Tom Barkin, Essay: Breaking Down the Labor Shortage

“Inflation has become the focus of conversation. But in its shadow — and partially pulling the strings — is tightness in the labor market. Employers continue to struggle to bring in new workers and keep existing ones. Job openings far outnumber individuals looking for work. Absenteeism is elevated due to COVID-19. Jobs are still down by nearly three million. Immigration remains far below its pre-COVID-19 trend. As a result of this tightness, wages are up 4.5 percent, the highest year-over-year growth in over 20 years.”

“Discussion about this labor shortage has focused on demographics. We have written about the surge in retirees and how child care challenges have pushed mothers out of the labor force. But it is also useful to look at the dynamics by sector. I hear very different stories in three distinct segments of the economy: low-paying personal services, in-demand skilled trades and remote-friendly professionals.”