The COVID-19 pandemic caused a major disruption in America’s labor force — something many have alluded to as ‘The Great Resignation.’ In 2022, more than 50 million workers quit their jobs, following the 47.8 million who did so in 2021. In 2023, this pattern gradually subsided, with 30.5 million workers resigning as of August.
A closer gander at what has befallen the labor force can be better described as ‘The Incomparable Reshuffle.’ While quit rates remain high, hiring rates continue to outpace them as many workers have been transitioning to different jobs in search of an improved work-life balance and flexibility, increased compensation, or a strong company culture.
The U.S. Chamber is closely monitoring trends in job openings, labor force participation, and quit rates affecting industries nationwide. Continue reading to explore an analysis of the industries most significantly impacted by these trends.
Food service and hospitality businesses struggle to retain workers
Jobs that are fully in-person and traditionally have lower wages have had a more difficult time retaining workers, even prior to the pandemic. For example, the leisure and hospitality industry has experienced the highest quit rates of all industries, with the accommodation and food services subsector of this industry experiencing a quit rate consistently above 4.5 percent since July 2021.
Across all industries, hiring rates have continuously outpaced quit rates. Looking again at leisure and hospitality, the industry lost 837 thousand workers in September 2023, but 1.1 million individuals were hired into the industry that same month. As a matter of fact, since November 2020, leisure and hospitality has maintained the highest hiring rate among all industries, ranging between 6% to almost 19%. This hiring rate remains significantly higher than the national average, which stood at 3.7 percent in September 2023.
While taking a gander at the labor shortage across different industries, the education and wellbeing services sector, and the professional and business services sector, consistently exhibit the highest number of job openings. It’s worth noting that professional and business services span a wide spectrum of occupations including legitimate services, scientific research, as well as roles like landscaping workers, cleaners, and waste disposal workers.
Meanwhile, in more stable, higher paying industries, such as financial activities and manufacturing, the number of employees quitting has been lower.
A closer gander at labor force participation
The most late jobs report from the Bureau of Labor Statistics indicates that thousands of individuals are joining the workforce, which is great. Nonetheless, labor force participation still does not match what it was before the pandemic for a variety of reasons.
If the labor force participation rate were at the February 2020 level, we would have an additional 2.2 million individuals in the workforce — and this shortage is impacting all industries in essentially every state. Regardless of whether each unemployed worker were to fill an open job within their respective industry, there would still be millions of unfilled job positions, highlighting the widespread labor shortage.
To further understand shifts in the labor force, it is important to see labor force participation across different industries.
The manufacturing industry overall confronted a major setback subsequent to losing roughly 1.4 million jobs during the onset of the pandemic. Since then, at that point, the industry has taken significant steps towards recuperation, making a deliberate effort to address job vacancies. While durable goods manufacturing has seen a more substantial recuperation contrasted with nondurable goods manufacturing, as of August 2023, a hole persists, with 616,000 total manufacturing job openings yet to be filled.
In actuality, the construction industry faces a labor surplus. The number of unemployed workers with experience in this industry exceeds the available job openings, with an average of 367,000 job vacancies each month in 2023, while the monthly average of individuals with experience in this field seeking business amounts to 490,000.
It’s worth noting that a labor surplus does not ensure that all positions will be occupied, as workers may not necessarily be situated in the geographic areas where the open positions are situated. It also does not imply that an industry will have every one of the workers it needs in future years.
All industries currently have job openings, with each actively seeking new hires. The rate of hiring varies significantly starting with one industry then onto the next, with certain sectors bringing in a bigger number of new employees at a more rapid rate contrasted with others.
Consider the mining and logging industry, which is relatively small in terms of business. From January to September 2023, this industry hired the fewest number of workers, totaling 234,000. This stands in sharp contrast to the leisure and hospitality sector and professional and business services sector. In the same time outline, every one of these industries hired around 10 million employees.
Unemployment exists in varying degrees among labor shortages
In the U.S., a sound unemployment rate typically falls within the range of 3% to 5%. As of January 2024, the national average unemployment rate stands at 3.7%. Within this context, there are 6.1 million individuals unemployed. This group includes individuals with varying degrees of experience spanning a wide cluster of industries.
The industries with below the norm unemployment rates have less experienced candidates to choose from while filling their job openings. This situation leads to heightened competition among businesses in these industries as they vie for the limited pool of available ability.
The predominance of remote work has dropped precipitously since 2021, despite workers’ inclination for flexibility. This year, just a quarter of all employees work remote piece of the time. While this is a small number contrasted with the pandemic high, it towers over the pre-pandemic norm, indicating the permeance of some remote work in the years to come.
Certain industries and occupations simply cannot function without in-person work. The highest propensity for in-person work exists in the hospitality and food services, transportation, and retail trade industries, where almost 80% of staff work fully on location. Alternatively, industries with a low amount physical labor or with customer service tasks are more likely to work from a distance, such as the information and finance sectors, where less than 30% of staff are fully on location.
The U.S. Chamber of Commerce is proud to lead the business community in identifying the actions employers can take to remain competitive to draw in and retain ability. Businesses can increase their hiring pools by removing barriers to entering the workforce like expanding childcare access, offering innovative benefits, participating in second-chance hiring, and providing opportunities for new and existing staff to be upskilled and reskilled at work.
The labor market challenges facing business are anticipated to continue into the next couple of decades as our nation’s workforce ages and employers make new jobs. This is the very thing that the latest data says — and what businesses need to be aware — about the workforce of the future.