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6 Reasons for Labor Shortages post-COVID-19:

Feb 21st, 2023

Following the COVID-19 pandemic in 2020, the number of workers in the United States has plummeted. The lingering effects of shortages in the labor market can be seen anywhere, from lack of workers in the restaurant industry to the many fast food chains that have yet to reopen their lobbies for service. 

Studies show that a staggering quarter-million people of working age have died from the coronavirus. More concerning, nearly 500,000 people in the United States have completely disappeared from the labor force altogether. 

The National Bureau of Economics report that 2.4 million workers have either missed work due to a COVID-19 related illness or cut back on the amount of hours they work. Nearly 7% of those who had to miss work did not return to the labor market. Many others went into early retirement. 

Here’s a look at 6 of the main reasons for mass labor shortages following the pandemic. 

1. Increase in savings

When the government decided to give everyone stimulus checks and unemployment payments, they didn’t factor in that the payments would be a much larger amount than what the everyday American was used to making. 

When I was let go from my job during the pandemic, for instance, my unemployment check was a much larger amount of money than I was used to making. It made it a lot harder for me to want to return to work. 

Although the payments weren’t astronomical, for the average blue collar worker and middle-class US citizen, the extra money made a huge difference. 

Many people were able to save up and either take extended time off of work or put themselves into early retirement, especially if they already had savings or retirement accounts. 

2. Early retirements

Older members of the workforce or those with disabilities weren’t able (or were scared to return) to work following the pandemic and feared exposure to the coronavirus as a vulnerable population.

While the extra unemployment money each week wasn’t enough for someone who was in their 20s to retire, many older workers were able to save the extra money and go into early retirement.

In fact, statistics show that 17% of the American workforce were able to save enough to retire earlier than they expected. 

3. Stay-at-home parent

Many people also took the opportunity of already being at home to transition into stay-at-home parents or decided they wanted to take care of elderly family members full-time. 

COVID made it possible for only 1 person in the household to return to work when COVID regulations were lifted. A lot of families used COVID as an excuse to make the transition to stay-at-home possible for one parent. 

4. The Great Resignation 

With the rise of COVID accommodations like remote work and other hybrid remote work models, many people in the workforce have started to become more choosy in what jobs they accept. The workforce now values a healthy work/life balance and the freedom to work remotely. 

Studies indicate that in May of 2022, nearly 4.4 million Americans quit their jobs completely. Around 52% of workers in the US surveyed have stated that actively searching for a job right now wasn’t their top priority. 

Many workers, not only in the US, have different expectations for what they want out of their employment. The pandemic highlighted that a lot of jobs can 1) be done completely remote and that 2) employers should offer accommodations for hybrid work. 

5. The rise of the Gig Economy 

During the pandemic, many people thought they had no other option but to start working as contractors for companies like DoorDash, Instacart, and Uber. 

Gig workers are independent contractors who are “hired” by a company who need workers (normally part-time) that fulfill business needs for a temporary period of time or project. Gig jobs can be anything from an Uber driver to an adjunct professor. Businesses aren’t required to compensate these employees with health insurance and other benefits, as they are technically their own bosses and can set their own schedules. 

With many industries closing down indefinitely during COVID, a lot of American workers jumped into these roles to make sure there wasn’t a lapse in their income. 

Now that everything is reopened again, a lot of workers have found that they enjoy the flexibility of working in the Gig Economy. Workers that transitioned to this sector of employment have created an even larger number of vacant jobs in traditional office, corporate and retail work. 

Although the Gig Economy has created a pretty successful sector of the workforce, there are still problems with how those in charge of these companies treat these workers. Because gig workers are considered independent contractors, they often work full-time hours without being given benefits or added compensation.  

6. Digital nomad

Most importantly, a lot of people have begun to transition into a more digital nomad lifestyle, able to travel and work outside the bounds of the typical 9-5 schedule.

Recently, the trend of working and traveling has become increasingly popular on social media, from digital nomads who travel in their vans to digital nomads who work in Greece and travel around Europe all-year.

One thing is for sure: the flexible job market has become one of the biggest deciding factors for many workers on if they want to go back to work. The traditional mantra of “working to live” has been replaced with a desire to want to “live to work” and actually enjoy what they’re doing.  

What do these labor shortages mean for the future of work? 

Although labor shortages always lead to a loss of profits and economic turmoil, many of the trends and pushes that the American workforce are hoping for may have positive outcomes. 

A lot of the issues surrounding people returning to work have to do with flexibility. In the past couple years, a lot of businesses have reevaluated how they conduct business–especially surrounding remote work. Companies all over the world have begun to adopt remote-first or remote-inclusive practices

So, while many companies have had to ponder and worry about their future following the pandemic, it has also made it possible for the labor market to adapt and grow based on the technology available. These jumps can move businesses towards actually caring about the mental and physical well-being of employees and challenge the traditional expectations surrounding work.  

Why companies partner with Via  

Many businesses want to hire remote employees and build global teams, but are unsure how. Via makes hiring international talent seamless. With our-easy-to-use platform, Via manages the local human resources processes for global employment such as work visas and permits, benefits, payroll, background checks, work data privacy, and more. Our team of local labor lawyers and on-the-ground experts ensure that your company remains compliant while expanding abroad. As your employer-of-record/entity, Via assumes responsibility for employment liability, so that you can focus on what matters: recruiting and managing your team. 

With Via’s transparent pricing, you can pay full-time employees or contractors across borders with no hidden set-up fees, no foreign exchange or transaction fees, and no minimums–start with 1 employee and scale up at your own pace. You can get started in 1-2 business days. That’s why a lot of businesses partner with an EOR service like Via. We expedite the process of hiring and recruiting, setting up HR, and adhering to all employment laws in other countries. 

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Janelle Watson
Janelle Watson
My name is Janelle Watson and I'm a Colorado native. I have a BA in English from University of Colorado Colorado Springs and an MA in English from University of Colorado Denver. Before moving to blog and copywriting, I was an English teacher for 3 years at the University of Colorado in Denver. Prior to writing for Via, I wrote reviews and content for a local concert and promotion company in Denver.

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Frequently asked questions

  • Why is there a labor shortage post pandemic? 

  • How has COVID affected the labor force? 

  • How has labor demand been affected by the COVID-19 pandemic? 

  • Is there still a labor shortage?