Retirements, layoffs, labour force flight may leave scars on US economy

FRANKFORT, Sept 14 (Reuters): Judith Ramirez received a letter this month that she'd been dreading: The Honolulu hotel that furloughed her from a housekeeping job in March, during the lockdown triggered by the coronavirus pandemic, made her layoff permanent.

Ramirez, 40, was originally told she might be called back after business picked up. But infections increased in Hawaii over the summer and quarantine restrictions for visitors were extended, a blow to the state's tourism-dependent hotels.

Six months into the pandemic, evidence of longer-term damage to the US labour market is emerging, according to separate analyses of detailed monthly jobs data by labor economists and Reuters.

Retirements are drifting up, women aren't reengaging with the job market quickly, and "temporary" furloughs like Ramirez's are becoming permanent - trends that could weigh on the US economic recovery in the short term as well as the country's prospects in the long term.

Economic growth depends on how many people work. If more retire, or are kept from the job market because of childcare or health and safety issues, growth is slower.

"In the first few months of the recession we were much more focused on how many jobs could come back, how many jobs could be preserved," said Kathryn Anne Edwards, a labor economist at RAND Corp. "Now the question is really how much damage has this done." The US economic drag is falling heavily on two groups, women here and older workers, who fueled here a rise in labor force participation prior to the pandemic. That supported stronger-than-expected economic growth in 2018 and 2019, and showed how a historically low unemployment rate drew people back into jobs.

Those workers may now be getting stranded. Women and workers aged 65 and older make up a disproportionate share of the 3.7 million people no longer working or actively seeking a job since the pandemic hit, Labour Department data show.

People 65 and older made up less than 7 per cent of the workforce in February, but 17 per cent of those who have left the labour market through August. Women previously accounted for 47 per cent of the workforce, but make up 54 per cent of the departed.

Initial evidence of longer-term trouble is starting to show in the monthly Current Population Survey (CPS) that forms the basis of regular government employment reports.

After a spike in women leaving the labor force in the early months of the pandemic, particularly to tend to family responsibilities, there's been slower movement back into jobs compared to the months before the pandemic, according to an analysis of CPS data by Nick Bunker, economic research director for North America at the Indeed Hiring Lab.

The per centage of women and men who moved from employed to out of the labour force jumped as the pandemic layoffs hit in April. The number of women, however, who cited child care or family responsibilities as the reason, increased 178 per cent, while the number of men citing it less than doubled, Bunker's analysis showed.