Telling one story about why employers are struggling to hire workers doesn’t come close to explaining what is going on with the job market.
Economists expect Friday’s employment report to show that the economy added 706,000 jobs in June, a step up from May’s 559,000 and what would in normal times be a big number. These aren’t normal times, though. The U.S. is still 7.6 million jobs short of what it had before the Covid-19 pandemic struck, and earlier this year there were hopes that, as more Americans got vaccinated, the job market would be closing that gap far more quickly than it has.
The problem isn’t a dearth of jobs. As of the end of April there were 9.3 million job openings by the Labor Department’s count, and businesses all over are complaining about how hard it is to get workers. Some of the more popular explanations are that enhanced and extended jobless benefits have reduced recipients’ incentives to look for work and that ongoing difficulties obtaining child care have dissuaded many women in particular from returning to work.
Arguments blaming one or the other fall along predictable ideological lines, but there is evidence that both are weighing on the job market. More than one thing can be true about the job market at once, and, considering the unusual set of circumstances the pandemic brought about, other factors could be contributing to hiring difficulties too.
A recent survey conducted by the job-search site Indeed found that, among unemployed job seekers who said they weren’t urgently looking for work, the biggest hurdle was continued worries about Covid-19. In addition to care responsibilities and unemployment benefits, they cited spousal employment and having financial cushions as reasons for their lack of urgency.
There are other factors that could be at play, said the Harvard University economist Lawrence Katz. One is that many employers might want things to go back to the way they were before the pandemic, while many workers might have something else in mind.
"It’s a mismatch of expectations and aspirations," he said.
The pandemic was traumatic for some people, and they might need time to process things before going on the job hunt, while for others it was simply exhausting and if they are able they might want to enjoy the summer before looking for work. Moreover, just knowing that there are a lot of job openings out there could dissuade some people from searching too hard—the easy pickings seem likely to continue.
There also could be geographical mismatches between the places where businesses are hiring and places where the unemployed used to work. Some of these could even occur not just across state lines but within a metropolitan area. With many offices still closed, restaurants in business districts are suffering, for example, while those near more-residential areas are booming as people make up for lost meals. Reallocating downtown restaurant workers into those new jobs could take time.
There might be limits on how fast employers can hire, and these could be aggravated by the high level of people quitting their jobs for other opportunities lately. It is one thing to fill three open positions in a month and another to fill those plus the positions of three more employees who just gave notice. There could also be measurement issues since the pandemic threw a wrench into typical hiring patterns. Some economists think Friday’s report could be strong, for example, since the end-of-school-year declines in education employment could be smaller than usual.
The good news is that a lot of things that could be behind hiring strains should ease up in the months ahead. Most schools will be back to in-person learning this fall, which could alleviate child-care issues, while the expiration of enhanced unemployment benefits will come in September, and the summer vacation season will be over. When it came to things that would prompt them to step up their job search efforts, respondents to the Indeed survey ranked increased vaccinations highly.
But that might not solve everybody’s hiring problems. The pandemic changed a lot of things about the job market. While it is fine to expect things to return to normal eventually, we still don’t know what normal is.
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