In September 2022, there were 10.7 million job openings in the United States. That means for every person looking for employment, there are 1.86 jobs to choose from, an obvious imbalance.

We don’t need government statistics to know this because we feel it all around us. No matter the sector, we see hiring as the top issue in most of our businesses. Everywhere you go there are help-wanted signs plastered on the walls offering starting wages as high as $20 an hour. Since the start of the pandemic, average hourly earnings across the country have increased by over $4.

Broadly, the news media has reported on this issue in an overly simplistic way. Right-leaning publications blame pandemic relief funds for disincentivizing the desire to work (partially true, as U.S. personal savings levels reached unprecedented highs in 2020 but have been floating back to long-term trends of late). Left-leaning publications say wages are not yet high enough to encourage workers to return (also partially true in that U.S. wages have increased $4 per hour on average since the start of the pandemic but are still lagging behind inflation on the lower end of the pay scale).

Like most problems in life, the answers are not simple or singular. Many large factors affecting the U.S, workforce have caused these issues to become inflamed over the past year.

Female participation

The female labor participation rate in 2021 was 57.3%. The last time the percentage was that low was 1988. For many families through Covid, someone in the household needed to stay home to act as a schoolteacher for their children or caregiver for a grandparent. Disproportionately, the choice was for the wife to leave her job and take on these duties.

Multiplying the 1.15% drop in female participation rates from 2019 to 2021 by the 167.5 million women in the country equates to 1.9 million women still missing from the workforce.

Females missing from the workforce ≈ 1,900,000

Immigration

Immigration estimates are tougher to calculate, as there are both legal and illegal aspects to immigration. Covid decreased all migration for a period, and tougher stances toward immigration for the past several years have also had a dampening effect.

Rough estimates are that America has 1.7 million fewer working-age immigrants than were in the country before the pandemic. This shortfall is particularly felt on the lower end of the wage scale, where immigrants disproportionately get their start in the workforce.

People who never migrated to the United States ≈ 1,700,000

Long Covid disability

The U.S .Department of Health and Human Services recognizes “long Covid” as a disability under Titles II and III of the Americans with Disabilities Act. While doctors are still trying to understand why patients’ results from Covid infection can be so varied, data on these outcomes are sparse.

Since mid-2020, self-reported disability claims have increased by 1.75 million. There are myriad issues from the Covid pandemic that could have contributed to this spike, but for this argument’s sake, I will take half of that increase for our total: 875,000 missing workers.

Long Covid disabilities ≈ 875,000

Early retirement

Covid imposed a disproportionate effect on the elderly. Not surprisingly, a large number of workers saw the risks and extraordinary measures of continuing on in the workforce as overly burdensome and decided to leave earlier than they might have otherwise.

The labor force participation rate for workers age 65 and over dropped by 1.5% from pre-pandemic levels, equating to 831,000 workers taking an early retirement.

Early retirement workers ≈ 831,000

Demographics are destiny

Demographers have talked for years about the coming “silver tsunami,” a quaint term for the wave of baby boomer retirees barreling toward our economy. The boomers were the largest generation until Gen Z showed up, and they have been creating ripple effects through our workforce since their arrival.

Separate from their early retirements mentioned above, their sheer size at normal retirement ages has created a slow leak in the growth of workers in our economy. While the very large Gen Z cohort is coming into their first working years, it is estimated that this demographic imbalance will dampen workforce growth by 600,000 between 2014 and 2024. So far we have experienced roughly 80% of that effect, equating to 480,000 workers.

Slower workforce growth because of demographic aging ≈ 480,000

Covid deaths

Covid has had a devastating death toll, with over 1 million deaths in the United States alone so far. Approximately 75% of those deaths were people age 65 or older. Per the Centers for Disease Control and Prevention, total deaths of the working age population (18-64) have totaled 224,616 through October 2022.

Covid fatalities ≈ 225,000

Adding it all up

Let’s summarize, shall we?

Females missing from the workforce ≈                                        1,900,000

People who never migrated to the United States ≈                      1,700,000

Long Covid disabilities ≈                                                                875,000

Early retirement workers ≈                                                            831,000

Slower workforce growth because of demographic aging ≈             480,000

Covid fatalities ≈                                                                          225,000

TOTAL                                                                                      6,011,000

Approximately 6 million workers are missing from today’s workforce! Add that to the 5.75 million people currently looking for work and you roughly bring the supply of workers into an equilibrium with the number of job openings.

So, what can you do in your family business with this data? Now that you know where the workers are missing from, you know where you can look to find more.

* Female participation is the largest factor above. Can you create work policies that would attract women who left the workforce? Childcare options, work from home incentives, mentorship programs?

* Immigration has left a major hole in our workforce. Can you use H1B visas and other guest worker programs to legally take advantage of this pent-up source of employees?

* Aging workers are leaving their jobs in droves. Can you sweeten retirement benefits, alter job duties for better ergonomics, offer sabbaticals, flexible hours, etc?

Our economy is a complex tapestry with thousands of moving parts, and there are no simple explanations for the shockwaves we have seen ripple through it. By understanding the underlying trends, you can better position your family business to sail through the volatility.