It’s not a worker shortage, it’s a worker renaissance in a post-pandemic economy
Headlines continue to call attention to a shortage of workers in the leisure and hospitality sector here and around the country. Workers are supposedly staying at home and avoiding work given federal unemployment insurance benefits — or so the story goes. But the commentaries fail to fully acknowledge that the “weird” labor dynamics we are observing may be the result of a paradigm shift fueled by workers who are reimagining work in a post-COVID economy. This ‘worker shortage’ may actually be driven by a shift in worker preferences regarding job satisfaction and work environment, which is leading many to choose different career paths (or stay home). Those who believe this paradigm shift is occurring simply because of a supplemental federal benefit will be left behind in a post-pandemic recovery if they do not also reimagine their workspaces.
As employers in Nevada and other states struggle to fill thousands of positions, one often cited culprit is the federal $300 weekly unemployment insurance (UI) benefit. But the claim that this supplemental benefit is solely or even primarily responsible for the millions of missing workers is far from conclusive. Several studies, including one last year conducted by Yale University economists, have found “no evidence that more generous benefits [CARES unemployment benefits] disincentivized work either at the onset of the expansion or as firms looked to return to business over time.” On the other hand, a Bank of America research note issued last month concluded that “low-wage workers currently have a disincentive to work due to generous UI benefits.” Recent data, however, diminish the impact of the federal UI benefit: In May, around 559,000 jobs were added in the U.S., driven by “strong growth at restaurants, bars and other food service establishments, which added 186,000 workers.” This suggests that workers are returning to kitchens and casino floors as more job opportunities arise – in other words, hiring is accelerating!
In short, the federal unemployment insurance benefit may play some role in a worker’s decision to participate in the labor market, but it does not fully explain current dynamics. Focusing on this one factor to the exclusion of others obscures a larger (and more interesting) paradigm shift that may be occurring nationally, and in Nevada. And if we do not consider the larger trends in the workforce, we will miss an opportunity to help low-wage workers move into the middle class and connect them to ways to learn new skills – thereby supporting long-term economic growth.
To fully appreciate this trend in shifting worker attitudes, we must start with how the pandemic jolted and dislodged workers’ sense of confidence in the stability of their employment. Last March, the pandemic forced the closure of shuttered businesses, schools, colleges and public spaces. Hospitality workers and others in Nevada were warned repeatedly that “millions of jobs probably aren’t coming back, even after the pandemic ends.” They were told they needed to “reboot entirely, learning new skills for new jobs” and “seek work with new industries or in new occupations.” In response, workforce ecosystem stakeholders rallied to provide opportunities to dislocated workers. Many institutions of higher education, libraries, and platforms like Coursera launched new programs that allowed workers to return to the classroom to upskill or explore a new career. In Nevada, the College of Southern Nevada, for example, launched more than twenty accelerated “rapid response” degree and certificate programs.
Evidence suggests that workers in Nevada and elsewhere wisely heeded these market advisories. Participation in efforts and programs to help dislocated workers – particularly those that offer “online certificates, industry certifications, apprenticeships, micro-credentials, boot camps and even lower-cost online master’s degrees” – have been robust. Udemy’s 2021 Workplace Learning Trends Report found that 38 percent of the workforce was upskilled in 2020, an increase from only 14 percent in 2019. Online learning institutions reported “that interest in both free and paid credentials is holding steady at a rate that is significantly higher than what many were seeing [in 2019].”
Among these online learners are “furloughed or laid-off workers looking to pivot to new careers, and people with stable jobs who are now working from home.” According to the National Student Clearinghouse, online higher education institutions saw a 2.2 percent increase in enrollment this spring, and part-time enrollment grew 5.1 percent — a stark contrast to declining undergraduate fall and spring enrollment patterns. One noteworthy finding – a 2020 National Bureau of Economic Research working paper found that “for every 100 displaced workers, only about 1 is ever induced to enroll in a public college within four years of layoff.” The low demand among dislocated workers for traditional educational programs (e.g., a two- or four-year degree) is a striking juxtaposition to the relative attractiveness of and rising demand for short-term, accelerated courses and certificate programs, bootcamps, and micro-credentials.
Women, in particular, appear to be availing themselves of these upskilling opportunities. This makes sense given that women (and people of color) were disproportionately affected by the pandemic. Information from the U.S. Census Bureau Household Pulse survey reveals that women in Nevada were more likely than men to enroll in a greater number of classes this (spring) term. Throughout the late fall and winter, on average, more Nevada women than men (and sometimes twice as many) reported that they were taking classes for a “different kind of certificate or degree” (and often at a new institution). If Silver State women are busy upskilling and/or pursuing new degrees, this may delay their return to the labor market. These personal investments of time and resources can strengthen a family’s economic and financial security over the long term and can also serve the needs of employers who are confronting “major talent shortages.”
Other workers who were directly affected by the pandemic may have chosen to reassess their interests, revisit their careers, and leave the hospitality and leisure industry entirely. Prior to the pandemic, job satisfaction, particularly among low-wage earners, was low: only 40 percent of workers classified their employment as good; about 45 percent of workers polled said their jobs were “mediocre;” and 16 percent admitted they were working “bad jobs.” Washington Post economics correspondent Heather Long summarizes this dynamic: “There is also growing evidence - both anecdotal and in surveys - that a lot of people want to do something different with their lives than they did before the pandemic. The coronavirus outbreak has had a dramatic psychological effect on workers, and people are re-assessing what they want to do and how they want to work, whether in an office, at home or some hybrid combination.” A February 2021 Pew Research Center survey found that two-thirds of adults who were unemployed, furloughed or temporarily laid off indicated that “they’ve seriously considered changing fields or occupations since they’ve been unemployed.” Zip Recruiter economist Julia Pollak noted, “70 percent of people coming off unemployment benefits are going to new employers.”
Not unlike many readers, I know individuals who have reimagined their post-COVID careers and have left the hospitality and leisure industry. One of our friends, who was laid off from his job on the Las Vegas Strip, is starting his own furniture refurbishing business. Several female colleagues, who were compelled to quit their jobs and oversee the virtual education of their children, have decided not to return to their hospitality jobs and are exploring consulting opportunities in a new industry that will give them greater autonomy over their schedules.
And labor statistics indicate that if these new career options do not work out, workers are quitting. As reported by Quartz’s Tim Fernholz, “the U.S. economy is currently experiencing the highest rate of workers quitting their jobs that we’ve seen in the last two decades.” Fernolz adds, “We’re seeing businesses start to compete for new workers by offering better wages, benefits and training—because workers are demanding it. In white-collar occupations, the experience of working remotely for the last year has led them to make new demands for autonomy, and quitting if these demands aren’t met. At many restaurants, there is a reckoning over decades of substandard pay and working conditions.”
For these reasons and more, we should be cautious not to oversimplify the current labor market as experiencing a widespread worker shortage. The unemployment rate in Nevada remains high (registering 8.0 percent in Nevada as of April 2021). Nationally, there are “a record 8.1 million unfilled jobs.” And while wages in the leisure and hospitality sector “accelerated markedly” in both April and May, there is still “very little evidence that the leisure and hospitality sector’s hot labor market is about to catch the rest of the economy on fire.” Furthermore, many of the unfilled jobs (particularly in the manufacturing sector) require skilled labor (and we were grappling with a skilled labor shortage long before the pandemic). As such, efforts to support workers upskilling and learning new skills will serve the economy over the long term.
We may see some movement in labor market participation rates later this summer. First, some restaurant and retail chains have announced they will raise hourly wages to $15 per hour. Furthermore, on July 1, 2021, the minimum wage in Nevada will increase to $8.75 per hour if the worker is offered health benefits and $9.75 per hour if the worker is not offered qualifying health benefits. Second, as an increasing number of Nevadans get vaccinated, this may serve to address some of the health concerns that are keeping some workers at home.
It is also widely anticipated that once full-time, in person instruction resumes in schools, women, who account for half of the workforce in accommodations and food services in Nevada, may rejoin the labor force at a faster clip. As has been noted elsewhere, roughly 1.8 million women nationally have left the workforce and there are no signs of reversing the trend (even the April increase in national labor force participation “was accounted for by men entirely).” A Federal Reserve survey found that “one in five of the people who are not working or working less, are doing so because of disruptions to child care or in-person schooling.” Opening schools in the Clark County School District could help draw thousands of southern Nevada women back to the workforce.
The pandemic has challenged the way we understand our work environment and has prompted a paradigm shift. The public health crisis has provided employers with an opportunity to revisit the organization and structure of work and workers, including an opportunity to consider quality of life and work issues. Many workers have responded by upskilling and learning new skills. Employers may need to reimagine the workplace to allow for greater flexibility. It is noteworthy that in a recent Harvard Business School survey, more than 80 percent of the workers who had been working from home throughout the shutdown stated that they “either don't want to go back or prefer a hybrid schedule.” The continued pace of the recovery and the smoothing of weird labor market dynamics will depend on how well our decision makers address some of the long-time barriers (e.g., childcare) and how well our business leaders are able to adapt to the paradigm shift and reimagine a workplace that supports workers through greater (scheduling) flexibility, work arrangements, and access to additional learning and training opportunities. If our state economy is to thrive, we must not fall prey to oversimplified explanations. Rather, we must embrace the increased fluidity and complexity of the workspace knowing that such an act of commitment and courage will reap greater economic benefits over the long term.
Nancy Brune, Ph.D. is the founding executive director of the Guinn Center, a statewide, independent, nonpartisan policy research center. She is a senior fellow at the Boyd School of Law and serves on the Law and Leadership Program Advisory Council. Dr. Brune received her Ph.D. from Yale University and her Master of Public Policy and B.A. degrees from Harvard University. Prior to joining the Guinn Center, she was a senior policy analyst at Sandia National Laboratories, where she worked on issues of national security. You can follow her on Twitter @NancyBrune or email her at [email protected]