Where did all of the workers go?

To better paying and more flexible jobs – that’s where. The number of open jobs in the US is running at the 11M mark and has held consistent. Consistent that is since mid-2021. Prior to the pandemic, the number of open jobs had a run rate of close to 6M. The size of the US has not materially changed and the workforce participation rate has not changed. What has changed is the demand for workers.

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Open Jobs in the United States

The labor force participation rate is a measure that indicates the proportion of the working-age population (individuals aged 16 and older) who are either employed or actively seeking employment. It is calculated by dividing the labor force (the total number of employed individuals plus those actively seeking employment) by the total working-age population and expressing it as a percentage.

In May 2023, the labor force participation rate for individuals aged 16 and above stood at 62.6 percent, which was 0.7 percentage points lower than its level in February 2020, before the onset of the COVID-19pandemic. However, the labor force participation rate for individuals aged 25 to 54 has rebounded and reached its pre-pandemic level, registering at 83.4 percent in May 2023. The last time this rate was as high was in January 2007. For women aged 25 to 54, the labor force participation rate in May 2023 was 77.6 percent, which is 0.6 percentage points higher than its level in February 2020. This group's recovery is noteworthy, considering concerns about reduced participation due to childcare responsibilities during the pandemic or other familial obligations. Among men aged 25 to 54, the labor force participation rate reached 89.1 percent in May 2023, having returned to its pre-pandemic level in April 2023.

This is a long way of saying that the labor force size is still the same as it was pre-Covid. What has changed is the demand for workers.

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Monthly job openings in the United States in April 2023, by industry

As some jobs have become more remote, it has pulled employees away from sectors where remote is not really an option. See the below chart from Statistica with job openings by industry:

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How does it play out?

Headwinds:

• AI is great and that will have short and long-term implications, but we have had major engineering and technological improvements since the beginning of time and the wheel, the steam engine, the internet and infinitely more examples. This gap may perpetuate how we fill gaps but it will not solve the problem.

• Over the coming 24 months, the deluge of capital thrust into the market during the pandemic will dry up as interest rates remain high and the economy slows down. This should help to settle the job market and wage rates.

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Tailwinds:

• We have an awesome system here in America and the economy is running at a faster pace than ever from an innovation and creation perspective. While that does create a labor strain, it is an awesome problem to have and what other countries would give anything to see. So, while you wrestle through the strain of office turnover, also give a slight smile to the economy and ecosystem you have helped to build and create.