Uncounted in the Unemployment Rate, but They Want to Work

Robert Hesse was expecting an upcoming promotion to manager of Sub Zero Ice Cream, a nitrogen ice cream parlor in Ventura, California when it closed in March due to the pandemic.

“I like to work,” said Mr. Hesse, a college graduate who will turn 26 on Tuesday. “Otherwise I feel useless.” But he was reluctant to find a new job because he lives with his parents, who have not yet been vaccinated, and is afraid of bringing the virus home to them.

“It’s just a health concern – I really don’t want to be in public just yet,” he said.

Mr Hesse represents what economists say is one of the most striking features of the pandemic-triggered economic downturn: the flood of workers who, the government counts, have left the workforce.

In the year the pandemic turned the economy into turmoil, more than four million people left the workforce, leaving a gaping hole in the job market that spans age and circumstance. An exceptionally high number were withdrawn due to childcare and other family responsibilities or health concerns. Others gave up looking for work because they were discouraged by the lack of opportunities. And some older workers quit earlier than planned.

These unemployed dropouts are not included in the most cited unemployment rate, which stood at 6.2 percent in February, making the group a hidden victim of the pandemic.

Now that the labor market is emerging from the vise of the pandemic, one of the big questions about the shape of recovery is whether those who have left the workforce will return to work – and if so, how quickly.

“There are many dimensions related to the pandemic that I believe are fueling this phenomenon,” said Eliza Forsythe, an employment economist at the University of Illinois. “We don’t really know what the long-term ramifications this will be as it is different from the past.”

There is reason to be optimistic. Economists expect that many who left the workforce in the past year will return to work once health concerns and childcare issues are resolved. And they are optimistic that the warming labor market will attract workers who have been disappointed in finding work.

For example, Mr Hesse said he was going to seriously look for a new job once he was vaccinated and hoped to go back to work this year.

In addition, after the last recession, many economists said those who left the workforce were unlikely to return due to disability, the opioid crisis, loss of skills, or any other reason. However, the labor force participation adjusted to demographic change eventually returned to the previous level.

But the speed at which the pandemic has displaced workers from the workforce has had a devastating impact that could cause permanent damage.

The employment rate among 16-year-olds or older fell from 63 percent in February 2020 to around 61 percent. For employees in their prime – between 25 and 54 years of age – it has fallen from 83 percent to 81 percent.

According to research by Wells Fargo, women were almost twice as likely as men to quit in their prime working years, partly because more women work in industries like recreation and hospitality, which are less suited to social distancing, and partly because women are more likely to be the burden of childcare. The proportion of black women who have left the labor force is more than twice the proportion of white men.

Then there are the many people who might be looking for a job but are unable to get one for health reasons, illness or due diligence. Bringing them into a gray area, as economists say – between unemployment and inactivity, violence – that has become more common during the pandemic.

A single mother, Frankie Wiley, 29, worked as a housekeeper at a resort in Bloomington, Minnesota until she was released in March last year. She wants a paid job, but has to stay at home with her 11-year-old daughter, who attends school from afar.

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March 15, 2021, 5:59 p.m. ET

“I take care of her so I am her only support,” she said. She said she plans to return to work as soon as her daughter is safe to return to school.

Older workers have left the workforce in droves, including those who have been left out for health or illness reasons or who have taken the opportunity to take early retirement. Among those 55 or more, labor force participation has fallen from 40 percent last year to 38 percent.

A study by the research company Oxford Economics estimates that around two million workers have left working life since the beginning of the pandemic, more than twice as many as in 2019.

Such was the case of Ed Hoag, a public librarian for 35 years, who decided to retire early last summer for health reasons. He and his wife have no children, and he feared that if either of them got sick, no one would look after them.

The 60-year-old spends his days reading at his home in Lambertville, New Jersey, where he moved a few years ago in anticipation of a retirement that once seemed much further away.

“I miss the work,” he said. “I miss my colleagues, and I miss the library activities, the people who would come in, the jobs we did. I miss all of this interaction. But I think it was the right decision for me and my wife. “

The road ahead could be challenging for the legion of older workers hoping to get back to work after the pandemic. Studies show that older people who leave the workforce will have difficulty re-entering the workforce because of age discrimination and other reasons. If this reality is true during recovery, the number of older workers who have left the workforce – either because they were unable to find work or because they retired early – could be one of the long-term consequences of the pandemic.

A prevailing question is whether, as in the past, employers look askance at those who have been unemployed for some time.

Even in a tight labor market, long-term unemployed were stigmatized, said Maria Heidkamp, ​​director of the New Start Career Network, which helps older job seekers in New Jersey.

“In addition to any age, race or gender discrimination you may already encounter, there is plenty of evidence to suggest that it is easier to find a job when you already have a job,” she said. Although employers may overlook a loophole on a pandemic’s résumé, she said, “There is no reason to believe that this will be any different for these people who are on the edge and want to come back.”

However, given the unique economic impact of the pandemic, many economists believe the extraordinary number of people who have left the workforce will be more of a passing slip than a symbol of a deeper structural problem.

“I don’t think the US labor force participation rate will stay any lower overall,” said Betsey Stevenson, professor of economics and public order at the University of Michigan who served on President Barack Obama’s council of economic advisers.

There is already evidence that people who have left the workforce are returning to work.

Young people’s labor force participation, which fell in the early stages of the pandemic, has rebounded significantly with the boom in the service industry.

And as the vaccination rate continues to rise and restrictions on activity mount across the country, more and more people who have left the workforce are beginning to plan their return.

Ever since she lost her job selling private events last March, Heather Kilpatrick has spent her days at home in East Boston looking after her daughter, who is now 3 years old.

Without her additional income, she and her husband, co-owners of a restaurant, could no longer provide day care at the local YMCA. Although Ms. Kilpatrick, 36, longed to get back to work, she felt like she was trying to solve a chicken and egg dilemma.

“No disrespect to women who want to stay home, but I’ve never been,” she said.

She recently finally got a part-time job for a home-based restaurant group.

Your work started last week.

Ben Casselman and Jeanna Smialek contributed to the coverage.

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