The Journal Gazette
Sunday, January 09, 2022 1:00 am

More than pandemic forcing shrinking local labor force

Rachel Blakeman

Remember two years ago when you could hit up a supercenter for fresh carrots, motor oil, a pair of new shoes and a quart of Greek yogurt at 3 a.m. without any thought of supply chain snafus? Even if you never did, just knowing you could offered comfort – the local economy as part of the larger American economic engine kept powering along at all hours of the day and night.

The shift from the 24/7 retail schedule started locally as a pandemic shutdown response, but when the other restrictions such as limited in-person capacity were left behind long ago, abbreviated hours of retail, food service and other customer-facing industries seem to be here to stay.

But why? Did consumers decide that late-night services were no longer merited or was it a worker revolt?

The worker shortage narrative of 2020 was that “people don't want to work.” While local labor market data never tells us why people are or are not looking for work, the supplemental unemployment benefits created an economic incentive not to return immediately to paid employment.

Assuming workers are “rational actors” in the economy and do what has the most advantageous cost-to-benefit ratio, collecting unemployment that could pay as much or more than their previous job was the rational choice.

Of course, those supplemental unemployment dollars disappeared, so why are there still all those “now hiring” signs? This is where the local labor market numbers from the Indiana Department of Workforce Development come in handy. It will be many months before the final 2021 numbers are out, so let's use November's numbers to understand where we've been.

In November 2021, there were 214,128 workers in the Fort Wayne metro area of Allen, Wells and Whitley counties, with 209,932 employed and 4,196 seeking work. Flip back a year to 2020, and we were still coming out of the initial shock of the pandemic with 218,070 workers in total with 207,783 working and 10,287 looking for work.

From 2020 to 2021, the Fort Wayne metro had an additional 2,149 people employed in November, but the total number of workers went down 3,942 people. Going back to November 2019 – before we had ever heard about a novel coronavirus – there were 219,900 total workers or 5,772 more than two months ago.

The Fort Wayne area has been advantaged in recent years, posting solid population gains in both total numbers and people moving into the area. Since we aren't a retirement destination as would be cities our size in Florida, Texas or Arizona, we can reasonably assume many of the people moving here are coming for jobs and employment.

So, again, what has happened to thousands of local workers despite population gains? It is too early to get much reliable 2021 data as it comes out far into the next year. Regardless, in precedented times, the Community Research Institute at Purdue University Fort Wayne would look at the U.S. Census Bureau's American Community Survey, which does an amazing job of collecting employment-related data to see whether we could identify any 2020 trends.

But since we are still living in unprecedented times, the 2020 ACS data has substantial “nonresponse bias.” In ordinary terms, it means the people who answered the survey that year don't sufficiently reflect the larger community, making the data suspect as the statistical sample it is intended to be. Instead, we are left to make some educated guesses as to what is going on with the labor market and why it's tough to fill so many jobs.

With all the talk of the “great resignation,” we may be missing the “great retirement” as a driver of the labor shortage.

Between 2014 and 2019, Allen County crossed over from having more households with someone younger than 18 than someone older than 60, according to U.S. Census Bureau data. The state and nation had already made this switch by 2014, but Allen County went from a third of households with a minor child in 2014 to 32.7% in 2019, while 31.7% of 2014 households had someone 60 or older with that jumping to 35.6% in 2019.

The oldest baby boomers turn 76 this year, meaning a large cohort of workers is aging out of the workforce, either to be fully retired or leaving the full-time job to take part-time roles.

Unlike the Great Recession of 2008 to 2010, the stock market has been performing spectacularly in the pandemic, with the S&P 500 Index closing out 2021 with a 26.9% gain on top of a 16.3% return for 2020. Not every worker edging toward retirement has a financial stake in the stock market, but for those who do, it makes leaving the labor force a more attractive option, especially with a viral pandemic that has hit older people particularly hard.

Workers who have retired and left the workforce entirely created a series of vacancies, which we can expect to see rippling through the economy right now. Furthermore, northeast Indiana's dependence on manufacturing and health care as employment centers means two industries with competitive wages and benefits are hungry to hire, leaving retailers, restaurants and other historically lower-wage industries with non-traditional schedules struggling to fill jobs.

As much as the professional class aspires to jobs with purpose, meaning and personal fulfillment, the vast majority work because of financial necessity. Going back to the rational actor theory, workers are going to positions that offer the best compensation and benefits, which unfortunately for northeast Indiana's consumers are not always public-facing positions.

According to the labor market projections from the Indiana Business Research Center at the Indiana University Kelley School of Business released in 2018, the Fort Wayne metro's labor force was to have 223,230 workers in 2020, then drop to just fewer than 223,000 for 2025 and 2030. Our current numbers are coming in below that projection.

While the recent decline can be reasonably attributed to the weirdness that is the times in which we are living, it looks like the shrinking labor force isn't wholly a result of the pandemic and wasn't entirely unexpected.

Meanwhile, that 3 a.m. trip for yogurt, carrots, shoes and motor oil doesn't look like it's coming back anytime soon.

Rachel Blakeman is director of the Purdue University Fort Wayne Community Research Institute.

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