Most of the country’s missing workers are back, propelling the economy

Americans are returning to work, bolstering the economy and easing concerns that many who had retired or moved to the sidelines during the pandemic might never return.

With 83.3 percent of workers between the ages of 25 and 54 back in the labor force, rates not seen since the Great Recession, the job market continues to defy expectations amid economic head winds. U.S. employers added 253,000 jobs in April, sending the unemployment rate to a post-pandemic low of 3.4 percent, according to data released Friday by the Bureau of Labor Statistics.

The burst of new workers is helping fill a gap of more than 4 million people who were “missing” from the job market as of March 2021, as a result of early retirements, a lack of child care, covid illness and death, and slowdowns in immigration. More than 75 percent of that shortfall has been filled, according to a Washington Post analysis, as new and returning workers help boost labor-force participation back to pre-pandemic levels. The share of adults who have a job or are looking for one is back to where it was in March 2020.

“A record number of Americans are working,” said Lawrence Yun, chief economist at the National Association of Realtors. “Any time we have more people wanting to work, that’s a good thing for the economy.”

Women and workers of color have led many of the recent gains in the labor market. The number of women with jobs rose by 305,000 in April, offsetting a 165,000 decline for men. The unemployment rate for Black workers, meanwhile, fell to 4.7 percent, its lowest point ever. Jobless rates for Hispanic and Asian workers are also near historic lows.

In all, there are 3.3 million more Americans in the workforce than there were before the pandemic, reflecting the pull of an incredibly strong labor market, as well as the strain of higher prices.

Chris McKee retired in 2018 after more than 20 years of managing a luxury car dealership in Albuquerque. But last summer, with prices inching up, he went back to work.

Now 66, McKee spends four days a week outfitting vehicles for government agencies, police departments and hospitals. He doesn’t have plans to retire again any time soon.

“They were in need of help, and I was in need of money,” said McKee, a single father to a teenager. “With the economy going the way it was, I needed to do something to supplement my retirement.”

“A lot of the concerns about the pandemic rebound have abated,” said Nick Bunker, an economist at Indeed Hiring Lab. “Unemployment is basically back to where we were pre-pandemic, and adjusting for the aging population, so is labor-force participation.”

Although workers have returned, they’ve switched industries and taken on new types of jobs, reshaping the contours of the economy. Sectors such as finance and professional services — which are more likely to offer remote and flexible opportunities — have hundreds of thousands more workers than they did before the pandemic. But others, including education, health care, and leisure and hospitality, continue to report massive shortfalls.

“In a tight labor market, people migrated into higher paying, more comfortable jobs,” said Julia Pollak, chief economist at ZipRecruiter. “They’ve managed to trade up, which has left some industries, like the public sector and public schools, short-staffed and struggling.”

A lopsided recovery has also changed the dynamics of the workforce. More than 20 million Americans, many of them in leisure and hospitality, lost their jobs in the first months of the pandemic. As the economy recovered, those workers found employment in new industries such as tech, finance, manufacturing and housing, where demand was booming and pay was high.

Now the economy is in the throes of another shift: Many of the sectors that grew rapidly during the pandemic, including tech, media and finance, are laying off thousands of workers. Meanwhile, service sectors such as leisure and hospitality are continuing to hire.

“Warehousing and tech are in retreat, but you’re still seeing a surge of jobs in airlines, tourism companies, hotels, restaurants, nail salons, gyms and concert venues,” Pollak said. “Job growth is becoming more narrowly concentrated in the service sector, specifically in low-wage leisure and hospitality, and health-care jobs.”

Difference between current and expected

workers as a share of expected workers,

by industry

20M

5M

Current number of workers

More employees than expected

In March, there were 8% more

construction workers — roughly 776K

people — than expected if employment

matched pre-pandemic levels

0

8.1%

Construction

Transportation

8%

7.8%

Public administration

7.5%

Finance and insurance

Professional and

business services

4.1%

0.8%

Information

Arts, entertainment

and recreation

0.7%

Fewer employees than expected

0

-0.5%

Retail trade

-0.6%

Health care and social assistance

Durable goods manufacturing

-1%

-4.4%

Educational services

Hospitality and food

-6.1%

-7.7%

Other services

After a huge

employment drop

early in the

pandemic,

hospitality and

food still has 6%

fewer workers than

expected

Nondurable goods

manufacturing

-9.2%

-9.6%

Real estate

Wholesale

trade

-14.8%

Note: Not seasonally adjusted. Transportation includes warehousing and utilities. Real estate includes rentals and leasing. Expected number of workers defined as the number of employees if the participation rate and the size of each industry, as a share of the labor force, were the same as in March 2019.

Difference between current and expected workers as

a share of expected workers, by industry

20M

5M

Current number of workers

More employees than expected

In March, there were 8% more construction

workers — roughly 776K people — than expected

if employment matched pre-pandemic levels

0

8.1%

Construction

8%

Transportation

7.8%

Public administration

7.5%

Finance and insurance

Professional and

business services

4.1%

0.8%

Information

Arts, entertainment

and recreation

0.7%

Fewer employees than expected

0

-0.5%

Retail trade

-0.6%

Health care and social assistance

Durable goods manufacturing

-1%

-4.4%

Educational services

Hospitality and food

-6.1%

-7.7%

Other services

After a huge employment

drop early in the pandemic,

hospitality and food still

has 6% fewer workers than

expected

Nondurable goods

manufacturing

-9.2%

-9.6%

Real estate

Wholesale

trade

-14.8%

Note: Not seasonally adjusted. Transportation includes warehousing and utilities. Real estate includes rentals and leasing. Expected number of workers defined as the number of employees if the participation rate and the size of each industry, as a share of the labor force, were the same as in March 2019.

Difference between current and expected workers as a share of expected workers, by industry

−15%

0

15%

In March, there were 8% more construction workers — roughly 776K people — than expected if employment matched pre-pandemic levels

Construction

Transportation

Public administration

Finance and insurance

Professional and business services

Current number

of workers

Information

20M

After a huge

employment drop

early in the pandemic,

hospitality and food

still has 6% fewer

workers than expected

Arts, entertainment and recreation

5M

Retail trade

Health care and social assistance

Durable goods manufacturing

Health care, one of the largest industries, had 132K fewer employees, almost 1% less than expected

Educational services

Hospitality and food

Other services

Nondurable goods manufacturing

Real estate and rental and leasing

Wholesale trade

Fewer workers than expected

More workers than expected

Note: Not seasonally adjusted. Transportation includes warehousing and utilities. Expected number of workers defined as the number of employees if the participation rate and the size of each industry, as a share of the labor force, were the same as in March 2019.

Difference between current and expected workers as a share of expected workers, by industry

−15%

0

15%

Construction

In March, there were 8% more construction workers — roughly 776K people — than expected if employment matched pre-pandemic levels

Transportation

Public administration

Current number

of workers

Finance and insurance

20M

Professional and business services

Information

5M

Arts, entertainment and recreation

Retail trade

After a huge employment drop

early in the pandemic, hospitality

and food still has 6% fewer

workers than expected

Health care, one of the largest industries, had 132K fewer employees, almost 1% less than expected

Health care and social assistance

Durable goods manufacturing

Educational services

Hospitality and food

Other services

Nondurable goods manufacturing

Real estate and rental and leasing

Wholesale trade

Fewer workers than expected

More workers than expected

Note: Not seasonally adjusted. Transportation includes warehousing and utilities. Expected number of workers defined as the number of employees if the

participation rate and the size of each industry, as a share of the labor force, were the same as in March 2019.

In many ways, the restructuring of the labor force has changed the equation for employers. For much of the pandemic, they were looking for ways to woo people back into the job market from early retirements, child-care obligations and other personal decisions that had them on the sidelines. Now businesses are increasingly looking to people who are already working — either for competitors or in entirely different industries — to fill openings.

“The big question has been: When will the labor market get back to where it was before the covid crisis?” said Amanda Cage, chief executive of the National Fund for Workforce Solutions. “The good news is that we’re getting back to those pre-pandemic levels. But the dynamics of where people have returned to are drastically different, which has huge implications for industries.”

In Sacramento, Emani Dawan graduated from film school last summer and finally landed a job last week, as a cook at her twins’ preschool. Dawan, who left the workforce in 2016, says reentry has been tough — she applied for dozens of positions at news companies, production firms and in customer service to no avail. Now she’s signing up to become a substitute teacher in California, in hopes that will lead to higher pay and more security.

“People say there are all these jobs out there, but what kinds of jobs are they and how much do they pay?” said Dawan, 32. “I have a degree and 10 years of experience, but zero luck finding a job in my field. Do I have a job? Yes. Is it enough to pay rent and cover my bills? No.”

The strong labor market has been a cornerstone of the pandemic recovery and has propped up the U.S. economy even as policymakers take aggressive action to slow things down. Employers have added more than 4 million jobs in the past year, including 1 million so far this year, with much of that growth in the service sector. Unemployment, meanwhile, stands at 3.4 percent, near a 50-year low.

But there are signs that growth is moderating, as higher interest rates and slowing consumer spending take their toll on businesses’ hiring plans. Employers had roughly 9.6 million job openings in March, the lowest level in nearly two years. Data released Friday showed that the pace of job creation — while still robust — has slowed from pandemic highs.

Economists and policymakers are keeping a close watch on the job market — and labor force participation, in particular — as they chart the road ahead. The Federal Reserve has raised interest rates 10 times since last year, most recently on Wednesday, in hopes of bringing down decades-high inflation. But there are growing fears that those higher borrowing costs could soon translate into broader job losses and tip the country into recession.

Kenneth Wells, 64, stopped working in early 2022 while he recovered from thyroid cancer. But a few months ago, he jumped back into the labor force, taking on a part-time job as a math tutor.

“I have a son in college and even though the retirement pay was good, I still needed a little boost,” said Wells, who lives in Woodbridge, Va., and spent 35 years as an engineer in the Navy. “So, part of it was for financial reasons, but also because I don’t want to be bored after retirement."

About the data

The Post analyzed data from the Bureau of Labor Statistics (BLS) to calculate the expected labor force based on March 2019 participation rate. The Post also used BLS data to estimate the difference between the current number and the expected number of employees by industry if the participation rate and the size of that industry, as a share of the labor force, were the same as in March 2019.