to help job seekers quickly pivot to new employment, we need to draw upon the active labor market strategies and workforce development policies that have worked in the past and other promising ideas.
