Where are the Missing Workers?

The U.S. labor force participation rate has been trending downwards since the beginning of the 21st century. This paper notes that labor force participation (the percentage of people working or looking for work) plummeted during the first two months of the COVID-19 pandemic, representing a decline of more than 8.2 million people. About half of the drop was quickly regained, and participation recovered further in the second half of 2021. About 40% (nearly 1 million workers) of the persistent decline can be attributed to the continuation of pre-pandemic demographic trends. The authors discuss four possible explanations for the remaining 60% of the decline (about 1.4 million workers): cash payments to households in 2020 and 2021 that made it easier for some people to postpone looking for a new job; fear of catching COVID; long-COVID symptoms that make it difficult to work; and changing work-life balance preferences.