The latest surge of coronavirus cases powered by the omicron variant has caused extremely high numbers of employees to miss work because of illness, exacerbating the country’s persistent labor shortages and threatening to complicate the labor market’s push toward pre-pandemic employment levels.
Those numbers are nearly triple the levels from the first two weeks of December, before cases had started to peak around the country. They were also the highest numbers since the agency started taking the survey in April 2020 — well over last January’s peak of 6.6 million workers out.
The statistics point to the substantial disruption the variant has caused businesses and workers at a key moment in the nation’s recovery.
Inflation, driven in part by supply chain issues and shortages overseas, is wiping out wage gains made by many workers, as the cost of essential goods such as food and gas continue to rise. And businesses in lower-wage fields have complained for months that their operations have been hampered by a shortage of available staff.
“Unfortunately, the biggest issue about omicron is it’s no longer just fear of contagion and aversion to in-person activity, but it’s actually causing acute labor shortages from the sheer number of people who are out sick,” said Diane Swonk, economist at accounting firm Grant Thornton.
Meanwhile, applications for first-time jobless claims, a proxy for layoffs, swelled last week to 286,000, the Labor Department reported Thursday. That’s a jump of 55,000 from the preceding week’s revised figure and the highest count since October, and another sign that the omicron outbreak continued to weigh on the labor market into the new year.
In recent weeks, reports have documented severe shortages in industries such as trucking — a crucial component of the country’s supply chain — port logistics, air travel, food sales and essential services like garbage collection, firefighting and policing.
“This is a different dynamic than we‘ve had,” Swonk said of the omicron surge. “The only silver lining is that it tends to go quickly.”
Cities have been pockmarked by closed signs on businesses big and small during typical workdays in recent weeks. Walmart shut nearly 60 stores in December for coronavirus cleaning and sanitizing. Department store Macy’s shortened store hours in January by two hours each day. The Smithsonian reduced hours at most of its Washington-area museums, and closed the National Air and Space Museum this month. United Airlines CEO Scott Kirby said recently that nearly a third of its employees at its transit hub in Newark called out sick in one day.
Hospitals, already dealing with labor challenges as many nurses have moved on to other careers after burning out from the pandemic, have been hit again with a double-edged sword recently, as staff infections rise just as their care demands from the virus increase.
“It is absolutely what is making this surge more difficult than even the surge last winter,” said Brett McClain, chief operating officer of the Sharp HealthCare system in San Diego. Staff absences due to illness peaked Tuesday, with some 1,500 out of 19,000 employees out, McClain said — nearly 8 percent.
The hospital has been largely able to cover most gaps by delaying or rescheduling elective procedures when needed and hiring temporary and contract workers to staff up. It did have to close one of its urgent-care facilities temporarily because of a staffing shortage in the last couple of weeks, McClain said.
“The last six months have been a big challenge,” McClain said. “We’re all tired, we’re all sick of this, we’re all frustrated by everything going on, so unfortunately it has absolutely impacted the workforce overall. Then you have your staff that are now infected in greater numbers than ever before.”
Bernard Klein, chief executive of the 377-bed Providence Holy Cross Medical Center in Los Angeles said his hospital, too, was missing about 8 percent of its 2,500 employee staff on any given day.
“It’s only compounding the issue of caregiver and employee burnout or stress,” he said.
LaRay Brown, CEO of Interfaith Medical Center in Brooklyn, said about 7 percent of her staff — between 330 and 350 people — had been out daily earlier in the month but that the numbers had been improving recently.
More than 750 @BalladHealth employees are out today having tested positive for Covid. This is putting an enormous strain on the hospitals and patients as we continue doing elective procedures and caring for 350+ Covid patients +others. 1/— Alan Levine (@alevine014) January 19, 2022
Joseph Brusuelas, economist at the firm RSM, said the absences were bad news for the economy — a sign of just how significant the pandemic’s effects continue to be, regardless of the political appetite for containing it.
“It’s difficult to get a quorum to get anything done because of the number of people who have called out sick,” he said.
Fewer workers means less productivity for businesses. And missed pay for workers without sick pay means that some household budgets will be strained.
Jerry Akers, the owner of Great Clips franchises in Iowa and Nebraska, said anywhere from 5 to 8 percent of his 180-person workforce is either out sick or caring for a family member who is. He estimates that about two to four of the salons are closed daily because of that, dating all the way back to Christmas. He, too, had been dealing with challenges finding available workers since long before the latest surge.
“Its exceptionally stressful,” he said. “We’re trying to keep our stores open, not only for our customers but also the rest of staff, because when one is closed it impacts everyone’s income.”
Brusuelas said he expected most firms — as his had — to revise downward their growth projections for the first quarter, saying that these economic activities were likely to take a hit.
“The fact that we’ve entered the third year and this is still with us should be another knock on consumer confidence and reinforce the idea of when will this ever end,” Brusuelas said.
Job creation slowed the last two months of 2021, in a year of booming job growth, as the country surpassed expectations by gaining back some 6.4 million jobs that had been lost during the pandemic. December’s jobs report, with just 199,000 jobs added, was the lowest in months, although the number could be revised upward, as data in other months have.
Brusuelas said the absences could spell trouble for the January report, which will be released in the first week of February.
The absences are another reminder of how closely related the public health picture is to the country’s economic growth, he said. Workers and businesses headed into this wave with few of the supports they had during previous ones, including tax incentives for paid-sick-leave programs and government loans.
“This is not the first variant and may not be the last,” Brusuelas said. “[With] more proactive public health measures to help individuals and households mitigate risk, the better the economy will be.”
Andrew Van Dam and Aaron Gregg contributed to this report.