The Great Unexplained Labor Shortage

The Great Unexplained Labor Shortage

As most people have come to recognize by now, the China Virus radically reorganized economies by removing large numbers of full-time employees from the labor force. Why? Over the past year, there have been half a dozen pieces in Yahoo, Forbes, the Wall Street Journal, and other outlets always asking the same question (“Why the perpetual labor shortage?”) without ever offering an answer.

Labor force participation in America peaked around 2000 at around 67%. It has declined steadily, and somewhat dramatically, since 2003. Then, with the China Virus, it crashed from 63% to just around 60% and has only recovered about one-third of what was lost since.

Generations and the Fourth Turning by William Strauss & Neil Howe

There are several reasons, in fact. First, as Neil Howe, the co-author of the influential demographic study Generations and The Fourth Turning suggests, aging is a key element. Americans who were in the workforce long past typical retirement age of 65 dropped out—or were forced out. The labor force participation rate of the group age 65-75 hovers at 30%, but predictably drops by two-thirds after age 75. And, as Howe would note, the year 2021 marked the point when the first large cohort of that Boomer generation hits 75. One could predict that labor force participation by that key group will begin to decline, not recover, from here on out.

This is, of course, an issue in all countries. Every major developed country, and almost all of the undeveloped countries except Muslim nations, are showing steady declines in birth rates. Virtually everywhere, including China (where the average age will be above that of the U.S. within a year), are below replacement rates and have been for a while. This means far fewer younger potential employees coming into the market.

For America, this means that as the Bureau of Labor Statistics admits, aging itself becomes a factor in labor force participation and by 2030 will drop by roughly 2% per year toward a shockingly low projection of 169 million in the 2020 workforce. In 2019 there were 157.5 million in the workforce—an increase of 15 million since just 2012. So the rate of growth has slowed down dramatically. (Put another way, if the 2012-2019 projections held, the U.S. would be looking at a workforce of nearly 180 million by 2030).

As Niall Ferguson wrote in Bloomberg:

“The Beveridge curve, which plots the vacancy rate against the unemployment
rate, suggests that the labor market is currently doing a worse job of matching
unemployed workers—meaning people without jobs who have actively looked
for work in the past month—with vacant jobs than at any time since the 1950s.
It’s even worse than the 1970s.”

Ferguson blames “policy errors” and inflation, but fails to explain why inflation is keeping people from working.


More than mere aging and “policy errors” are driving the work dearth, however. The combination of the China Virus and wokism in schools caused an explosion in homeschooling as parents took their kids out of public schools. In mid-2020, I spoke to the heads of the two leading homeschool conventions, Brennan Dean of Great Homeschool Convention and David Nunnery of Teach Them Diligently. Dean said his statistics told him homeschooling had doubled in 2020, up to about 10 million children. Nunnery, however, used a different calculation that included those children who were predominantly homeschooled but who still appeared on public school records for specialized classes in art, music, or in sports. He insisted the number was closer to 20 million who had left public schools.

This mass migration out of public schools has had a major impact on the labor force, as one parent—usually the mother—stayed home to educate the children. Quite often, “experts” simply assumed these parents would return to the workforce, but so far the evidence suggests they have made a lifestyle change. However, the Current Population Survey data says that 1.1 million households had an adult that did not look for work due to child care responsibilities (while saying this might not have been a major factor—go figure).

Yet even that doesn’t really satisfy what has happened. Perhaps it goes beyond the China Virus, beyond fear of infection, beyond the need to stay home with kids. Perhaps our real unemployment enemy is a mindset cultivated since at least 2000 that the “old fashioned” values of hard work, savings, career advancement through achievement, invention, innovation and problem solving are considered passe?

I spoke to a school teacher the other day who said her kids completely lack basic problem-solving skills. One kid came to her with a broken pencil! (Didn’t think to sharpen the remainder of the pencil or just get a new one). Her experience is not exceptional. For at least 20 years, maybe more, we have given out “participation trophies,” told kids being first didn’t matter, tried to eliminate competition in all areas of life—when in fact all of life is competition. Yes, humans can cooperate. But the essence of the only economic system in human history that has peacefully delivered surpluses—that is, without enslaving neighbors or simply taking stuff through conquest—relies absolutely on competition. It is necessary for a host of reasons that in previous generations would have been common sense: it tells people what they are good at and what they are not good at; it tells both suppliers and consumers what products are worth; and it allocates scarcity better than any other system in human history.

But this runs counter to much of the snowflake/Karen culture since 2000. As early as the 1990s as a professor at a university I was noticing that students increasingly only wanted work that was “meaningful.” CLUE! By its very definition, work is not play, and most work in the grand scheme is not “meaningful.” On the other hand, all work is meaningful if you approach it in the right way: the person who installs a rearview mirror on a car (or who runs a machine that does this) is making a significant contribution to our transportation and our safety. The most routine of jobs is, in fact, quite meaningful if you follow it to its economic conclusion. But will every job “change the world?” Of course not. And most of those positions that college grads got thinking they would be “world impacting” gigs soon proved otherwise.

One of the better TV series of the late 1980s was “Thirtysomething,” in which a pair of thirty-year-old guys who founded an advertising firm that was going to engage in “meaningful” marketing by the end of a couple of seasons found they were going broke. The market wanted “useful,” not meaningful. A Clint Eastwood film, “The Mule,” made a similar point when the protagonist (a smuggler) sees a couple standing helplessly by a car at the side of the road . . . with a flat tire. It seems they had no cell connection and without a youtube video did not know how to change a flat!

Entertainment usually reflects something about real life, and such is the case here. With an aging population, it befalls on younger people to be more inventive than ever, yet they cannot perform some of the most routine life tasks that teach patience, attention to detail, and the consequences of failing. Did I mention participation trophies? Many schools are now eliminating tests, and some colleges are no longer looking at ACT scores as an indicator of academic performance.

Could it be that anti-work, anti-competition, anti-achievement attitudes are the driving force behind the intractable unemployment rates? And even more important, could it be that this—instead of terror over the China Virus or an aging demographic—is why even the economic and financial media refuses to even consider it?

Larry Schweikart is the co-author with Michael Allen of the NYTimes #1 bestseller, A Patriot’s History of the United States and is founder of the history curriculum site, the Wild World of History. He publishes on substack under Larry Schweikart and is on Twitter, for as long as they let him stay, @OtherWalls.


This post was originally published on this site


Share on facebook
Share on twitter
Share on linkedin
Share on pinterest

Other News