WASHINGTON Reuters - U.S. labor shortages may limit the coronavirus pandemic and outlast general economic growth unless the country comes up with better education, health and childcare policies to increase the number of people willing and able to work, Richmond Federal Reserve President Thomas Barkin said on Tuesday.
As our workforce ages and birthrates decrease, we could find workforce availability limiting our economic growth, Barkin said at prepared remarks for delivery to a South Carolina Chamber of Commerce event, noting that while labor shortages have appeared acute during the pandemic closing they represent a longer-term challenge to the country.
What is this math problem? I can't grow without more workers. The best source of more employees is those on sidelines. And those on the sidelines won't come back to the labor market unless the math makes more sense to them, Barkin said, through childcare programs that help parents, better pay and transport options or even incentives for older people to stay in jobs.
He emphasized, for example, that parental leave policies in Japan appeared to help boost labor force participation there, while Canada has used a combination of later mandated retirement ages and subsidies for older workers to boost the number of people aged 60 to 64 in the workforce.
The prospect of restrictions on U.S. labor participation is a key issue for Fed as it contemplates the shift to post-pandemic monetary policy. However, the majority of workers retired during the crisis while others, including women and those in lower-paid jobs, stopped working because of health care responsibilities or family concerns about risks.
Some have been hesitant to return to their old jobs with lower pay.
That, in turn, raises questions about whether the U.S. central bank should reach its goal of maximum employment sooner than expected.
Barkin warned that labor shortages may last beyond this pandemic. Among the 100 millions of adults not working or looking for work, opting out is the right decision because they retire, for example, or are in school.
But it is easy to imagine many could be open to working, he said, with 6 million of those out of the labor force, for example, saying on surveys that they want a job but just aren't looking.