A “perfect storm” of labor-market conditions is keeping millions of people out of the workforce, Goldman Sachs estimates.
Though some lawmakers hoped ending pandemic-era unemployment benefits would jump-start the labor market, less than one fifth of Americans cut off from the federal government’s pandemic-era unemployment benefit program will return to work by year’s end, Goldman Sachs analysts said Monday, noting other contributing factors—including Covid fears and surging self-employment—should keep some people from work for months to come.
Expectations for ongoing worker shortages “reflect a perfect storm of factors” that have disincentivized people from looking for work, all while labor demand—as measured by job openings—has surged to anChief among factors, more than 3 million people still say the risk of getting or spreading Covid-19 is their main reason for not working, according to the latest Census Household Pulse—down from a high of 6.5 million in August but still a large portion of the 8 million unemployed people.
Also feeding labor shortages, the number of visas issued to immigrants and temporary workers “collapsed” during the pandemic, partially reflecting restrictions on entry into the U.S. that have only recently been relaxed, Goldman notes, forecasting the drop in visas has reduced available workers by about 700,000.
In addition, a staggering 1.5 million workers have retired early during the pandemic, on top of another 900,000 who naturally aged out of the workforce. Although they expect labor-market shortages to ease going forward, the analysts expect that a million people will still be out of the labor force by the end of next year.“While generous unemployment benefits have contributed to the labor shortages, reports of labor shortages are widespread across developed economies, suggesting that common global factors—for example, elevated health risk—also play significant roles,” the Goldman team led by Jantzius wrote Monday.