The job market is looking pretty good considering where this economy has been over the past three years.
Compared to just before the pandemic, there are now half a million more jobs and the unemployment rate is 3.5%, the same low level as in 1969.
But what if the pandemic hadn’t happened?
Where would that economy – and that labor market – be in that case? Let’s do an experiment in counterfactual economic history.
Half a million more jobs seems pretty decent.
But, said University of Michigan economist Betsey Stevenson, if there hadn’t been a pandemic and job growth had stayed on the path it was on between 2015 and 2020:
“We would have had 5 million more jobs, not 500,000 more jobs.”
And the jobs we would have gotten would have been different.
“A lot of our pre-pandemic job growth came from education and healthcare,” Stevenson said.
Boy has the pandemic derailed that train. Employment is struggling to recover, let alone grow to meet new demand.
Harvard economist Jason Furman said many more baby boomers would be working if it weren’t for the health threats of the pandemic.
“At this point, you’re mostly talking about men over the age of 55 who have left the workforce and not come back,” he said.
In our imagined world without COVID, we would have more waiters and cooks, fewer people stopping by Amazon and Target warehouses.
John Leer of polling firm Morning Consult said consumers have not returned to their pre-COVID habits.
“They continue to spend less time in restaurants and going out,” Leer said. “More of her money is spent on supplies at her house. And jobs have essentially followed that shift in consumer preferences.”
In some ways, however, October 2022 doesn’t look that different from February 2020.
Unemployment was as low as it is now. And wages rose – especially for low earners. Those wages just don’t go that far now. Because what we didn’t have much of in 2020 was inflation.
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