The short road to recovery is covered. It’s time for a bigger challenge- the transition.
The U.S. is on a brisk recovery path out of the global pandemic. Thanks to trillion dollars in packages that President Biden has resolved to spend on the country’s economy. While new jobs are swiftly entering the market, infusing hope among the unemployed population, the trend is actually contrasting. Despite millions of new jobs created in recent days, the jobless population is actually going in the opposite direction that what science says.
- The post-recovery job market defies the rule of economics, a trend seldom seen before.
- COVID-19 led transition in psychology of masses poses a massive challenge.
- Recovery policies prove to be small-sighted, falls short of meeting the bigger challenge.
- Employable workforce has new terms, and nothing can change its mind.
The Beveridge Curve, an economic tool to study unemployment and vacancy rate, suggests that unemployment rate and job openings are inversely proportional to each other. This means that an upsurge in the unemployment rate leads to a drop in the number of job openings in the economy since employers have abundant options for recruitment. This is also true another way round.
However, the post-pandemic phase of recovery is revealing opposite trends. The unusual market situation reveals that despite the promising upward graph of jobs, the unemployment rate is also rising high. This trend has now persisted for months.
Consider this, a report revealed that more than 9 million Americans were on a hunt for jobs in May. On the other hand, companies asserted that the market has more than 9 million jobs that are actually breakthrough.
There is a huge discrepancy between the lay-off rate that we witnessed during the onset of the pandemic and the rate of putting those jobless workers back to work. This unusual trend also explains why despite a notably high unemployment rate at 5.9%, wages are still rising swiftly.
SO WHAT IS BEHIND THIS HIGH UNEMPLOYMENT RATE TOGETHER WITH HIGH JOB OPENINGS?
One answer to this question can be the dislocation and migration during the COVID-19 outbreak. A lot of workers have moved back to their hometowns and countries that they migrated from in search of jobs. Another reason that explains the high unemployment rate in combination with high job openings is the policies introduced during COVID-19. Extended unemployment benefits by the federal government are allowing the employable population to stay out of work for a longer period of time.
The change in work preferences is another reason why companies are falling short of labor despite millions out of jobs. COVID-19 has introduced Millenials to the comfort and advantages of remote working, thus causing a huge labor shortage in industries like warehouse and logistics.
This leads to a significant factor that is playing the major role in advancing the economic disparity among the current employment rate and what we should be witnessing right now-
THE JOB MISMATCH
A similar trend was witnessed after the 2008 recession where the market was full of jobs but not suitable enough for the majority of the population. It can be called a skill mismatch. There is a huge discrepancy in the market between the work experience of people and the kind of jobs that are prevalent in the marketplace. This trend is most visible in the sectors such as wholesale, entertainment, finance, healthcare, and food services.
Gianluca Violante, a researcher at Princeton University said, “While the initial increase in mismatch subsided with the reopening of the economy, we are now seeing tightening in some sectors that might be leading to the second wave of mismatch.”
THE GEOGRAPHIC DISCREPANCY
The second major reason that is causing a stark labor shortage in the job market is the migration. Skilled labor has moved back to the towns and cities that they migrated for in the first place in search of job. Pertaining to the big shifts taking place in market, these local regions are now booming with businesses because of the COVID-19 led transformation.
Another study reveals that people are now starting to believe in the gravity of virus outbreaks and have permanently moved from heavily populated urban areas to outskirts or rural regions where population is scarce. This has also led to decrease in the number of people relocating to the metro citites.
If there is anyone that can play a role in eliminating huge discrepancies in job market, it is the federal policies. The current plans being rolled out focus on bringing jobs back but not on bring the comfort of the employable population. People are finding better comfort in the new lifestyle that virus outbreak introduced them too, they are still unsure whether the nation is immune to the disease or will it bounce back.
The road after the recovery seems longer than the once so far. Easy tasks are accomplished, it’s time for bigger goals to meet.