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Beyond BLS

Beyond BLS briefly summarizes articles, reports, working papers, and other works published outside BLS on broad topics of interest to MLR readers.

May 2022

Workers are less likely to work as much following the COVID-19 pandemic

Summary written by: Lisa N. Huynh

As employment is recovering from the onset of the coronavirus disease 2019 (COVID-19) pandemic, overall employment and willingness to work have decreased. In the working paper, “Has the willingness to work fallen during the COVID pandemic?” (National Bureau of Economic Research, Working Paper 29784, February 2022), authors R. Jason Faberman, Andreas I. Mueller, and Ayşegül Şahin analyze how much willingness to work has declined since the start of the COVID-19 pandemic.

Designed by the Federal Reserve Bank of New York, the Job Search Supplement of the Survey of Consumer Expectations (SCE) provides details on individuals’ desired work hours from 2013–21. The SCE collect information on people’s employment situations, work preferences, and job search behavior. This survey provides a measure to identify changes over time in people’s willingness to work and shows how the COVID-19 pandemic could affect decisions relating to people’s job searches and labor market participation.

Using data from the SCE and workers’ actual labor market participation, Faberman, Mueller, and Şahin construct a labor market underutilization measure called the aggregate hours gap (AHG). These data are used to identify the difference between desired hours worked and what is available within the labor market. Specifically, the AHG measures underutilization by looking at the difference between the desired work hours and actual hours worked by workers, regardless of employment status. According to the authors, AHG has a stronger relationship with nominal wage growth than other more traditional metrics (for example, the unemployment rate) do, since AHG can address the unique labor market brought on by the COVID-19 pandemic.

Faberman, Mueller, and Şahin note that the labor market is tighter than what the unemployment rate would suggest. This tightness is due to the individuals not in the labor force and part-time workers who reported a lower willingness to work many hours or participate in the labor market altogether. Between 2013 and 2021, the decline in desired hours worked was 4.6 percent; meanwhile, the decline in labor force participation rate was 2.3 percent.

The unemployment rate and AHG have displayed a diverging pattern following the recession caused by the COVID-19 pandemic. The authors don’t find evidence that the contraction in labor supply is due to women responding to childcare demands. Rather, the contraction is consistent across most demographic groups, with a larger decline among those with less than a college degree. The disinclination to work has reduced the labor supply, and this reduction has been persistent throughout the pandemic.