By David P. Martin
Why are there so many job openings? More particularly, why did my take-out pizza box have an advertisement for a signing bonus to work at a pizza place? I see in cities all across Alabama, quite a few employers with “hiring now” signs visibly displayed outside businesses. In response, some say there are too few people available for work. They cast blame saying there are too many people on unemployment and others say there are too many people on disability. The implication is that those working are giving a free ride to a large percentage of the population, when many should be filling open jobs. So let's take a look and see if there is any truth to that.
The United States Bureau of Labor Statistics says that for 2022, 68.3% of men are employed for the 20 and over age group. For women 20 and over, 56.3% are employed. So, what about the other 31.7% of men and 43.7% of women? Too many people on unemployment is not the answer. Unemployment is low. The unemployment rate in September 2022 was 3.5%, which is lower than it was last year and two years ago.
Being under 5% is considered good, so unemployment is not a target for criticism. If you reduce the non-working 31.7% of men and the 43.7% of women not participating in the labor force by the 2022 unemployment percentage that reduces each group to 29.2% and 40.2% respectively.
So, is the problem too many people are claiming disability? Does that fairly answer the question as to the other 29.2% of men and the 40.2% of women? It does not, as statistics show that as to people with a disability, but who were unemployed (and not yet age 65), that number only accounts for 8.3% in 2022.
Statistics show fewer individuals claimed disability over the last few years, due to accommodations by employers in permitting remote work in 2020 and 2021. In fact, the unemployment rates for persons with a disability declined from 2020 to 2021.
If you take 2022 statistic of 8.3% disabled and reduce those percentages of 20 and older adults who are not participating in the labor force it only shrinks the numbers to 20.9% and 31.9% respectively. That leaves some fairly large percentages on the table.
So how do we account for the remaining 20.9% of men and 31.9% of women who are not participating in the labor force? Statistics show it is a greater number of retirees. Those 65 and older, being a common retirement age, is growing and has been steadily increasing. In 2010, it was just 13.1% of the population. Ten years later, it had risen to 16.9% and by 2030, it is expected to be 20.6% of the population.
That largely reduces the unaccounted for percentages leaving much small percentages.
The Civilian Labor Force in 2019 was at an all-time high with 163.54 million people in the labor force. That number declined to 160.74 million people in 2020, and then it grew slightly in 2021 to 161.2 million people. From 2019 to 2021 the drop was less than 2% of the labor force.
However, many businesses suffered a downturn and the spike in unemployment claims in mid-2020 evidences that. However, those claims dropped later in 2020, but the labor force had not climbed back to the 2019 levels by 2021. Clearly many simply did not return and thus retired.
What we see is that Covid also played a role in retirement decisions. As of the third quarter of 2021, 50.3% of U.S. adults 55 and older said they were out of the labor force due to retirement, according to a Pew Research Center analysis of the most recent official labor force data.
An increasing number of 55 and older adults felt it was time when the pandemic came. Pew Research further notes that “The retirement uptick among older Americans is important because, until the pandemic arrived, adults ages 55 and older were the only working age population since 2000 to increase their labor force participation. As many companies suffered during Covid years, a good number in the 55 and older age group determined it was time to retire and that number increased over pre-Covid years.
There is also one other factor. According to Pew Research, there has been a “… steep drop in participation among 16 to 24 year-olds (66% to 56%), as young people increasingly pursued schooling rather than employment.” Notably many of the “hiring now” signs displayed in many cities largely pertains to the restaurant and retail business sector, which is often a first source of employment for this younger age group.
Blame for the uncommonly high number of job openings cannot be fairly left at the feet of those receiving unemployment benefits nor on those who are disabled. Rather, it is the retirees who presumably have set aside assets sufficient to retire, as well as teenagers and young adults who are going to school presumably to obtain better employment opportunities. As baby boomers continue to retire I do not see this changing.