Hiring Difficulties May Be on Horizon as US Labor Force Participation Rate Remains Unchanged

By Katabella Roberts
Katabella Roberts
Katabella Roberts
Katabella Roberts is a reporter currently based in Turkey. She covers news and business for The Epoch Times, focusing primarily on the United States.
November 8, 2021 Updated: November 8, 2021

Hiring difficulties may be on the horizon for U.S. firms amid a weak labor supply, according to the Bureau of Labor Statistics’ latest jobs report.

The bureau’s October jobs report, released Nov. 5, showed that employers added more than a half-million jobs in October, beating market expectations and painting a more positive picture of labor market recovery compared to the previous month.

However, the labor force participation rate—a measure of how many people work or are actively looking for jobs—was unchanged at 61.6 percent in October and has remained within a narrow range of 61.4 percent to 61.7 percent since June 2020.

The participation rate is 1.7 percent lower than in February 2020, at the peak of the COVID-19 pandemic.

Meanwhile, for workers aged 25 to 54, the labor force participation rate ticked up to 81.7 percent in October from 81.6 percent in September, which, while above the historic pandemic lows, is still far below pre-pandemic levels, according to Bloomberg.

In February 2020, 82.9 percent of 25- to 54-year-olds were in the labor force.

While the reason for the lagging labor force participation rate isn’t immediately clear, economists have cited growing fears among employees returning to the office amid the recent wave of the Delta variant of COVID-19, government assistance programs and policies, and the stress of the pandemic prompting a spike in retirements and resignations as factors contributing to the rate.

A lack of access to affordable child care is another factor that may be adding to the stalled participation rate.

A study released last month by the Joint Economic Committee (JEC) Republicans found that the government’s huge assistance programs, such as the stimulus handouts designed to help Americans through the pandemic, have “likely made work less attractive for these Americans.”

The study found that the United States has experienced an unprecedented rise in disconnected prime-age workers over time.

For men, this trend dates back a half-century, with their labor force participation rate falling to 89 percent before the pandemic from more than 97 percent in 1955. For women, receding workforce participation began in the past two decades.

That’s occurring as employers across the United States raise wages and implement attractive bonuses and competitive compensation in an effort to pull in new workers after the pandemic.

Starbucks, Costco, Walmart, Target, CVS Health, and Walgreens Boots Alliance are just a handful of companies that have all said they are boosting starting wages to $15 an hour, in line with President Joe Biden’s push to raise the minimum wage to the same amount and in an effort to recruit more workers amid a nationwide labor shortage.

According to the ADP Research Institute Workforce Vitality Report (WVR) released Oct. 27, third-quarter wages in the United States increased 3.3 percent, in line with growth in the months before the pandemic, while job switchers’ pay is up 6.6 percent since September 2020.

“We know from other recent data that the rate and number of individuals quitting their jobs have been at record levels,” Bankrate senior economic analyst Mark Hamrick said in an emailed statement to The Epoch Times.

“A key question of the day is whether or when will these workers return, helping to address worker supply challenges,” he wrote.

The Federal Reserve on Nov. 3 said it will begin trimming its $120 billion in monthly purchases of Treasurys and mortgage-backed securities in November, with plans to end them in 2022, citing “substantial further progress” in the economy.

“Economic activity and employment have continued to strengthen,” the policy-setting Federal Open Market Committee said in its statement.

However, Fed Chairman Jerome H. Powell noted in a news conference last week that “there is still ground to cover to reach maximum employment, both in terms of employment and in terms of participation.”

“We thought that schools reopening and elapsing unemployment benefits would produce some sort of additional labor supply. That doesn’t seem to have been the case interestingly. So I think there’s room for a whole lot of humility here as we try to think about what maximum employment would be. We’re going to have to see some time post-COVID so that we know, or post-Delta anyway, to see what is possible,” he said.

Katabella Roberts is a reporter currently based in Turkey. She covers news and business for The Epoch Times, focusing primarily on the United States.