Millions of Americas Plan to Abstain from Workforce Indefinitely

New York, NY, April 18, 2022-Several million workers who dropped out of the U.S. workforce during the Covid-19 pandemic plan to stay out indefinitely because of persistent illness fears or physical impairments, potentially exacerbating the labor shortage for years, new research shows, according to the Wall Street Journal.

“About three million workforce dropouts say they don’t plan to return to pre-Covid activities-whether that includes going to work, shopping in person or dining out-even after the pandemic ends, according to a monthly survey conducted over the past year by a team of researchers. The workforce dropouts tend to be women, lack a college degree and have worked in low-paying fields.

“The research team has named this phenomenon ‘long social distancing’ and believes it will be one of the lasting scars of the Covid-19 pandemic.

“‘Our evidence is the labor force isn’t going to magically bounce back,’ said Nicholas Bloom, a Stanford University economist who oversees the survey along with José María Barrero of Instituto Tecnológico Autónomo de México and Steven J. Davis of the University of Chicago. ‘We still don’t see any change in these long social distancing numbers, which suggests this drop in labor-force participation may be quite enduring.’

“Should the researchers’ predictions turn out to be true-that the labor force will be depressed for potentially years after the pandemic recedes-the implications for the world’s largest economy and the Federal Reserve are substantial. A sharp drop in the labor force at the pandemic’s start led to shortages of workers and products that have frustrated households, restrained economic growth and helped push inflation to a 40-year high.

“The labor force has recovered significant ground since March and April 2020, when the pandemic put about 22 million people out of work and the labor force-consisting of both employed workers and job seekers age 16 or older-fell by 8.2 million workers, or 5%.

“The ranks of employed workers as of this March were 1.2 million shy of their prepandemic level, recovering faster than economists predicted two years ago. The labor force grew to 164.4 million workers, down just 174,000 from its prepandemic level. The rebound has been particularly sharp in recent months as the winter outbreak of the Omicron variant of Covid-19 faded.

“Even with those gains, the U.S. is still missing about 3.5 million workers, by the team’s calculations. That figure represents the difference between the number of workers in March and how many there would be if the labor force had continued to grow at the pace it did from 2015 to 2019, absent the pandemic.

“And their research suggests progress could soon stall. If so, the labor force would remain depressed for longer than the Fed anticipates, potentially helping to keep inflation high.”