Posts tagged low-skilled workers
Another Weirdness of the COVID Labor Market
September 2, 2022 // The early retirements problem came into view as pandemic unemployment “cleared” and the labor market returned to status quo ante. The 65-plus group accounts for between 50 percent and 100 percent of the decline in the population-to-employment ratio, amounting to .7 percent of the entire workforce, perhaps a million or so workers, and about half that number were among those who chose to hang up their cleats ahead of time. These early retirements are interacting with the overall market in some unique ways. In a normal recession, businesses tend to cut labor costs through automation. As the old jobs are eliminated, workers are “reallocated,” meaning they move into new occupations. The NBER study finds that the COVID-19 recession saw almost no reallocation except in low-skill leisure and hospitality occupations. In the meantime, the number of workers in professional occupations grew as a share of the labor market. This relative expansion of professional jobs was also accompanied by “downskilling” (i.e., the relaxation of educational and experience requirements reflected in help-wanted ads) as firms responded to the tight labor market by making it easier for less credentialed workers to qualify for openings further up the value chain.