A big reason for the tightness of the labor market that’s going unmentioned

So, something striking from the news conference last week with Federal Reserve chair Jerome Powell.  Let me quote from Axios.

“Close to a half a million who would have been working … died from COVID,” Powell said while talking about the U.S. labor shortage.

In a footnote to a speech he gave on Nov. 30, Powell estimates that 400,000 working-age Americans died in excess of what was anticipated pre-pandemic. 

Compared to pre-pandemic projections, around 3.5 million people are effectively missing from the American workforce, as Powell explained in that speech at the Brookings Institution. 

This number includes older workers who left the labor force earlier than expected. “These excess retirements might now account for more than 2 million of the … shortfall,” he said. The other 1.5 million comes from a decline in immigration and “a surge in deaths.”  Overall, 1.09 million Americans lost their lives to COVID-19, according to Johns Hopkins data.

I wanted to highlight his hard reality.  One reason why there is a labor shortage is that there are fewer laborers.    Because they died.

That’s a horrific reality.     I felt it necessary to say this because there are many other reasons thrown around for the lack of workers.    And yet this is an important headline.