Report: COVID forced 500k workers from workforce; thousands from Michigan

• A new study quantifies the number of workers that COVID-19 illness is keeping out of the labor force
• An estimated 14,000 Michiganders stopped working after contracting COVID 
• Experts say adaptations could attract people grappling with health limitations back to the workplace

Until September, understanding who left the U.S. workforce during the pandemic was gleaned from federal labor data and other analyses, including talking to workers and employers.

But a new national study examining what happened to workers who had to take at least a week off of work due to the virus quantifies the impact more severe COVID-19 has had on the labor force.

COVID made people who suffered longer with the illness 7 percent less likely to be employed a year later, the National Bureau of Economic Research report found. Researchers estimate about 500,000 people left the labor force, compounding the U.S. worker shortage that began before the pandemic. In August, at least 10.7 million U.S. jobs were still unfilled. 

Related: Michigan braces for dip in economy and hiring, hopes to avoid a recession

The NBER data will help predict longer-term, COVID-related employee absences, explained Aaron Sojourner, an economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo. It also could guide employers and policymakers on what the workers might need to get back into the labor force.

“This is the most credible evidence to date about the impact on a big chunk of the population. …Cutting somebody’s chance of working by 7 percent is a big effect,” said Sojourner, who was not a part of the study.

Since March 2020, experts and employers suspected the pandemic had eroded people’s productivity, Sojourner said. “But we didn’t have a great hand on how much … and in what ways,” he said.

The study, published by economists Gopi Shah Goda of Stanford University and Evan J. Soltas of the Massachusetts Institute of Technology, was developed with the nonprofit collaborative of dozens of U.S. research universities.

Their estimated number of COVID-related absences represents about 0.2 percent of adults, equating to about 14,000 workers in Michigan based on the proportion of Michigan workers compared with the national total.

But Sojourner suspects the number of overall workers the NBER study reports left the labor force is conservative.

University of Michigan economist Daniil Manaenkov agreed. He said there could be close to another 1 million people in the U.S. unable to work full-time because of COVID-related health concerns. 

“If you combine people who are not looking for work because of the pandemic and people who are constrained from working …full-time because of health and medical limitations, it’s probably more than 1 million people,” he said.

Michigan employers continue to struggle with high levels of job openings. About 142,000 jobs in the state went unfilled in July, according to the Bureau of Labor Statistics.

“There are a lot of restaurant owners still struggling to get people to work (for them),” said Dan West, president and CEO of the Livonia Chamber of Commerce. 

 “Accounting, engineering, finance, all are still very much in need.”

Nationally, the labor participation rate was 62.1 percent in August, down from 63.4 percent in January 2020. About 60.1 percent of Michigan’s working-age adults were working or looking for a job in August, down from 61.7 percent in January 2020.

Economists and employment experts have pointed several possible reasons the U.S. labor participation rate is still lower than at the start of the pandemic. 

In Michigan, the gap between the state and the national average is larger post-pandemic, which many suggest is a result of that state’s aging population turning to retirement.

Other factors have also influenced the workforce exodus, including not finding child care, pursuing higher education, living off savings and exploring entrepreneurship instead of taking a payroll job.

While the new study doesn’t address all the reasons people stepped out of the workforce, “it does speak to an important one,” Sojourner said, speaking of the health impacts.

The report estimates the lost labor supply is resulting in an economic loss of about $62 billion, “which is about half of estimated losses from cancer or diabetes.”

Those who had more severe COVID and did return to work took on fewer hours or lower-paying jobs.

Attracting people back to work and at higher productivity levels could come from understanding the effects of so-called long COVID, which can include brain fog and fatigue. 

“It suggests that we have a lot to learn about how to support people who find themselves in this position,” Upjohn’s Sojourner said. 

Scheduling shorter shifts, allowing more flexibility based on varying health needs and even improving disability policies could play a role.

Lost productivity also could help policymakers and employers make more informed decisions when it comes to containing the spread of the disease. Masks, ventilation and social distancing “have real costs to people,” Sojourner said, “but [they] also generate benefits.”