Where have all the workers gone?

“What’s most puzzling to me is that the labor shortage is everywhere,” Jason Furman, the chairman of the Council of Economic Advisers under President Barack Obama, told me. “It’s everywhere, and it’s every industry. Every small-business person I talk to has a story. And this is coinciding with large increases in nominal wages. So what are people doing? How are they getting by?”

The most complete explanation is that the massive fiscal-policy response to the pandemic reduced the urgency of looking for work. The United States has spent trillions of dollars to help families get through the economic deep freeze, via stimulus checks, expanded unemployment benefits, and the moratorium on student-loan interest payments. National eviction bans have taken pressure off renters. Then there’s the record-high surge in savings among families who haven’t gone on vacation or splurged on experiences in more than a year. Add to that the fact that job openings have hit record highs—which means people know that if they wait a month or three, there will still be jobs aplenty to apply to. Seeing this whole picture, more Americans clearly feel like they can take a more leisurely approach to going back to work…

This raises a bigger question: Is this a new normal? For now, much of the labor force seems to be participating in a kind of distributed protest against the status quo of work in America. As more people reject the office, spend more time with their family, or avoid returning to work entirely, this may be a pivotal turning point in the relationship between labor and capital.