How COVID shook up the labor market

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Ali Caravella’s last day of work as a human-resources executive was on July 31, 2020, when she ­resigned from a job she had once cherished.

She closed her laptop in her home office in Connecticut at 4 p.m., having replied to every e-mail in her inbox, and was struck by the strangeness of the moment.

“I didn’t walk out of a building or pack up my stuff,” the mother of two daughters, ages 5 and 3, told The Post. “I didn’t know what to do with myself, so I went for a walk to reflect and process.”

Caravella, 36, resolved never to work for a large corporation again. Her job had turned into 80-hour work weeks, managing hundreds of layoffs.

She is among the 1.4 million mothers of school-age children who left or were forced to leave careers and jobs during the pandemic.

And like many of them, Caravella isn’t coming back to the workforce — at least not in the same way. Because her husband has a job that can support them both, she decided to start her own freelance business, career-coaching other women. It’s given her more flexibility and time with her children.

The pandemic has forced seismic changes in the labor market, with millions changing jobs. But while the unemployment rate — those actively looking for jobs — has fallen to a low 4.2 percent, the labor participation has fallen, as well.

The national unemployment rate has dropped to a low 4.3%, but the percentage of working-age adults with jobs or looking for jobs hasn’t reached pre-pandemic levels, meaning millions have dropped out of the workforce. In 2019, the participation rate was close to 63.5% — it’s now 61.8%
The national unemployment rate has dropped to a low 4.3%, but the percentage of working-age adults with jobs or looking for jobs hasn’t reached pre-pandemic levels, meaning millions have dropped out of the workforce. In 2019, the participation rate was close to 63.5% — it’s now 61.8%

There are some 3.6 million fewer workers now than there were in February 2020, according to government data. By some measures, the number is much larger and could be 6 million, according to Moody’s Analytics chief economist Mark Zandi.

The majority of the missing workforce are people 55 and older — some 2.4 million people — who either retired early by choice because they could financially or low-income retirement-age workers who were axed at the start of the outbreak.

COVID-19 nearly doubled the retirement rate for 2020, fueling the largest exit of older workers from the workforce in at least 50 years, according to Siavash Radpour, associate research director of the Retirement Equity Lab at The New School.

There’s also the simple, tragic fact that the pandemic has claimed 800,000 lives — and about half a million of those victims were working-age adults, Zandi estimates.

Mothers burned out

The rest of the missing workforce is a combination of people in two-salary families who decided to make due with one income; those who’ve decided to start their own business or take “gig” employment; and discouraged workers with low incomes.

The US Census Bureau’s Household Pulse Survey also noted on Wednesday that about 4.9 million said they were not working because they were taking care of children who were not in school or day care (Some of these people show up on the unemployment numbers because they are still looking for work.)

Mothers are the second hardest-hit group during the pandemic behind older workers, say economists.

The majority of missing workers are the 2.4 million who are 55 and older and decided by choice or layoff that they would retire early. Only teenagers increased in labor participation, by 0.8%.
The majority of missing workers are the 2.4M who are 55 and older and decided by choice or layoff that they would retire early. Only teenagers increased in labor participation, by 0.8%.

While fathers and mothers of school-age children largely shared child-care duties last year, when “full-on virtual learning kicked in in March 2021, we saw a gap forming with dads going back to work and moms staying home,” according to Misty Heggeness, principal economist at the Census Bureau.

Women’s overall participation in the workforce has slipped to 1980s levels or about 52 percent from more about 60 percent, studies show.

“We found that moms who were in telework jobs were more likely to exit the labor force compared to women without children,” according to Heggeness’ research. “During the last school year, they were multitasking with roles as mothers and employees which left them burned out.”

In September, with the start of the school year, the number of mothers not working rose to 1.4 million from 850,000 in August, Heggeness found.

For Caravella, the ups and downs of her children having to quarantine because they were exposed to another child with COVID was taking a toll.

Part-timers bummed out

Another group “sitting out” are those who worked part-time, low-wage jobs before the pandemic and lived in urban areas, according to an analysis of government data by Radpour.

“These are people who lost their jobs and were at the bottom quantile of wages,” Radpour said. “My guess is that they are discouraged and think they can’t find a job.”

Lower-income workers are less able to uproot their lives and relocate for new jobs, he added, and they may have other constraints, including transportation issues.
“We don’t know if the people who are unemployed now held the types of jobs” that are available now, Radpour said.

That goes a long way toward explaining the abundance of “help wanted” signs in the windows of stores and restaurants, employers known for relying on part-time help.

Not surprisingly, entry-level jobs, including in the hospitality sector, construction, manufacturing and health care, have experienced the highest wage growth over the past 21 months as evidenced by the pay increases for 16- to 24-year-olds. Their wages and salaries have rocketed up by 10 percent compared with a measly 2.1 percent increase for people 55 years and older, according to the wage tracker for the Federal Reserve of Atlanta.

But even higher pay has not been enough to persuade some workers to return to former jobs.

“It bears remembering that we had 21 million people lose their jobs in March and April 2020, and it caused people economic distress and heartbreak and could have done irreparable damage with their employers,” said Bankrate senior economist Mark Hamrick.

Indeed, a good number of people simply switched careers — by choice or not — leaving jobs in high-turnover industries like restaurant work, which has suffered some of the biggest job losses.

senior woman at home
Seventy-eight percent of older workers say they have seen or experienced age discrimination in the workplace, the highest level since AARP began tracking in 2003.
Getty Images

Older folks shut out

John O’Neil, a former sous chef for celebrity chef David Burke, decided to leave the culinary industry altogether this summer to become a generator technician in Connecticut.

“I had been in the restaurant business for over 20 years as it was just a passion of mine. As with everything in life, we need to change our paths in order to better our quality of life,” he told The Post in July.

Older workers face a set of unique challenges, as well, namely discrimination, according to AARP’s senior policy adviser, Jen Schramm.

While retirements tend to tick up during recessions, this increase is fueled in part by employers wanting to mitigate their risk by culling their older workers, experts say.
“Perceptions of age discrimination has been very high during the pandemic,” Schramm said.

In fact, 78 percent of older workers say they have seen or experienced age discrimination in the workplace, the highest level since AARP began tracking this question in 2003.

Most older workers who retired over the past two years, whether they pulled high salaries or not, lost their jobs and started unplanned retirements, Radpour said.
Economists don’t expect the number of retirees returning to the workforce to make a meaningful dent in the employee shortage, in part, because pay has not risen for this group.

For discouraged workers, rising salaries may help return them to jobs, as well as the end of COVID federal aid checks that allowed people to go without pay for more than a year.

construction workers
Construction is among the sectors with the highest wage growth over the past 21 months as evidenced by the pay increases for 16- to 24-year-olds.
Getty Images/iStockphoto

As for mothers, some may return to corporate or hourly jobs once their child-care crisis has abated, but others, like Caravella, may never rejoin the corporate world again.
That explains why groups like Path Forward, which help women land jobs after a hiatus, are in more demand now.

In 2019, the nonprofit worked with 27 companies, including Amazon, Walmart and Netflix, to transition 158 women who had taken time out to raise their children to return to the workforce.

This year, some 40 companies, including Intel and Dell signed up for Path Forward’s services, placing some 278 women in corporate jobs, executive director Tami Forman told The Post.

“Employers realize that all of these women got shoved out of the workforce and couldn’t work if their day-care center shut down,” Forman added. “The pandemic has raised the awareness of employers that mothers represent an available talent source that they had been overlooking.”

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