August Unemployment Report Was A Bust – Implications

The question becomes even more perplexing when we consider the fact that expanded unemployment benefits from the federal government and the states – which paid many people as much or more than going back to work in many cases — have ended for millions of jobless workers in the last few weeks.

Some of these people went back to work recently, but millions still have not. There are still 5.4 million fewer jobs today than before the pandemic began in February of last year. Again, the question is why.

The answer lies in the fact there is a massive employment reallocation underway in the economy among both employees and employers — which is triggering what some economists call a “great reassessment” of work in America.

Workers are shifting where they want to work — and how. For some, this is a personal choice. The pandemic and all of the anxieties, lockdowns and time at home have changed people. Some want to work remotely forever. Others want to spend more time with family. And others want a more flexible or more meaningful career path.

It’s the “you only live once” mentality on steroids.

The reassessment is playing out in all facets of the labor market this year, as people make very different decisions about work than they did pre-pandemic. As noted above, resignations are the highest on record — up 13% over pre-pandemic levels. There are 4.9 million more people who aren’t working or looking for work than there were before the pandemic.

There’s also a surge in retirements with 3.6 million people retiring during the pandemic, over 2 million more than expected. At the same time, there’s been a boost in entrepreneurship which has caused the biggest jump in years in new business applications and incorporations.

It doesn’t help that the abundance of job openings this year are not in the same occupations — or same locations — where people worked pre-pandemic. There is a fundamental mismatch between what industries have the most job openings now and how many unemployed people used to work in that industry pre-pandemic.

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