Richmond economist on why we’re still experiencing a worker shortage and where things are going

Business

RICHMOND, VA. (WRIC) — From bus drivers to postal workers to line cooks, the nationwide worker shortage is still plaguing many industries. Some thought when extra pandemic unemployment benefits ended last month, unemployed Virginians would rush to open jobs. That hasn’t happened and employers are still feeling the pinch just as much.

Over the past couple of months, handfuls of business owners have told 8News they can’t seem to get staffed and stay staffed. It’s rare when you don’t see a “We’re Hiring” sign outside of a business these days.

So what’s fueling this shortage and when will the situation get better?

“There are just a huge number of job openings, unprecedented,” said VCU Economics Professor Jeffrey Lacker. “At the same time there’s a pool of people…. looking for work and willing to work. The fact that those two numbers are coexisting is really the striking thing about the labor market right now,” he said.

The economics professor said this is because of several factors. One factor is that a wave of people retired when COVID first hit. People are also sick with COVID, caring for someone ill, or staying home out of fear of getting sick. The professor added that childcare issues are keeping some otherwise working parents home with their kids.

Many Virginians are exploring changing their career paths as well.

“Anecdotal evidence and some surveys suggest a lot of it is just reevaluating their careers. A lot of people across the economy are doing that, taking this time to learn more, find new skills, start new businesses,” he said. “Business start ups have been increasing.”

Lacker said it’s been difficult for economists to measure the exact impact from pandemic unemployment benefits on the job market right now. He said based on trends from the last recession, it’s a factor but certainly not the biggest one.

A leading cause is job mismatches, according to Lacker.

“We’ve had a shift in the location of economic activity that’s lead to a mismatch of where available workers are versus where they’re needed,” he said.

This means employees’ skill levels, job expectations, or locations are not matching what employers are looking for.

He expects the situation will improve over the next few months, but as far as a so called “normal” job market goes, “I expect it’s going to take a couple of years,” Lacker told 8News.

Another effect of this worker shortage is inflation. It’s ramping up, which the economist said will mean interest rates increasing sharply and sooner, higher mortgage rates and more.

A new Department of Labor report shows in August, people quit their jobs in record numbers. The Labor Department said that quits jumped to 4.3 million in August, the highest on records dating back to December 2000, and up from 4 million in July. That’s equivalent to nearly 3% of the workforce. Hiring also slowed in August, the report showed, and the number of jobs available fell to 10.4 million, from a record high of 11.1 million the previous month.

Lacker said that’s not necessarily a bad thing. “That’s sort of actually a good sign,” he said. “That’s a sign that people are leaving jobs they have now. Usually they don’t do that unless they have another job lined up or they’re confident hey can find another job when they go looking for it. That’s a sign of healing in the labor market. That’s something that over the long run is gonna remedy that huge overhang of job openings that are unfilled right now.”

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