Coronavirus Has Shrunk the American Labor Force
December 3, 2020
America’s labor market rebounded quicker than many economists thought possible. Between April, when most state lockdowns ended, and October, the unemployment rate fell by more than half, dropping to 6.9%. However, raw unemployment data obscures the reality of the labor market’s overall health.
The majority of the unemployment rate’s decline is because workers have found new jobs, but part of the decline is because workers have given up looking for work. Since February, the U.S. labor force has shrunk by 2.2%, a loss of 3.7 million workers. The total labor-force participation rate, which counts the share of Americans over the age of 16 who are working or seeking work, was 61.7% as of October, down from 63.4% in February. That is nearly the lowest level since the 1970s when more women began entering the workforce.
Economists who spoke to the Wall Street Journal say it is too early to say if the decline in labor participation is permanent. The two groups that have seen the largest decline is baby boomers and women. The boomers, who may have opted to retire early rather than look for a new job, may not come back, but women, many of whom have opted to stay home to care for children while schools and daycares are closed, may return to work once things get back to normal.