Below is a complimentary Demography Unplugged research note written by Hedgeye Demography analyst Neil Howe. Click here to learn more and subscribe.
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America isn’t the only country that has seen a recent decline in its labor force population rate. LFP is down from pre-pandemic highs in many OECD nations. (The Economist) |
NH: We have written several recent pieces about America's stubbornly low LFP. Although the unemployment rate has improved, total employment has lagged behind.
That's because the labor force has declined as a share of the population. (See "Is Labor Force Participation Down For Good?")
Now here comes an Economist article showing that it isn't just an American problem. Employment remains low in many wealthy countries.
The Economist estimates that across eight OECD nations (Australia, Britain, Canada, Colombia, Germany, Japan, South Korea, and the U.S.), employment is down -3% from its pre-pandemic high. And LFP is down -1.5%.
So why are there so few workers?
This article offers four explanations.
First, there are still Covid-19-related disruptions keeping down the labor supply, such as fear of getting the virus and declining availability of migrants in certain industries. Second, pandemic-era government policies, such as increased cash benefits, are keeping some people home. Third, many older workers have retired early. And fourth, work attitudes may have broadly changed.
Perhaps people have reconsidered what’s important to them, and working for pay has moved down a few notches.
We have touched on many of these drivers in the past. In the US, roughly 1.5M more Boomers retired in 2020 than in the prior few years. (See "Pandemic Forcing Boomers Into Retirement.")
Cash benefits may have kept some people home, though this effect has probably been over-estimated. ("Did Employment Rise in States that Cut Benefits?") And we have also discussed attitudinal changes around work and home life.
But this article leaves out a significant factor: the effects of Long Covid. We previously covered a global study that found 22% of respondents with Long Covid reported not working due to their symptoms. (See "The Long Shadow of Long Covid.")
Additionally, a massive British survey found that 34% of respondents with Long Covid said their health was negatively affected by the pandemic compared to 12% of everyone. And 36% said their work was negatively affected compared to 25% of everyone.
IMO, this is what the media and policy makers are missing.
And with infection rates still high due to the delta variant, Long Covid will continue to be a drag on total employment worldwide for months if not years to come. (See “The Long Shadow of Long Covid: An Economic Threat.”)
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ABOUT NEIL HOWE
Neil Howe is a renowned authority on generations and social change in America. An acclaimed bestselling author and speaker, he is the nation's leading thinker on today's generations—who they are, what motivates them, and how they will shape America's future.
A historian, economist, and demographer, Howe is also a recognized authority on global aging, long-term fiscal policy, and migration. He is a senior associate to the Center for Strategic and International Studies (CSIS) in Washington, D.C., where he helps direct the CSIS Global Aging Initiative.
Howe has written over a dozen books on generations, demographic change, and fiscal policy, many of them with William Strauss. Howe and Strauss' first book, Generations is a history of America told as a sequence of generational biographies. Vice President Al Gore called it "the most stimulating book on American history that I have ever read" and sent a copy to every member of Congress. Newt Gingrich called it "an intellectual tour de force." Of their book, The Fourth Turning, The Boston Globe wrote, "If Howe and Strauss are right, they will take their place among the great American prophets."
Howe and Strauss originally coined the term "Millennial Generation" in 1991, and wrote the pioneering book on this generation, Millennials Rising. His work has been featured frequently in the media, including USA Today, CNN, the New York Times, and CBS' 60 Minutes.
Previously, with Peter G. Peterson, Howe co-authored On Borrowed Time, a pioneering call for budgetary reform and The Graying of the Great Powers with Richard Jackson.
Howe received his B.A. at U.C. Berkeley and later earned graduate degrees in economics and history from Yale University.
