Despite inflation and a pandemic, a record number of Americans are refusing to get back to work. Job openings are near record highs while hourly pay rates are rising. Given all these, conditions should encourage a hiring boom in the US labor market. However, the reverse is happening.
After surging in the early half of this year, job growth slowed down considerably by September. With numerous job openings and offers of higher pay, why are many Americans still reluctant to get back to work?
According to economists, there were many reasons that stopped many Americans from going back to work. Here are six reasons why.
Reason 1: COVID-19
The fear of contracting COVID-19 at the workplace became a legitimate concern early on in the pandemic. Now, with cases spiking again during August and September, it’s not surprising to see that job growth slowed during these months.
Compared to 1.1 million new jobs in July and 962,000 in June, only 366,000 new workers signed up in August. By September, new workers totaled a measly 194,000.
According to Daniel Zhao, senior economist at Glassdoor, the pandemic continues to hold sway over careers. “The September jobs report is a reminder that the pandemic is still what controls our recovery.
The pandemic is still keeping workers out of the labor force.” he said. Apart from the lackluster new jobs, a record 4.3 million Americans quit their jobs in August.
Frontline positions in foodservice and retail accounted for most resignations. Meanwhile, Zhao hopes that job signings should take off once COVID-19 cases go down.
Reason 2: Early Retirement
Unsurprisingly, the pandemic gave many work veterans a reason to retire early. With older Americans more prone to infections from coronavirus, many senior employees thought now was the best time to pack up.
Some experts also suggest that older workers who are grandparents offered to take care of their grandchildren. They did so to help the kids’ parents with childcare duties as they needed to get back to work.
Aaron Sojourner, a labor economist at the University of Minnesota, said that the pandemic helped workers on the fence about retiring make a decision. “All those things would push especially hard on people in their 60s to come out of the labor force,” he said.
Compared to 2019, around 3.6 million American workers said that they don’t want a job right now. Those aged 55 or older accounted for 89% of the group.
Reason 3: Child Care issues
Taking care of the household took a new meaning during the pandemic. As schools closed, kids had to stay home and off the streets. The closure of malls, retail shops, bars, restaurants, and convenience stores meant nobody can go anywhere else to hang out.
With schools opting for remote learning, kids can now attend school without leaving their homes. Which means somebody had to be there to take care of them.
Managing the household will definitely provide less time for Americans to return to work. Parents would also think twice before getting a job that can potentially transport the virus from the workplace to their homes.
Reason 4: Savings
Compared to pre-pandemic levels, many households managed to save more money as shutdowns forced everybody to stay home. According to JPMorgan Chase Institute, cash balances were up 50% for the typical household in July 2021.
In addition, the generous amounts that the federal government gave to American households as a stimulus also added more to their budgets. A
ccording to Fiona Greig, co-president of the institute, workers feel they have a bigger buffer they can live on without needing to risk getting a job right now.
“They don’t have to find a job at this moment,” she added. Then, the government also provided temporary relief for home rentals and student loans.
Add the fact that people have nowhere to go to spend money. These factors all led to many Americans getting comfortable living on their savings for the meantime.
Reason 5: Salaries
Wages rose more than 4.5% on average compared to last year. However, many Americans are still holding off getting back to work. Many think that the higher pay won’t offset the decrease in job quality.
This is especially true in service jobs like restaurants, bars, and retail. The risk of infection, dealing with unruly customers, and difficult commutes for the same salary won’t cut it for many workers.
On the other hand, other workers armed with savings are waiting for further raises in job offers.
With corporations reporting record profits, many workers know that employers will need to offer pay raises even more to attract workers. “The big question is, why aren’t companies bidding up wages and working conditions fast enough to pull people off the sidelines?” Sojourner said.
Reason 6: Time
Given the disruptions caused by the pandemic and how they affected the economy, it will take some time for markets to sort things out. Zhao believes that “getting people back into jobs isn’t something you can do at the snap of a finger.”
Many workers who left their jobs will want to sort out their careers in light of the pandemic. They will reassess what kind of work they plan to pursue in the future.
They may also consider the policies of their former employers that they don’t agree with at present. For example, many executives want workers to return to the office full-time. Many workers would rather wait for the pandemic to clear before agreeing to do so.
Watch the CNBC video reporting on The Great Resignation: Why Millions Of Workers Are Quitting:
Do you agree with the reasons why many Americans refuse to get back to work? Which reason do you think resonates most with you?
Let us know what you think. Share your thoughts below.