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NOTE: The following article originally appeared in the June 2021 Leadership Connect newsletter. 

The anecdotes aren’t lying. Labor market data suggest that pandemic factors still hold job seekers back, making hiring more difficult. Employers clearly want to hire, and job postings on Indeed are climbing. But hiring is slow relative to job openings and both actual wages and the minimum pay that job seekers want are rising surprisingly fast, according to government reports. Together this data points to labor supply concerns, even though labor demand is strong.

So, what's holding job seekers back? Three factors have been with us throughout the pandemic, plus there are three newer factors.

Throughout the pandemic, these factors have held job seekers back:

  • At the peak of unemployment last April, nearly 80% of unemployed people expected to be recalled, so they probably weren’t searching intensely. 
  • The risk of getting or transmitting the virus remains a concern for in-person jobs.
  • Caregiving burdens reduced employment, especially for mothers.

All of these factors should fade as the pandemic wanes.

More recently, new reasons have arisen: optimism, rising value of leisure time, and perhaps also government benefits: 

  • Now that the economy is rebounding strongly, job seekers might feel less urgency to take a job if they assume they’ll still have good options in the near future. 
  • With rising vaccination rates, people are eager to travel and enjoy the summer. Leisure time is worth a lot more now than it was last year. 
  • Extra relief like the enhanced federal unemployment insurance benefits might also be holding some job seekers back, though this is hard to quantify when so many other factors are also in play.

These additional factors should also fade toward the end of summer. But some job seeker hesitancy could persist. The pandemic might have caused people to look at their lives and their jobs differently. Some people might be more inclined to prioritize family, friends, and experiences over professional ambition. Job seekers might have higher expectations of employers, including higher compensation. So, the labor market might stay tight even after this crunch passes. Employers might have to dust off their strategies for hiring in a tight labor market a lot sooner than they imagined.

Jed Kolko

Jed Kolko is Chief Economist at Indeed, the world’s #1 job site, where he leads the research division, the Hiring Lab. Previously he was Chief Economist and VP of Analytics at Trulia, the online real estate marketplace. He has also led research teams at the Public Policy Institute of California and at Forrester Research. Jed specializes in using large-scale proprietary and publicly available datasets to uncover insights about labor markets, the future of work, demographics, housing markets, and urban trends. He has written for the New York Times, the Wall Street Journal, FiveThirtyEight, Wonkblog, and Bloomberg View, and has authored a dozen academic articles. He earned his A.B. in Social Studies and his Ph.D. in economics at Harvard University and lives in San Francisco.