(Credit: Steve Thurston, 2022)
Economist and researcher Rachel Sederberg speaks at the Warren County Economic Development Corporation annual luncheon, June 19, 2022.
Many workers have disengaged. They are healthy and able to work, but they are not working.
A lot of them.
Nationally, there are 100 million people out of the labor force, and of those, 50 million are not retired, they just do not want to reenter the workforce. About 3.5 million of them had been working just before the pandemic.
The nation needs between three and five million workers to reenter the workforce if the country’s labor shortage is to abate.
To be clear, these are not necessarily people resting on unemployment or looking for work yet cannot find any. These are people who have stepped back from the labor pool altogether and do not seem to want to reenter, said Rachel Sederberg, Ph.D., Research Manager at Emsi Burning Glass, a labor market analysis firm.
She spoke to hundreds gathered at the Great Escape Lodge in Queensbury on Friday June 19, during the Warren County Economic Development Corporation annual luncheon. With the EDC theme “The Best Days Are Ahead,” Sederberg joked that the news is bad, but she would try to make it good by the end of her talk.
Since May 2021, 3.2 million people came back into the workforce, about 1.9 million are still looking, but 3.5 million have just disengaged, she said.
Although the various pandemic-era extended unemployment payments, and the lack of childcare had some lasting effect on the labor shortage, the disengaged were already shifting before the pandemic hit, she said.
“We were on this train before COVID, and COVID slammed on the gas,” she said adding later, “Those over 55 are increasingly not looking for work.”
Although the Baby Boomer generation “generated massive wealth gains,” the millennial generation, the children of the boomers, with too few of them, can not keep up with the needs of the labor force. This is a strain on the economy.
She listed a number of factors that have contributed to this as well, including the number of people who are self-employed, the number who have opioid addiction, the low immigration rates, and the misalignment of the workers' backgrounds and what is needed in the workforce.
She said that seven of 11 job openings require no college degree while the United States has been graduating college-educated people at record rates. As well, the birth rate is not keeping up with the need.
And there is no fast or easy way out. Building enough robots to replace workers, for instance, would require millions more workers to design, build and maintain them. Artificial intelligence will not replace humans fast enough.
She said one piece of bad news for individuals may be a bright spot for the overall economy.
“Credit card debt is back to where it was [pre-pandemic], and personal savings is below where it was,” she said. As well, inflation has pushed prices much higher, so the basic need for money may force some of those disengaged workers back into the market, she said.
She said the old model for labor shortage change has gone. It used to be that the people out of work were looking and were interested in work. They could be enticed with the right job or better pay, but that has shifted, she said. Employers have to find potential employees and convince them to come back.
“Actively seek out the disengaged for whatever reason they are disengaged. Get your message out to the people who are out of the workforce, the people who are maybe taking care of an elder, or a child or who feel they are too young or too old, people who feel they are discouraged from being in the workforce,” she said.
Getting creative and finding ways to reengage these people is food for thought for another day, she said.