Beyond BLS briefly summarizes articles, reports, working papers, and other works published outside BLS on broad topics of interest to MLR readers.
The U.S. labor market was severely affected by the coronavirus disease 2019 (COVID-19) pandemic as the unemployment rate increased to 14.7 percent in April 2020 from 3.6 percent in April 2019. As 2020 continued, the labor market began to improve and the unemployment rate started to fall. The labor force participation rate, however, did not recover as fast. This low participation rate during COVID-19 has been attributed to several factors, such as dependent care demands, increased unemployment benefits, or people afraid of getting sick from the COVID virus. In their working paper, “Has the willingness to work fallen during the COVID pandemic?” (Federal Reserve Bank of Chicago, Working Paper 2022-08, February 2022), authors R. Jason Faberman, Andreas I. Mueller, and Ayşegül Şahin examine how people’s desire to work has changed from 2013 to 2021 to better understand why labor force participation has remained low.
The authors use job search supplement data from the Survey of Consumer Expectations (SCE) to understand how people’s employment situation, work preference, and job search behavior have changed over time. To measure labor market underuse, the authors use the Current Population Survey and SCE data to calculate an individual’s desired work hours to the actual hours worked to get an “aggregate hours gap.” This calculation is an alternative measure of understanding labor market tightness.
The authors found that most workers are on their labor supply curve (actual hours worked equal their desired hours). They also found that during the pandemic (2020–21), workers in jobs that required moderate or more levels of social contact wanted to work less hours (between 0.8 hours and 4.0 hours), whereas workers with less social contact wanted to work more hours (between 0.3 and 1.3 hours). Regardless of the social contact requirement of jobs, all workers wanted an increase in pay. In addition, individuals out of the labor force reduced job searches during the pandemic because of the lack of job opportunities and fears of contracting the virus in 2020. However, by the end of 2021, people’s desired work hours returned to normal levels.
In conclusion, Faberman and his coauthors deduce that people have an overall lower willingness to work (“desired work hours reduced the aggregate hours gap by 2.5 percentage points”) that has kept labor force participation down. The willingness to work also predates the pandemic. This desire is driven mainly by people out of the labor force and part-time workers because they choose not to work more hours.