Do you remember the “She-Cession”? What about the early retirement wave or America’s army of silent quitters?
For economists and other forecasters, the pandemic and the post-pandemic economy has been a lesson in humility. Time and time again, predictions about how the labor market would have permanently changed have proven to be temporary or even illusory.
Women lost their jobs early in the pandemic but have returned in record numbers, making the cession a short-lived phenomenon. Retirements have also skyrocketed with the coronavirus deaths, but many older workers have returned to the labor market. Even the person credited with sparking a nationwide conversation by posting a TikTok video about work essentials has hinted that “quiet quietly” might not be the way of the future – he’s into it these days, stop loud.
That doesn’t mean nothing has changed. In a historically strong labor market with very low unemployment, workers have far more power than usual, giving them better wages and new perks. And the shift of many white-collar workers to working from home is still changing the economy in subtle but important ways.
But the big takeaway from the pandemic recovery is simple: the US job market has not been permanently worsened by the impact it has suffered. It reflects the aftermath of the 2008 recession, when economists were similarly skeptical about the job market’s ability to bounce back — and also proved wrong as the economy regained strength.
“The profession has not yet fully digested the lessons learned from 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 was, “Don’t bet against the US worker.”
Here’s a rundown of the labor market narratives that have ebbed and flown over the course of the pandemic recovery.
True, but over: The “She-cession”
Women lost their jobs on a massive scale early in the pandemic, and people feared they would be permanently worse off in the labor market – but that hasn’t materialized.
In the wake of the pandemic, women’s employment has actually recovered faster than men’s – so much so that the employment rate for women in their prime, commonly defined as ages 25 to 54, in June was the highest on record. (Prime-age male employment is back to pre-pandemic levels, but still below a record.)
Gone: early retirement
Another common narrative at the start of the pandemic: It would trigger a wave of early retirement.
Historically, people who lose their jobs or leave them late in their careers don’t tend to go back to work – they actually retire, whether they call it that or not. So when millions of Americans in their 50s and 60s exited the workforce early in the pandemic, many economists were skeptical they would ever return.
But the early retirement wave never really materialized. Americans between the ages of 55 and 64 returned to work just as quickly as their younger peers and are now employed at higher levels than before the pandemic. Some may have been forced back to work by inflation; others had always planned to return and did so as soon as they felt safe.
The retirement narrative wasn’t entirely wrong. Americans past the traditional retirement age — 65 and older — have still not returned to work in large numbers. This is helping to reduce the overall labor force, especially as the number of Americans in their 60s and 70s is growing rapidly as more baby boomers retire.
Doubtful: the economic recession
Tech layoffs at big companies have sparked talk of an economic recession, which is particularly affecting well-heeled tech and information workers. While these layoffs were undoubtedly painful for those who experienced them, they haven’t shown up particularly prominently in overall employment data.
Currently, the country’s highly skilled workforce seems to be moving into new and different jobs fairly quickly. Unemployment remains very low in both the information and professional and business services sectors – typical office industries that comprise much of the technology sector. And tech layoffs have slowed recently.
Nuanced: The Missing Men
For a moment, it looked as if young and middle-aged men — that is, men between the ages of 25 and 44 — were not returning to the workforce like other demographics. In recent months, however, they have finally been able to return to their pre-pandemic employment rates.
That recovery came much later than some other groups: for example, 35-44-year-old men have not yet sustained employment rates at their 2019 average, while women in this age group surpassed their employment rate last year before the 2019 average Pandemic. However, recent advances suggest that men are making slow progress, even if recovery takes longer.
(Again) False: The labor market will not fully recover
All these narratives have a common thread: while some warned 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 recovery has been rapid and sweeping, defying grim narratives.
This isn’t the first time economists have made this mistake. It’s not even the first time this century. The crippling recession that ended in 2009 pushed millions of Americans out of the labor market, and many economists relied on so-called structural explanations for why they were slow to come back. Workers’ skills or professional networks may have been eroded during their long periods of unemployment. Perhaps they were opioid addicts, on disability pensions, or stuck in parts of the country where job opportunities were scarce.
In the end, however, a much simpler explanation proved correct. People were slow to return to work because there weren’t enough jobs for them. As the economy recovered and opportunities improved, employment recovered in nearly all demographics.
The recovery from the pandemic recession was much faster than after the 2008 downturn, which was exacerbated by a global financial crisis and a housing market meltdown that left lasting scars. But the basic lesson is the same. When jobs are plentiful, most people go to work.
“People want to adapt, and people want to work: those things are generally true,” said Julia Coronado, founder of MacroPolicy Perspectives, a research firm. She found that the pool of available labor continued to expand over time and in the face of heavy immigration. “People are resilient. You find things out.”