The Great Talent Crisis

Fewer people are working than almost any other time in U.S. history.

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Fewer people are working than almost any other time in U.S. history.

Call it what you will – quiet quitting, lying flat, the Great Resignation, or just plain old don’t wanna’ go back to work. 

Only a few years ago, the world was awash in life-after-the-pandemic predictions, as humans faced, in the words of one religious leader, “the fragility and vulnerability of the human situation.” There were prognostications of rampant misinformation, political uprisings and mass reclusion, none of them wrong. But what stayed with me the most, in reading these, were the projections of how individuals would enter the pandemic era at first paralyzed by caution, then emerge spending more, demanding more of their political leaders – and taking more risks. 

It does appear the latter has proven true. What past pandemics like the French cholera outbreak of the 1830s and the Spanish flu of 1918 have taught us is that when people are faced with their own mortality, personal decision-making fundamentally changes. 

Post-pandemic, there seems to be an onus on living for the moment and a rejection of anything redolent of delayed gratification. It’s a trend that’s played out in Americans’ rabid spending, vacationing, splurging on luxury goods, second homes and racking up record credit card debt this past year (see above links), as covered by Power Corridor.

In a nod to the Chinese “lying flat” neologism, which means rejecting societal pressures to over-work or achieve, to one’s detriment, this attitude can also be seen taking hold globally. (To be sure, the Chinese Communist Party is not at all happy with the movement, bashing it as so much “poisonous chicken soup.” Great metaphor.)

In the U.S., the labor force participation rate has dropped to 62.5 percent, closing in on the all-time nadir of 58.1 percent reached in December 1954. At present, even if every person looking for a job found one, there would still be millions of jobs left unfilled. At the end of last year, there were 1.4 unfilled jobs for every job seeker in the country, an imbalance that’s persisted into 2024, even with spates of layoffs at major corporations.

America’s labor market has been tightening for decades, with a shrinking number of people participating in the workforce over time and still fewer expected in the years to come, especially in light of sharply declining birth rates

The latest data from the U.S. Bureau of Labor Statistics (BLS) showed unemployment edged up 3.7 percent in December from 3.5 percent the prior year, with the number of unemployed persons at 6.3 million, unchanged from November and up from 5.7 million a year ago. 

The details show that, for many, opting out of work is entirely by design: Two-thirds of those who lost their full-time jobs during the pandemic have reported they are only somewhat actively looking for a new job, or “not very active at all,” according to data out this month from the U.S. Chamber of Commerce. 

The Chamber surveyed the unemployed as they emerged from the pandemic, finding nearly half of respondents refused to consider any new position that didn’t offer remote work, while 19 percent had become homemakers, 17 percent decided to retire and 14 percent were working part time. 

More than one-third of younger unemployed workers – around 36 percent – surveyed said they were taking a break from working to focus on improving their education, training, or attaining new skills before seeking re-employment. “We have a lot of jobs, but not enough workers to fill them,” said Stephanie Ferguson, director of global employment policy and special initiatives at the Chamber. “If every unemployed person in the country found a job, we would still have over 2 million open jobs.”

There’s one group whose employment numbers are rapidly increasing, however. Seniors over the age of 75 are now the fastest-growing sector of the U.S. workforce. According to a recent Pew Research Center survey, senior workers have tripled from 2 percent in 1987 to 7 percent today, fetching greater pay and working longer hours than ever before. 

BLS data show the number of Americans aged 75 and up – dubbed “silver staffers” – will spike by nearly 97 percent over the next decade. 

The so-called silver surge will not be enough to fill the missing-worker gap, but heightened life expectancy, combined with rising economic need among seniors, will help to assuage it. U.S. employers now hire an estimated 11 million senior workers, quadruple the totals of the 1980s.

While artificial intelligence holds the promise of stepping in to take over some of the jobs once held by humans, A.I. will not be paying taxes or Social Security. It will take humans to do that – and human workers have been dwindling for the past 80 years. 

As of 1940, there were 42 workers supporting every retiree, compared with three workers today. By 2050, that number will drop to two workers for every retiree. As U.S. workers directly support retirees in real time, you can see where this is heading. People are living longer, working less and having fewer children. The demographic and population shifts are coming and they won’t be stopped, as they are nearly a century in the making. 

These trends aren’t just specific to the U.S. The World Health Organization forecasts that between 2015 and 2050, the world’s population of people over 60 will leap from 12 percent to 22 percent. In other words, the great talent crisis is an unstoppable megatrend, calling for more workers to target higher levels of productivity as well as specialization – with more work needing to be done by fewer people. 

With the Great Retirement of the older generations colliding with the Great Resignation of those of prime working age, the U.S. has options, but they are not very politically tenable. It can, for example, increase the retirement age, reduce Americans’ Social Security benefits – or perhaps adjust immigration rules to welcome more foreign-born workers into the country.

As of late last year, foreign-born workers made up 19 percent of the U.S. labor force, rising 9.5 percent from just before the pandemic in January 2020 to July 2023. This compares favorably with the miniscule 1.5 percent increase among native-born American workers for the same period. “The foreign-born labor force has made a disproportionate contribution to reducing the jobs-workers gap,” said Goldman economist Tim Krupa late last year.

According to the bank, immigrants joining the U.S. workforce are expected to account for half a million new jobs going into mid-2024. (Of course, this trend can only continue if the nation is able to find ways to loosen immigration restrictions – which, so far, has been a political third rail, both for the Biden and Trump administrations.) 

Immigrants are 80 percent more likely than U.S.-born workers to start their own businesses, too. According to a recent study from the Massachusetts Institute of Technology, “immigrants act more as ‘job creators’ than ‘job takers’ and non-U.S. born founders play outsized roles in U.S. high-growth entrepreneurship.” 

Making and taking? Now that’s a silver lining.