As the pandemic struck the United States, unemployment soared with over 17 million people losing their jobs between February and April 2020. However, as the economy recovered, the U.S. moved from a labor surplus to a fairly significant shortage.
In fact, as we can see from the latest Bureau of Labor Statistics (BLS) Job Openings and Labor Turnover (JOLTS) data, there are 0.6 unemployed people per job opening, meaning there is roughly one person available for every two job postings. Notice, though, that there was a downward trend before the COVID recession, indicating that, even prior to the pandemic, the U.S. was moving from a surplus of labor to a shortage.
The civilian labor force participation rate, the percentage of the non-institutional population 16 years and older that is working or actively looking for work per the BLS, emphasizes this point. Despite recently rising, it remains close to a level last observed in October 1977.
The prime age labor force participation rate, an important cut of the data only looking at those 25 to 54 years old, has returned to its pre-pandemic level at 83.1%. The current rate is down from its peak of 84.6% in January 1999. The change in the labor force is of particular interest to the construction industry. From the JOLTS data for the whole year of 2022, job openings in construction industries averaged 402,000 per month. This is up about 45% from 2018 when there were 277,000 openings per month on average for the year. There are signs that there’s a better availability of workers since housing starts are down cyclically, but the lack of labor is a longstanding issue.
The obvious next question is "Where have the workers gone?" We attribute the change to five main things: the aging workforce, changes in immigration, drug abuse, the gig economy, and alternative employment opportunities.Read More