https://edition.cnn.com/2022/02/03/perspectives/imf-labor-shortage-employment-us-uk/index.html
The big reason the US and UK are facing such a massive labor shortage
Almost two years after the pandemic upended labor markets, job openings are plentiful in many advanced economies, yet workers have not fully returned.
The broader trend of plentiful jobs and not enough workers can have major implications for growth, inequality and inflation.
This gap, in which the employment rate is below its pre-Covid level, is playing out in the United States and the United Kingdom. Despite tight labor markets, as reflected in high vacancy-to-unemployment ratios and job quits, the employment recovery remains incomplete and below pre-pandemic levels in both countries. Now with a possible cooling effect on labor markets caused by the Omicron wave, this trend could be longer than expected.
New IMF staff research uses granular data on employment and vacancies in the US and the UK to assess four commonly held explanations:
- The effect of generous income support on willingness to seek and take up jobs
- A mismatch between the types of jobs that are available and the willingness of people to fill them
- Mothers of young children exiting the work force amid continued disruptions to school and childcare
- Older workers withdrawing from the labor force
We found that lower participation among older workers not returning to work is the common thread, and matters most. Mismatch plays a secondary role. The fall in female participation is unique to the US, but also quantitatively important
