Infection rates and death tolls are way down, and pandemic restrictions have been lifted almost everywhere—yet the workforce remains hard hit by COVID-19, according to The Wall Street Journal (subscription).
What’s going on: “Researchers say the virus is having a persistent effect, keeping millions out of work and reducing the productivity and hours of millions more, disrupting business operations and raising costs.”
- In an average month in 2022, about 630,000 more workers missed at least a week of work due to illness than did prior to the pandemic, according to Labor Department data.
- That’s a reduction of approximately 0.4% of the workforce, which over a period of two-and-a-half years becomes “a big deal,” Federal Reserve Bank Senior Economist Jason Faberman told the Journal.
- An additional half a million people have left the workforce altogether owing to continued effects of past COVID-19 infections, or “long COVID.”
The impact: The labor shortages are exerting “upward pressure on wages and inflation” and have contributed to the Federal Reserve’s recent decision to raise the interest rate a fourth time in five months.
- “The virus’s lingering effects on staffing have forced employers to change how they operate, such as keeping more people on payroll so that work continues without interruption during surges of infections, and cross-training staff and standardizing processes so that one person’s absence doesn’t slow down a project. That has made many companies less efficient.”
Productivity: “[I]n services involving close contact among employees, productivity fell at a 0.7% annual pace during the pandemic, while remaining flat, on average, for manufacturing, and rising steadily among industries with high rates of telecommuting.”
Economic impact: Less than half of these reported absences from the period between March 2020 and February 2022 were paid, and those most affected were low-income households.
- “The average worker’s earnings fell by about $9,000 over 14 months following a weeklong absence for health-related reasons during the pandemic, [economists] said.”
The NAM’s take: “Manufacturers continue to struggle with workforce challenges, exacerbated by the tight labor market and evolving workplace dynamics,” NAM Chief Economist Chad Moutray said.
- “Indeed, labor force participation rates remain well below pre-pandemic paces, with accelerated retirements and many opting to move to the sidelines of employment based on changed work-life balance priorities.”
- “In addition, long COVID is an emerging challenge for manufacturers and other businesses, with employees and their families coping with ongoing symptoms. This is forcing many to miss work, potentially dampening productivity.”