Millions of sidelined workers won’t come back ‘unless the math makes better sense to them’

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A ‘We’re Hiring!’ sign is displayed at a Starbucks on Hollywood Boulevard on June 23, 2021 in Los Angeles, California. Mario Tama/Getty Images
  • Sidelined workers could become a long-term drag on the US economic recovery, a Fed president warned.
  • A mismatch of expectations between workers and employers is also making it harder to fill jobs.
  • Many workers won’t return to the workforce until the numbers make more sense, he said.

The current complications of the labor market risk becoming a drag on the long-term economic health of the US unless employers and community leaders solve a “math problem,” Richmond Federal Reserve President Thomas Barkin said Tuesday.

In remarks at a workforce development symposium with the South Carolina Chamber of Commerce, Barkin pointed to the roughly 6 million people who say they do want a job but aren’t actively looking for work.

“The best source of more workers is those on the sidelines,” he said. “And those on the sidelines won’t come back to the labor market unless the math makes better sense to them, whether it be child care, benefits, compensation, transportation or investment in education.”

Those sidelined 6 million people are in addition to the 8 million unemployed workers who have actively been looking for a job in the preceding four weeks. As the pandemic stretches on over 18 months, many workers have given up looking for jobs, leaving the labor force and bringing the official unemployment number down.

Barkin said he has observed four main barriers to people getting jobs: labor mismatches, family care, health coverage and employment incentives.

“All these issues existed before the pandemic, but it’s fair to say they have intensified in the last 18 months,” he said.

Beyond the more familiar mismatches of skills and location, Barkin said there’s a larger mismatch of expectations between workers and employers that’s making it even harder to get positions filled.

“Increasingly, we are seeing misalignment between the jobs available and the jobs workers want,” he said.

For starters, employees are seeking better pay and flexibility than was previously the norm from employers, but that’s only the beginning. They’re also expecting better treatment on the job as well as greater support and stability for their lives outside of work.

Right now, Barkin said the numbers simply aren’t adding up in the interests of many US workers, and that’s driving them out of the labor force. In order to bring them back, some employers have told the Fed they are revising their drug-testing policies, offering more training for new hires, and considering relevant career experience in lieu of a degree.

In addition, those employers who think more creatively about how to accommodate the needs of parents and caregivers or individuals living with a disability can gain access to a wider talent pool than those who don’t. Barkin pointed to Canada and Japan for having implemented successful approaches at inclusivity.

Barkin charged employers and policymakers with the responsibility for solving this math problem and improving “the real and perceived benefits versus the costs of employment.”

The US has enough people to power its recovery from the pandemic and return to growth, Barkin said, and it’s up to business and community leaders to figure out how to get them off the sidelines and into jobs.