Millions of Americans have taken a do-it-yourself approach to employment, and that has some serious long-term consequences for the US economy. In the past two years, many ditched their jobs to become their own bosses, leaving businesses strained and competing for workers. Policy prescriptions — like increasing immigration — can only help so much.
Covid-19 upended the US workforce, particularly for women. Around 3.5 million mothers with school-age children exited the labour market in 2020, according to the Census Bureau. While the overall unemployment rate fell sharply from its peak last year to 4.2 per cent in November, companies are still struggling to get people back in the door. There were 0.7 unemployed persons for every job opening in October, the Labor Department said last week.
Turning to retail
The data suggests that women are creating their own workplaces, finding employment through online channels like Etsy. Nearly 5 million people applied to start a new business from January to November, a 56 per cent jump from the same period in 2019, and a bulk of them have no employees, according to the Census Bureau. Almost 1 million turned to retail.
Active sellers on Etsy, the platform where crafters sell DIY goods, doubled year-over-year in the first nine months of 2021 to 7.5 million, and more than 80 per cent are women, according to the company. The Instagram influencer market is expected to grow 15 per cent this year, with more than 6.8 million sponsored posts, according to HypeAuditor.
While those jobs are less secure and often less lucrative, employers are still left in the lurch. Even if every jobless person was hired, there would still be 3.3 million openings. After being largely stagnant pre-pandemic, compensation costs for private sector workers increased 4.1 per cent in September as businesses fight for staff.
One policy solution would be opening the US borders. The government could increase the annual 85,000 cap for H-1B visas for skilled workers; there were nearly 2 million job openings in October in professional services like engineering.
But even under normal conditions, it often takes at least six months to process an H-1B visa, and Covid has slowed that further. So the best solution is to lure people back into the office. But women, in particular, are not eager: One in three say they considered leaving or downshifting their career in the past year, according to a McKinsey report in September. That suggests the problem will get worse before it improves.