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COVID-19 Cut U.S. Workforce by About 500,000: Researchers

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Two economists say COVID-19 has pushed hundreds of thousands of people out of the U.S. workforce, but probably not millions.

In a new working paper based on federal Current Population Survey data, Gopi Shah Goda of Stanford and Evan Soltas of MIT suggest that lingering health problems related to the pandemic caused about 340,000 to 590,000 people to leave the U.S. workforce between early 2020 and June of this year.

If COVID-19 continues to have roughly the same impact, it will reduce the U.S. workforce participation rate by about 500,000 workers, or 0.2 percentage points, in a typical year, and lead to the loss of about $62 billion in labor supply value per year, the economists predict.

Some other teams have used less direct means to calculate that COVID-19 might have cut the U.S. labor supply by as many as 1.5 million people.

What It Means

COVID-19 has pushed many US. workers out of the workforce earlier than they had expected and saddled them with complicated financial planning needs.

Whether the number is 500,000 or closer to 1 million, those clients and prospects are likely to have lower savings than other retirees and more need for help with matters such as buying income annuities and managing streams of public and private disability insurance benefits.

The Study

Goda and Soltas based their paper on an analysis of public census microdata, or anonymized data on individual census survey participants.

The survey team did ask about participants’ illness-related absences from work but not directly about COVID-19.

Goda and Shah developed techniques for determining how much of the variation in absence levels was due to the COVID-19 pandemic.

The economists found that workers who missed an entire week of work due to COVID-19 were about 7 percentage points less likely to be working a year later than other, similar workers who had not missed work for health reasons.

The labor supply impact of COVID-19 appears to be about half of the size of the impact of cancer, the economists estimate.

A working paper is an academic paper that has not yet gone through a full peer review process.

The paper is available, behind a log-in wall, on the website of the National Bureau of Economic Research.

(Image: Adobe Stock)