A new analysis indicates that the American labor market will not return to normal “anytime soon.”
Glassdoor — a website through which employees can anonymously review companies — said in its most recent “Workplace Trends” report that the labor shortages which bottlenecked economic activity in 2021 will continue into next year:
Labor shortages defined the 2021 job market. As customer demand roared back to life, employers faced acute hiring challenges as workers trickled back into the labor force. The increased competition for workers has made it exceptionally difficult to both hire and retain employees. Employers may be ready to write off the tight 2021 labor market as a pandemic-era anomaly, but they shouldn’t. Instead, 2021 should be a template for what to expect in 2022.
Unlike past recessions, the U.S. has largely skipped the phase of the recovery where employers have a large pool of unemployed workers to hire from. Employer reliance on furloughs kept the pool of available workers relatively small throughout the pandemic.
Among the difficulties faced by companies seeking to hire were “a lingering pandemic that will not disappear overnight,” “reduced availability of retirees and parents,” and “a quicker-than-expected recovery in customer demand.” Glassdoor sees no end in sight to these pain points:
The imbalance between labor supply and demand is large enough that even a moderate improvement in conditions would not be enough to make it easy to hire again. There simply is no silver bullet to fix labor shortages. Even previously touted changes like withdrawing enhanced unemployment benefits or school reopenings are unlikely to make a sufficiently large dent to return the job market to a period of easy hiring. Combined with structural shifts shrinking the workforce like an aging population and lower immigration, it will be just as hard to hire and retain workers in 2022 as it was in 2021.
Indeed, the Department of Labor’s Job Openings and Labor Turnover Survey (JOLTS) from October shows that there are over 11 million job openings in the United States — exceeding the number of people actively searching for work by 3.6 million.
However, President Biden has been routinely turning a blind eye to concerning trends in labor market recovery. While discussing the November jobs report — in which job growth failed to reach even half of what economists had forecasted — Biden boasted that “our jobs recovery is going very strong.”
“This year, we can reflect on an extraordinary bit of progress. Our economy is markedly stronger than it was a year ago, and today, the incredible news that our unemployment rate has fallen to 4.2%,” he said at a press conference. “At this point in the year, we’re looking at the sharpest one-year decline in unemployment ever. Simply put, America is back to work and our jobs recovery is going very strong.”
“Today’s historic drop in unemployment rate includes dramatic improvements for workers who have often seen higher wages and higher levels of unemployment. Excuse me, higher levels of unemployment — they are seeing higher wages.”
Higher nominal pay, however, does not necessarily correspond to higher living standards. Since Biden took office, Americans’ inflation-adjusted wages have been consistently declining.
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