Simple answers are always appealing, which is why many people are placing the blame for our region’s current worker shortage on the enhanced federal unemployment benefits that remain in effect in most parts of the country, including Minnesota.
For a small number of workers, the benefits may be a factor, but they are just one of many that are going into the calculations of individuals and families as they weigh the future in what we hope is soon a post-pandemic Minnesota.
It’s worth remembering that our region faced an acute worker shortage even before the pandemic. Exactly three years ago, in an editorial titled “Workforce woes,” we wrote about two issues that were contributing to the problem: the region’s aging workforce and the lack of childcare. The pandemic didn’t slow the aging of our workforce. In fact, it likely prompted more people to retire early. And the childcare industry was hit hard, including in our area, by the pandemic. In other words, both of these factors are, if anything, posing even greater challenges to the area’s workforce than they were before the pandemic.
Details from the April jobs report, nationally, suggest that lack of childcare remains a major issue. Of the 266,000 new jobs reported last month, virtually all went to men, which suggests that, at least in two-parent families, women are choosing to remain at home with kids. That’s not a surprise. With many schools elsewhere in the country still shifting back-and-forth between distance learning, hybrid-learning, and in-person classes, families are facing considerable uncertainty. If the enhanced unemployment benefit means families can delay sending both parents back into the workforce a few months longer, without causing serious stress, then they are achieving exactly their intended goal.
If unemployment benefits were really the primary issue, we would only find worker shortages at the lower end of the pay scale. Someone who is in a profession or trade that pays in excess of $60,000 a year is unlikely to give up that level of compensation for an enhanced federal benefit that will amount to no more than $11,700 this year, since the benefits are only slated to go through September. Yet employers are reporting an inability to find workers at virtually all levels, including for jobs paying well over $100,000 a year.
We always knew there would be a worker shortage in the U.S. when the baby boom hit the exit from the workforce, and for some boomers, the pandemic was the shove they needed to call it quits. Now that the economy is ready to ramp back up, their absence from the job market is being felt.
The disappearance of baby boomers from the workforce is coming at the same time that the U.S. has tightened its rules and limits on immigration, which used to be a significant factor in maintaining the workforce in the U.S. And that tightening comes amid the backdrop of a declining birth rate in the U.S. It’s now so low that more people die in the U.S. each year than are born, something that is unprecedented since European settlement here. If you think the worker shortage is bad today, just wait. It will be much, much worse in the future.
The impacts to the economy are already significant. Most economists expect strong economic growth this year, because most of the economic indicators are pointing that way. But if businesses don’t have the workforce, much of that expansion could be stalled.
The bottom line here is that our employment situation and our prospects for economic recovery are connected. While the U.S. has most of the pieces in place for a strong post-pandemic recovery, the shrinking workforce could pose one of the biggest challenges. It would be nice if cutting off enhanced federal unemployment benefits would prompt more Americans to re-enter the workforce. Unfortunately, our workforce challenges, both here at home and across the country, are a lot more systemic and challenging than that.