Here’s a puzzle to solve this Labor Day: Where have over 3 million workers gone? The economy has reportedly recovered all of the jobs lost during the pandemic. Yet, a swath of the workforce the size of San Diego, Dallas, and Denver combined has vanished.
Contrary to popular belief, workforce dropouts are not largely working parents sidelined by high childcare costs. Instead, the most seasoned workers are MIA. Taxpayer-subsidized child care will not lure them back into the workforce. Flexible work may be the incentive that draws coveted workers back to fill employment gaps.
Neglected in much coverage of the Great Resignation is the small, but not negligible, group of workers who vanished from the labor force entirely. The labor market is bleeding workers. At 62.4%, the labor force participation rate, which measures the percentage of the population either working or actively looking for work, is below the pre-pandemic level of 63.4%.
That low participation rate is behind the disappearance of 3.4 million workers–the number of workers who left the workforce according to the Chamber of Commerce. One narrative that left-leaning policymakers used to justify a massive new childcare entitlement was that women and working parents dropped out to oversee their children’s virtual learning or to caregive for preschoolers. Yet, the data denies that working parents have been the drivers of the worker shortage and the Great Resignation.
However, these concerns did not disproportionately affect women’s and parents’ employment, according to an analysis by Heritage Foundation’s Rachel Greszler. Even left-leaning economists, including senior Obama economic advisor Jason Furhman, concluded that the “differential job loss among parents, or even mothers specifically, accounts for a negligible share of aggregate job loss and could even have led to a small increase in jobs between the first quarters of 2020 and 2021.” A costly new childcare subsidy and universal Pre-K program would have solved a problem that did not exist. It’s a good thing that it was left on the Build Back Better cutting floor.
Older Americans are the true faces of worklessness today. Among those 55 and up, just 38.7% worked or looked for work in July, down from 40.3% before the pandemic. The employment-population ratio for (non-disabled) 65+ workers is still 2.6 percentage points below its pre-pandemic level. Compare this to employment among 25-55 year olds, which recovered, and that more of our youngest workers are employed than before the pandemic.
Prior to 2020, large groups of Baby Boomers were retiring. The oldest of this generation hit 73 in 2019. Enter a pandemic that had the harshest health impacts on older Americans. Due to sickness, caregiving, or fear of coronavirus exposure, retirement rates went from 48% to 51%.
The loss of so many older workers exacerbates the labor shortage and contributes to inflation. Early (and sudden) retirements also present a loss of human capital that drains workplaces of the knowledge and experiences gained from decades of work.
Here’s one way to lure some of these workers out of retirement: flexibility. A benefit often promoted to attract women and working parents, flexible work is just as critical for older workers. Through freelancing and independent contracting, companies and organizations can retain some of the information and insight that older workers possess, as well as their labor.
Older workers gain the benefit of income and productivity at a pace that matches their desired lifestyles. Working remotely also provides cautious workers the security of limiting their exposure to colleagues. Some older workers can also fend off ageism that hampers their employment opportunities.
Lawmakers must respect this alternative to the 9-to-5 job. Troublingly, the Left is bent on erasing independent contractors because they cannot organize them. California implemented the devastating Assembly Bill (AB5) law that reclassified millions of independent contractors as workers. It led to widespread work loss and decimated industries that older workers enjoyed, such as transcription. Exempting hundreds of industries has still not stemmed the loss for marginalized and older workers.
The Biden administration and congressional allies may seek to destroy independent contracting nationwide through the Protecting the Right to Organize Act or through regulatory fiat at the Department of Labor or even the Federal Trade Commission.
Any policymaker who is serious about addressing the worker shortage and inflation this Labor Day must protect flexible work. Senator Tim Scott’s Employee Rights Act is a good place to start, but from state capitols to Congress, we need to see a bipartisan commitment to protect independent contracting.
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