“Employers have had to be more flexible. For example, many employers continue to accommodate remote work, flexible schedules, and pay higher wages to attract workers. In other cases, employers have had to be flexible with the hours they are open because they cannot staff their businesses. And in still others, they have had to close down completely.”
Maurice E. Schweitzer, Ph.D. – Professor, University of Pennsylvania
“The major impact according to our two monthly surveys at Creighton University has been a sharp upturn in ‘labor hoarding. That is, instead of laying off workers due to low levels of economic activity, employers have retained the workers, but with fewer hours worked, or lower intensity of job efforts. Not surprisingly, labor productivity for the first half of 2022 declined to its lowest level since 1947. Additionally, employers are now more open to employees working from remote locations including home. While some of this movement has been reversed, there remains a high share of employees working from remote locations. This has had a significant and negative impact on businesses located in large downtowns across the nation (e.g., sinking commercial office rentals, failure of businesses that cater to downtown workers).”
Ernie Goss, Ph.D. – Professor, Creighton University
What will be, if any, the economic impact of this workforce trend?
“It may be too early to say for sure. But it does seem likely to have a variety of effects. Those who exited the labor force may stay out, which reduces potential output. On the other hand, a strong market pulls in younger workers and creates opportunities to build human capital and advance, which are positives for the economy.”
Andrew Burnstine, Ph.D. – Associate Professor, Lynn University
“Elevated federal transfer payments will remain a part of the U.S. worker landscape as it has been in Europe for some time (e.g., the so-called social safety net). While the non-work benefits have been reduced, they remain elevated from pre-pandemic levels and continue to incentivize workers to remain out of the workforce. Furthermore, the youngest of baby boomers, at age 59, have yet to reach retirement age so there will remain a high share of workers moving into retirement age. Thus, labor force participation rates will not return to pre-pandemic levels for another 8-10 years.”
Ernie Goss, Ph.D. – Professor, Creighton University
Will this be a long-term issue or will we see a re-entering in the labor force of the prime-age workers in 2023?
“The economic conditions today are unlikely to persist through the end of 2023. We are headed for disruption, and I expect a re-engagement in the labor force with many workers who are likely to see a more difficult economic environment by the fourth quarter of 2023.”
Maurice E. Schweitzer, Ph.D. – Professor, University of Pennsylvania
“Because there is no ‘crystal ball’ to accurately predict if this will be a long-term issue, or who or how many workers will be re-entering the labor force of the prime-age workers in 2023, economists and statisticians will need to keep a constant watch on what is happening in the U.S. and around the world. And, with a debt-limit breach, and possible, (but improbable), Government shutdown, ‘all bets’ would be off for a sustainable and viable future labor force for 2023 and beyond.”
Andrew Burnstine, Ph.D. – Associate Professor, Lynn University