Anecdotes and Evidence—A National Scan of Worker Shortage Analyses

by | Dec 2, 2021

Part One

By Aaron Hirsh for the Fund for Our Economic Future

Last week, we announced the launch of a multi-part analysis to answer the question on everyone’s mind: Where are the workers? (And, what do they need?) The Northeast Ohio labor force is down approximately 5% from its pre-pandemic level, as compared to an approximately 1.5% decline for the nation over the same period. 

To unpack in greater detail what is happening locally, our analysis will connect national economic data with robust input from working-age adults and businesses in Northeast Ohio, to be gathered through surveys and focus groups. 

As a first step, we took stock of what national data and analyses can—and can’t—explain relative to the current state of the Northeast Ohio labor market. The chart below summarizes what we learned after digging in on three questions: What are the most common theories on why there is a labor market shortage? How great of a factor does each theory seem to play in the current state of the labor market? And how much supporting evidence exists for the theory?

Here’s what we found, in a nutshell:[mpc_textblock content_width=”100″ font_preset=”preset_12″ font_size=”18″ font_line_height=”1.2″ font_align=”center”]How much evidence exists for this theory?[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_size=”16″]Workers are leveraging stronger financial positions attained during the pandemic to remain out of the labor force. [/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_color=”#ffffff” font_size=”16″ font_align=”center”]Significant factor[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_color=”#ffffff” font_size=”16″ font_align=”center”]Significant evidence[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_size=”16″]Reducing unemployment benefits caused people who were not working to return to the labor force.[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_size=”16″ font_align=”center”]Limited factor[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_color=”#ffffff” font_size=”16″ font_align=”center”]Significant evidence[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_size=”16″]School closures and a lack of childcare capacity prevented parents, particularly mothers, from working during the pandemic.[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_color=”#ffffff” font_size=”16″ font_align=”center”]Moderate factor[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_color=”#ffffff” font_size=”16″ font_align=”center”]Significant evidence[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_size=”16″]Employment status for people of color has been disproportionately impacted by the Covid-19 pandemic.[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_color=”#ffffff” font_size=”16″ font_align=”center”]Significant factor[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_color=”#ffffff” font_size=”16″ font_align=”center”]Significant evidence[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_size=”16″]A wave of retirements among older workers is shrinking the labor force.[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_color=”#ffffff” font_size=”16″ font_align=”center”]Moderate factor[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_color=”#ffffff” font_size=”16″ font_align=”center”]Some evidence[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_size=”16″]Fear of Covid is preventing people from going back to work.[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_size=”16″ font_align=”center”]Limited factor[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_color=”#ffffff” font_size=”16″ font_align=”center”]Some evidence[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_size=”16″]An excess of job applicants is raising the cost of hiring for employers.[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_color=”#ffffff” font_size=”16″ font_align=”center”]Moderate factor[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_size=”16″ font_align=”center”]Limited evidence[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_size=”16″]Transportation barriers are preventing people from returning to work. [/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_color=”#ffffff” font_size=”16″ font_align=”center”]Moderate factor[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_color=”#ffffff” font_size=”16″ font_align=”center”]Some evidence[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_size=”16″]Mental health challenges are preventing people from returning to work. [/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_color=”#ffffff” font_size=”16″ font_align=”center”]Moderate factor[/mpc_textblock]Limited evidence[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_size=”16″]A decline in immigration due to the pandemic has shrunk the labor force.[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_color=”#ffffff” font_size=”16″ font_align=”center”]Moderate factor[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_color=”#ffffff” font_size=”16″ font_align=”center”]Some evidence[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_size=”16″]Deaths due to Covid have significantly reduced the number of available workers.[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_size=”16″ font_align=”center”]Limited factor[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_color=”#ffffff” font_size=”16″ font_align=”center”]Some evidence[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_size=”16″]Changing preferences related to work have made some workers unwilling to return to their old jobs. [/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_color=”#ffffff” font_size=”16″ font_align=”center”]Moderate factor[/mpc_textblock][mpc_textblock content_width=”100″ font_preset=”preset_11″ font_color=”#ffffff” font_size=”16″ font_align=”center”]Some evidence[/mpc_textblock]Subsequent posts in our series will dive more deeply into some of the most surprising insights emerging from the existing research relating to each hypothesis. Hearing something different in your community? Email or Tweet us (@thefundneo) the theory (and evidence, if you have it!).

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