Most of the country’s missing workers are no longer missing

“They were in need of help, and I was in need of money,” said McKee, a single father to a teenager. “With the economy going the way it was, I needed to do something to supplement my retirement.”

Around the country, millions of Americans are weighing rising costs against an incredibly strong labor market, and arriving at the same conclusion: They have to go back to work.

In March 2021, more than 4 million workers were “missing” from the job market as a result of early retirements, a lack of child care, covid illness and death, and slowdowns in immigration. More than 75 percent of that shortfall has been filled, according to a Washington Post analysis, as new and returning workers help boost labor-force participation back to pre-pandemic levels. The share of adults who have a job or are looking for one is back to where it was in March 2020.

“A lot of the concerns about the pandemic rebound have abated,” said Nick Bunker, an economist at Indeed Hiring Lab. “Unemployment is basically back to where we were pre-pandemic, and adjusting for the aging population, so is labor-force participation.”

Although workers have returned, they’ve switched industries and taken on new types of jobs, reshaping the contours of the economy. Sectors such as finance and professional services — which are more likely to offer remote and flexible opportunities — have hundreds of thousands of more workers than they did before the pandemic. But others, including education, health care and leisure and hospitality, continue to report massive shortfalls.

Restaurants can’t find workers because they’ve found better jobs

“In a tight labor market, people migrated into higher paying, more comfortable jobs,” said Julia Pollak, chief economist at ZipRecruiter. “They’ve managed to trade up, which has left some industries, like the public sector and public schools, short-staffed and struggling.”

A lopsided recovery has also changed the dynamics of the workforce. More than 20 million Americans, many of them in leisure and hospitality, lost their jobs in the first months of the pandemic. As the economy recovered, those workers found employment in new industries such as tech, finance, manufacturing and housing, where demand was booming and pay was high.

Now the economy is in the throes of another shift: Many of the sectors that grew rapidly during the pandemic, including tech, media and finance, are laying off thousands of workers. Meanwhile, service sectors such as leisure and hospitality are continuing to hire.

“Warehousing and tech are in retreat, but you’re still seeing a surge of jobs in airlines, tourism companies, hotels, restaurants, nail salons, gyms and concert venues,” Pollak said. “Job growth is becoming more narrowly concentrated in the service sector, specifically in low-wage leisure and hospitality, and health-care jobs.”

In many ways, the restructuring of the labor force has changed the equation for employers. For much of the pandemic, they were looking for ways to woo people back into the job market from early retirements, child-care obligations and other personal decisions that had them on the sidelines. Now businesses are increasingly looking to people who are already working — either for competitors or in entirely different industries — to fill openings.

“The big question has been: When will the labor market get back to where we it was before the covid crisis?,” Amanda Cage, chief executive of the National Fund for Workforce Solutions. “The good news is that we’re getting back to those pre-pandemic levels. But the dynamics of where people have returned to are drastically different, which has huge implications for industries.”

In Sacramento, Emani Dawan graduated from film school last summer and finally landed a job last week, as a cook at her twins’ preschool. Dawan, who left the workforce in 2016, says reentry has been tough — she applied for dozens of positions at news companies, production firms and in customer service to no avail. Now she’s signing up to become a substitute teacher in California, in hopes that will lead to higher pay and more security.

“People say there are all these jobs out there, but what kinds of jobs are they and how much do they pay?” said Dawan, 32. “I have a degree and 10 years of experience, but zero luck finding a job in my field. Do I have a job? Yes. Is it enough to pay rent and cover my bills? No.”

The strong labor market has been a cornerstone of the pandemic recovery and has propped up the U.S. economy even policymakers take aggressive action to slow things down. Employers have added more than 4 million jobs in the past year 0r 1 million jobs so far this year, with much of that growth in service-sector. Unemployment, meanwhile, stands at 3.5 percent, near a 50-year low.

Black unemployment rate hits record low 5 percent

But there are signs that growth is moderating, as higher interest rates and slowing consumer spending take their toll on businesses’ hiring plans. Employers had roughly 9.6 million job openings in March, the lowest level in nearly two years. New data being released Friday is also expected to show that the pace of job creation — while still robust — slowed again in April.

Economists and policymakers are keeping a close watch on the job market — and labor force participation, in particular — as they chart the road ahead. The Federal Reserve has raised interest rates 10 times since last year, most recently on Wednesday, in hopes of bringing down decades-high inflation. But there are growing fears that those higher borrowing costs could soon translate into broader job losses and tip the country into recession.

The strong job market is becoming its own worst enemy

Kenneth Wells, 64, stopped working in early 2022 while he recovered from thyroid cancer. But a few months ago, he jumped back into the labor force, taking on a part-time job tutoring math.

“I have a son in college and even though the retirement pay was good, I still needed a little boost,” said Wells, who lives in Woodbridge, Va., and spent 35 years as an engineer in the Navy. “So, part of it was for financial reasons, but also because I don’t want to be bored after retirement.”

Alyssa Fowers contributed to this report.

The Post analyzed data from the Bureau of Labor Statistics (BLS) to calculate the expected labor force based on March 2019 participation rate. The Post also used BLS data to estimate the difference between the current number and the expected number of employees by industry if the participation rate and the size of that industry, as a share of the labor force, were the same as in March 2019.