Remember the “assignment of her”? What about the wave of early retirements, or the US army of silent defectors?
For economists and other forecasters, the pandemic and post-pandemic economics have been humbling. Time and time again, predictions about the ways in which the labor market has permanently changed have turned out to be temporary or even wishful thinking.
Women lost their jobs early in the pandemic but have returned in record numbers, making women’s assignment a short-lived phenomenon. Retirements have soared along with coronavirus deaths, but many older workers have returned to the job market. Even the person credited with sparking a national conversation by posting a TikTok video about doing the bare minimum at his job has suggested that “quietly quitting” may not be the way of the future: He’s interested in leaving out loud these days.
That is not to say that nothing has changed. In a historically strong job market with very low unemployment, workers have much more power than usual, so they get better wages and new benefits. And a shift toward working from home for many white-collar jobs is still reshaping the economy in subtle but important ways.
But the big lesson of the recovery from the pandemic is simple: The US job market was not made permanently worse by the blow it took. It echoes the aftermath of the 2008 recession, when economists were equally skeptical of the labor market’s ability to recover, and similarly proven wrong once the economy strengthened.
“The profession hasn’t fully digested the lessons of the recovery from the Great Recession,” said Adam Ozimek, chief economist at the Economic Innovation Group, a research organization in Washington. One of those lessons, he said: “Don’t bet against the American worker.”
Here’s a roundup of the labor market narratives that have gone up and down over the course of the recovery from the pandemic.
True but over: the ‘assignment of her’
Women largely lost their jobs early in the pandemic, and people feared they would stay forever. in worse situation in the labor market, but this has not turned out to be the case.
In the wake of the pandemic, employment recovered faster among women than among men, so much so that, as of June, the employment rate for women in their prime working years, commonly defined as ages 25-54, was the highest on record. (Employment among working-age men is back to where it was before the pandemic, but is still below a record.)
Gone: early retirement
Another frequent narrative early in the pandemic: it would trigger a wave of early retirement.
Historically, when people lose their jobs or leave them late in their working lives, they tend not to go back to work, effectively retiring, whether they label it that way or not. So when millions of Americans in their 50s and 60s dropped out of the workforce early in the pandemic, many economists were skeptical that they would ever return.
But the wave of early retirement never really materialized. Americans between the ages of 55 and 64 went back to work as quickly as their younger peers and are now employed at a higher rate than before the pandemic. Some may have been forced to go back to work due to inflation; others had always planned to return and did so as soon as they felt safe.
The retirement narrative was not entirely wrong. Americans past traditional retirement age (65 and older) still haven’t returned to work in large numbers. That’s helping to shrink the overall workforce, especially since the number of Americans in their 60s and 70s is growing rapidly as more baby boomers enter their retirement years.
Questionable: The White Collar Recession
Technological layoffs in large companies have sparked the discussion of a white collar recession, or one that mainly affects wealthy workers in the information and technology sector. While those layoffs have undoubtedly been painful for those who experienced them, they have not featured prominently in the overall employment data.
For now, the nation’s highly-skilled employees seem to be moving into new and different jobs rather quickly. Unemployment it remains very low for both information and professional and business services, distinctive white-collar industries that encompass much of the technology sector. And layoffs in tech have slowed recently.
Nuanced: The Missing Men
For a moment, it seemed that young and middle-aged men, ages 25 to 44, weren’t returning to the job market like other demographic groups had. However, in recent months, they have finally recovered their pre-pandemic employment rates.
That recovery came much later than for some other groups: for example, men from 35 to 44 years they still have to consistently hold on to employment rates that match their 2019 average, while last year women in that age group eclipsed your employment rate before the pandemic. But recent progress suggests that even if men are taking longer to recover, they are slowly making progress.
False (again): the labor market will not fully recover
All of these narratives share a common thread: while some cautioned against jumping to conclusions, many labor market experts were skeptical that the labor market would fully recover from the shock of the pandemic, at least in the short term. Instead, the rally has been swift and broad, defying gloomy narratives.
This is not the first time economists have made this mistake. It’s not even the first time in this century. The crippling recession that ended in 2009 drove millions of Americans out of the workforce, and many economists accepted so-called structural explanations for why they were slow to return. Perhaps workers’ skills or professional networks had eroded during their long spells of unemployment. Perhaps they were addicted to opiates, received disability benefits, or were stuck in parts of the country with few job opportunities.
In the end, however, a much simpler explanation turned out to be correct. People were slow to go back to work because there weren’t enough jobs for them. As the economy has recovered and opportunities have improved, employment has rebounded among nearly all demographic groups.
The rebound from the pandemic recession has unfolded much faster than the one that followed the 2008 recession, which was made worse by a global financial explosion and a housing market crash that left lasting scars. But the basic lesson is the same. When jobs are plentiful, most people will go to work.
“People want to adjust and people want to work: those things are generally true,” said Julia Coronado, founder of MacroPolicy Perspectives, a research firm. She noted that the pool of available workers has expanded further over time and amid robust immigration. “People are resilient. They work things out.”