Labour demand in the time of post-COVID-19

ABSTRACT

The COVID-19 pandemic disrupted the labour market in ways that have proved difficult for economists to predict. Early studies suggested that labour demand ‘collapsed’. This initial forecast proved to be overly alarmist, due to the short-run view. We find that labour demand has rebounded sharply, though an aberration has appeared in recent months. Using what is believed to be a near-universe of online jobs postings, we demonstrate that while total job postings are up 43% from pre-pandemic levels, only one-tenth of that increase is driven by increases in new postings. This suggests that the growth in job postings in the labour market is being driven by jobs that are remaining unfilled. Labour force participation has dropped to levels not seen since the 1970s, while unemployment claims have mirrored other recent economic downturns. Combined, these two measures account for almost all the remaining jobs shed during the recent economic downturn. Analysing the characteristics of these job postings, we find a decrease in required skills and salary compared to the pre-pandemic periods. Individuals appear unwilling to re-enter the labour market, likely because of the quality of jobs currently available, leading to an overall labour shortage.

KEYWORDS:

• Covid-19
• recessions
• job vacancies
• labour demand
• unemployment

JEL CLASSIFICATION:

• J23
• J31
• J63

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ We estimate a nearly identical 42% decrease in new postings during this time using our data.

² It is worth noting that the pattern in changes in labour force participation rate have been similar across sexes. While women initially saw a larger decline at the start of the pandemic, their labour force participation rate has recovered to the same level as men, with both groups observing a 2.5% decline in labour force participation rate through May 2021. This suggests that a gender bias is not driving this result. We also do not find evidence of the change in labour force participation rate differing significantly across racial or ethnic groups.

³ The largest area of difference in changes in labour force participation we observe is over individuals with a high school degree or less compared to individuals with a college degree. Lower educated workers have not returned to the labour force at the same rate as college-educated individuals.

⁴ Examining job posting by sector, we observe an increase across the board; however, the two sectors that have the largest increases are retail trade and accommodations and food services, which tend to recruit workers with less education.

Additional information

Funding

This work was supported by the National Institute of Food and Agriculture [2020-67024-30954].