When the pandemic hit the United States in the spring of last year, there were days when a million people across the country lost their jobs. In March and April 2020 alone, the government in Washington counted around 20 million layoffs, and the number of employees is still five million below the values that were once common in pre-Corona times. So it would not be surprising if the workers who were spared by the wave clung to their jobs all the more intensely to this day. But the opposite is the case.
According to the Department of Labor, 4.3 million Americans left their permanent positions in August this year alone. This corresponds to almost three percent of all employees in the country and is the highest rate that has been measured since the statistics were introduced in 2001. Almost 20 million people gave up their previous job within five months. In earlier years, monthly termination rates between one and two percent were common, and these fluctuated up and down with the economy. But since autumn 2020, the values have been well above the range that was once usual.
The wave of layoffs hit the hotel and catering industry particularly hard in August, which had to accept 892,000 farewells in just over four weeks. There were 721,000 in retail, 706,000 in professional business services – such as financial, legal and marketing consultants – and 534,000 in health care. Banks, insurance companies, real estate companies and the state, on the other hand, were largely spared. It is also noticeable that there were noticeably fewer layoffs on the east and west coasts with their large metropolises than in the south and the great center of the country.
Many companies have to offer applicants higher salaries than before
The statisticians of the Ministry of Labor give no reasons for the many farewells in their report. However, experts agree that there is a whole bundle of motives and behavioral changes behind the development. For example, the International Monetary Fund recently stated that the recovery of the US labor market after overcoming the Corona recession is progressing differently than after previous economic downturns. On the one hand, it takes longer to push the unemployment rate back to the pre-Corona level, on the other hand, countless companies have great difficulties in finding suitable employees. The reason: Much more people than before moved away during the pandemic and are now looking for jobs in other regions of the country. Others are reorienting themselves professionally, still others no longer want to work in professions with a lot of direct customer contact because of the persistent health risks.
All in all, this means that there is an acute labor shortage in numerous industries – with all the consequences that this has in a market economy: Companies are forced to offer applicants higher salaries or other amenities, from more vacation to cheaper health insurance to one better child care. There is also one innovation: the pandemic has proven that employees in many industries can work from home instead of in the company, without the employer having to fear that they will be lazy.
The Republicans cut aid for the unemployed – to no avail
This opens up a brave new world for employees that has seldom existed: They can turn their back on poorly paid jobs, occupations with shift work or unfriendly bosses and look for more convenient jobs with higher salaries. At the same time, people have a greater choice thanks to the home office options, because they can also offer themselves to companies that reside far away from their place of residence. This applies, for example, to the big tech companies, which up until now have often not been an option for workers in the Midwest. “Workers are in a better bargaining position than they have in the past,” said Nick Bunker, an economist at Indeed, the employment agency Washington Post. “There is a lot of demand, people are taking the chance and quitting their jobs.”
It is indeed a strange recovery in the US labor market: on the one hand, the number of employees is five million lower than at the beginning of the pandemic, on the other hand, there have been around ten million vacancies for months, unchanged. Many Republican-ruled states blame President Joe Biden for the development and have cut the additional unemployment benefits introduced at the start of the pandemic. Motto: Many people do not want to work because they are doing so well thanks to state aid. Nobody really knows whether this is true. In any case, the social cuts have so far brought nothing.