At the beginning of the pandemic, when the economy froze and inventories were being whittled down, many older drivers simply retired or took buyouts rather than wait to see how this once-in-a-century pandemic played out.Īnd, of course, the 65+ age group is the one most vulnerable to being involuntarily removed from the labor force due to "long COVID" or other health complications. Likewise, trucking companies have had major issues in recent years attracting younger drivers to replace their largely older driver base. Amid the difficulty and risk of treating a flood of COVID patients, numerous older nurses and doctors burned out and quit, exiting the workforce completely. Those pilots have not come back, and their experience will take years to replace, hence the numerous flight cancellations and delays experienced this year as air travel has made a resurgence.Ī similar story could be told in the healthcare sector, especially in hospitals. According to Richard Alaniz, in 2020, among the 65+ age group, "there were 7% more retirements than would otherwise have been expected in a given year."Īirlines offered buyouts to many of their oldest and most experienced pilots as an incentive to retire early. Meanwhile, the small minority of 75+ workers is getting smaller and smaller as the post-COVID trend shows a steady decline in this group's LFPR. The 55-64 age group is within 50 basis points of its pre-pandemic level, but the 65+ age group's LFPR has dropped by about 120-130 basis points from its pre-pandemic level. The trend we find is that the older the worker, the more likely they were/are to retire in the wake of COVID-19. Here we find a major cause of the lingering labor shortage. That leaves older workers, which in this case we'll define as those over age 55. While the recovery in LFPR in this age group was swift from early 2021 to mid-2022, it has faltered in recent months.Įven so, it should be noted that prime-aged workers are mostly back to work, and the LFPR for this group is roughly back to where it stood in early 2019. How about prime-aged workers from age 25 to 54? These workers represent the bulk of the workforce. While there is indeed a smaller share of this age group (many of whom live with their parents) in the workforce than there was in February 2020, the level isn't significantly lower than where it was for most of 2019. Let's start with younger workers from age 16 to 24. ![]() Surely you could slice and dice the data in multiple ways, but one of those is to break it out by age group. ![]() To answer that question, we need to look into who those workers are who left the workforce. There are about 3 million fewer workers in the labor force today compared to February 2020. The overall labor force participation rate is about 125 basis points below its pre-pandemic level. ![]() While the consumer has remained strong and continues to spend, the workers needed to meet consumer demand have continuously been too low. To start, let's show the chart that clearly illustrates the lingering labor shortage. Labor Force Participation Rate By Age Group In the third section, we explain our approach to this new characteristic of the economy. In the second section, we explain why it isn't necessarily a good idea to invest in robotics and automation. In the first section below, we identify a major reason for the labor shortage. Why hasn't the labor shortage been sorted out by now? And if the shortage is permanent, as more experts appear to be concluding, should investors allocate investment dollars to the obvious solution of labor-saving technologies like robots, automation, and artificial intelligence? ![]() That's the question that everyone has been asking over the last year or two as people emerged from the pandemic to find many more "help wanted" signs in store and restaurant windows.īut the labor shortage goes well beyond retail and restaurants and into manufacturing, healthcare, logistics, truck driving, and many other corners of the economy.
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