COLORADO SPRINGS — With new jobs added in March and the unemployment rate dropping, why is every employer survey showing employers are still starved for labor?

According to PhD economist Tatiana Bailey, the U.S. added 431,000 new jobs in March, bringing the unemployment rate down to 3.3%, which is well below what most economists consider to be the natural rate of unemployment, around 4 and 4.5%. The disconnect, however, may be attributed to the large gap between how many jobs are available vs. how many people are looking for work.

There are approximately 11.3 million job openings in the U.S. but only about 6 million unemployed people. That works out to roughly 5.3 million more job openings than unemployed people in U.S.

Another aspect is the amount of people who choose not to work, either because of excess savings or other extenuating circumstances such as the ongoing risk of Covid-19, or being under or over-qualified.

In March, the labor participation rate was 62%. When compared to March of 2019, when labor participation was 63%, it doesn’t seem like an impactful difference, but it equates to 1.6 million workers.

Even if all those workers came back into the labor force, the U.S. would still be short about 4.4 million workers. This boils down to one simple fact– there just aren’t enough eligible workers to fill all the available jobs.

“Now the other thing to remember is what I consider to be the true labor participation rate, and those are working age people 16 to 64. Well that labor participation rate is at 76 and that is exactly the same as it was in March of 2019. So really that tells me that it isn’t the young working age people who are the blame for the labor shortages that we are having in the U.S. right now,” said Bailey.

What do all these statistics boil down to? Unfortunately Bailey believes the demographics are working against us. “It also tells me this headwind is probably a major factor in my own calculus in terms of the probability of the ‘R-word’– a recession in the next six to 12 months.”