‘Long Social Distancing’ Will Keep Millions of Americans Out of the Workforce

Number of people queuing up in front of supermarket, grocery store, restaurant, business shops.
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With a tight labor market, a Great Resignation that shows no sign of abating, and companies having trouble attracting employees, a new phenomenon seems to be complicating the labor market. Indeed, millions of American workers who dropped out of the workforce during the pandemic plan on not re-entering the labor market, citing infection concerns, according to new research. The authors of the research dubbed this phenomenon “long social distancing” and expect it to continue to lower the force participation in the future.

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As of early 2022, the US labor force is short about 3.5 million workers, relative to the pre-pandemic trend, the survey notes. And 24% of people who are neither working nor seeking work cite infection concerns as a reason, according to the monthly Survey of Working Arrangements and Attitudes (SWAA).

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Nicholas Bloom, one of the study’s co-author and a professor of economics at Stanford University, told GOBankingRates that Long Social Distancing looks like it could last for many more months or years, as over the last two years we have seen little change in the share of people that want to stay social distancing after COVID-19.

“This raises concerns that interest rates could be pushed higher for some time by the shortage of employees,” Bloom said. “Of course, in the long run another impact if rising levels of working from home will entice some people back into work, often those with young children or nearing retirement. This will act to increase labor supply partly offsetting Long Social Distancing.”

The survey also finds that more than 10% of Americans who worked in 2019 say they will continue social distancing after the COVID-19 pandemic ends, and another 45% will engage in limited forms of social distancing.

In addition, this Long Social Distancing is more prevalent among women, older persons, the less educated and those with lower earnings, the survey notes.

Jose Maria Barrero, another co-author of the research study and assistant professor of finance at Instituto Tecnológico Autónomo de México (ITAM), told GOBankingRates that the most surprising finding is that, “we consistently find around 10% of the people who respond to our survey say they will continue social distancing.”

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“This 10% persists through 2020 (before vaccines) all the way to now,” he said. “By contrast, the fraction of people saying they will return to normal activities has risen with the vaccine rollout and the low numbers of cases we’ve seen this spring and last spring. So, yes, I do think this reluctance to go back fully to pre-COVID activities will continue to push enough people away from seeking work for the foreseeable future to meaningfully impact the labor market.”

By the study’s estimates, long social distancing lowers force participation by about 2.5 percentage points as of early 2022 and this drag on labor force participation showed no sign of abating over the past year, suggesting it could depress labor force size for a long time. 

Stephanie Lovell, head of marketing at hiring app Hirect, told GOBankingRates that it’s no secret that there are currently more open jobs than active job seekers.

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“With millions of Americans stating they do not plan to rejoin the workforce due to Long Social Distancing, companies are under increased pressure. It also signifies that the battle for talent will only become more competitive,” she said.

Lovell added that many companies adapted during the lockdown and focused on remote work, and this is the mentality they will have to take again to attract and retain talent who are planning for long social distancing.

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“Offering remote work removes a major obstacle and allows businesses to exponentially expand their talent pools,” she said. “By offering remote work as an option, these employers are winning talent who don’t want to commute to an office while filling foundational roles so they can grow their businesses and revenues.”

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.
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