This week, Craig Siminski, of CMS Retirement Income Planning, shares an article discussing the U.S. workforce and what the shifting labor market could mean for workers, employers, inflation, and economic growth:
The headline U.S. unemployment rate fell from 6.7% at the end of December 2020 to 3.9% in December 2021 — the biggest one-year improvement in history. While many workers took advantage of this strong rebound in the job market, companies large and small have been struggling with labor shortages.
A conspicuous lack of workers has snarled corporate supply chains; resulted in delayed and cancelled product orders; left working parents without access to child care; upended air travel; and forced restaurants, retail stores, and other businesses to shorten their hours or close understaffed locations. A recent spike in outbreaks from the Omicron variant worsened the situation.
Since the pandemic began, unpredictable demand shifts have exposed pre-existing mismatches between the knowledge and skills of available workers and the tasks for which they are needed.3 But the sheer number of available jobs is also running well above the number of unemployed job seekers. Employers reported 10.6 million job openings on the last business day of November 2021, even though there were the 6.8 million unemployed persons in November and 6.3 million in December.
COVID-19 may have kicked off a severe labor shortage, but longer-term demographic trends are partly to blame for this highly unusual job market.
A Workforce in Flux
At the onset of the pandemic, the labor force participation rate — the percentage of Americans age 16 and older who are working or actively looking for work — plummeted from 63.4% in February 2020 to a record low of 60.2% in April 2020.
By December 2021, the rate had recovered only partially to 61.9%.5 About 2.3 million people have dropped out of the workforce entirely since the pandemic began.6 Some may have left temporarily, but…
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Craig Siminski is a CERTIFIED FINANCIAL PLANNER™ professional, with more than 24 years of experience. His goal is to provide families, business owners, and their employees with assistance in building their financial freedom.
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