2021 Jobs Update – The Post-Pandemic Labor Market

The U.S. economy is facing a disparity between job availability and unemployment. Some believe this gap threatens to impact our post-pandemic recovery and future growth. In May, the U.S. Bureau for Labor Statistics reported a 5.8% unemployment rate, down from 14.8% in April 2020 but still higher than the pre-pandemic level of 3.5%. Yet, despite the unemployment rate, for months businesses have been anecdotally reporting a shortage in labor and a sluggish rate of job fills. 

Zip Recruter and other employment experts now point to the lack of labor participation as a key component of the problem: the economy is experiencing a “vaccination job boom” but labor participation rates are not increasing to meet the demand. What is causing the disconnect? Let’s look at some issues in the post-pandemic labor market.

Remaining Pandemic Concerns

While many states have successfully vaccinated large percentages of their populations, others seem to be lagging. With the emergence of COVID-19 variants, some individuals are still hesitant to return to in-person jobs. Families may also fear exposing young children who still are not eligible for vaccines.

Speaking of children, childcare still remains an issue for many parents. With summer in full swing, daycare facilities, camps, and other care options may not be completely open or available. Until parents are certain their kids can (safely) return to school and after-school activities in the fall, they may be hesitant to return to work as well.

Unemployment Benefits vs. Wages Debate

Many economists believe that government assistance is to blame for low labor participation. If people return to work, they lose the expanded pandemic unemployment benefits, and in some low-wage jobs, workers can earn more by not working. President Biden’s response to this claim is to encourage businesses to offer better wages. Employers may already be acting on this: according to S&P Global, between March and April of 2021, average hourly earnings jumped .7%.

The President recently confirmed that supplemental unemployment benefits will end in September. Several states are attempting to end those benefits even earlier, assuming that this will incent people to return to work faster. However, judges are now ruling in favor of suing workers, and we may see these early deadlines reversed. Chances are that we will have to wait until after September to fully understand the impact of government assistance on labor participation.

Workforce Skills Gap

Much has been written about the technology skills gap in the United States, an issue prior to 2020 that worsened with the digital demands of the pandemic. Marchon Partners has also written on this issue, citing disproportionate demand in cloud computing, cybersecurity, and web development skills, among others.

It may be surprising to learn that non-technology skills are now in demand in the post-pandemic labor market as well. HR Digest reported that Digital Marketing and Strategy and Business Development both landed in the top seven in-demand jobs in 2021. In addition, HR Digest highlighted the importance of communications skills in today’s job search: “Organizations require savvy communication capabilities in a remote work environment and as a prerequisite for collaborating with colleagues and partners via online platforms.” Candidates would be wise to emphasize communications experience in their applications.

Job Seeker Confidence

NBC news recently reported that job application fatigue may actually be leading to fewer applicants for open positions. They explained that, immediately following a job loss, individuals apply for a large number of roles, and in a weaker market, receive rejections en masse. This leads to a negative perspective on job prospects and a drop off of labor participation.

In the first quarter of 2021, the job market was weaker and job seeker confidence was low. However, by May 2021, the job market had improved significantly. The NBC article speculates, “But those who have already given up, just before the latest hiring boom, may not have got the message yet about their improved chances.”

Until the post-pandemic labor market improves, what can employers do? 

• Evaluate candidates on potential rather than exact skills match and consider providing training to current and potential employees to attain the exact skill sets needed
• Offer market-rate salaries for open positions and ensure that current employees’ rates are also on par with the market to limit turnover
• Offer flexible work hours and locations, if the job permits, to match current employee attitudes

A professional recruiter firm like Marchon Partners can help your HR team understand the latest market trends and provide access to a high-quality talent pool…for both contingent and permanent employment needs. Contact our team today, and we can help you accelerate hiring for 2021 and beyond!