The U.S. labor force is “missing” approximately 2 million workers, according to a Federal Reserve Bank of Kansas City report covered by Bloomberg (subscription).
What’s happening: “The participation rate—or the share of the population that is working or looking for a job—was 62.2% in April, and while it has improved from its pandemic levels, it remains one percentage point below levels seen before the Covid-19 outbreak.”
- The actual labor force was about 3.6 million smaller in March than it was before the pandemic, according to Kansas City Federal Reserve Bank Senior Economist Didem Tuzemen.
- Most of the “missing” workers are older adults.
The causes: “Reasons for the drop include the aging of the population in the past two years and a slowdown in population growth,” according to the report.
Why it’s important: “The Fed paper noted participation rates have been recovering slowly as reopened schools and daycares have allowed prime-age parents to return to work, and as higher vaccination rates have led to service-sector workers feeling safer about returning to employment. But to completely recover, participation rates among elderly workers would need to normalize.”
Our take: “Manufacturers continue to cite their inability to attract and retain enough workers as a top concern,” said Chad Moutray, director of the Center for Manufacturing Research at The Manufacturing Institute.
- “We know that firms in the sector will need to identify 2 million workers over the course of the next decade.”
- “To achieve that goal, manufacturers need to think proactively about how to reach out to prospective employees—including working to change perceptions about the sector, focusing on the sector as a high-paying, advanced career and pathway to success, and differentiating manufacturing from other local competitors for talent.”
- “In addition, workers are attracted by a culture that celebrates individual successes, values diversity and a social mission and advances their professional development.”
- He added that manufacturers that embrace diversity, including by age, are more successful than those that do not.