Where are the missing workers?

In this piece we look at data that may explain some of the factors behind the contraction of Baton Rouge's labor force over the past two years.

In March 2020, the size of Baton Rouge Metro’s labor force hit an all-time high at 429,374 workers. Two years and one pandemic later, the size of the labor force has contracted slightly, and sits just above 420,000 – meaning that there are nearly 10,000 fewer residents working or seeking work, despite an apparent increase in population

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. Our region is not alone in feeling the effects of a smaller labor force. It’s important, however, that we attempt to determine where these workers went. This analysis draws from available data to help illustrate the current conditions in Baton Rouge’s labor market, and highlights recent research that may explain what is causing a reduction in the size of our labor force.  

Labor Force Participation Rate 

Aside from the initial months of the pandemic when the labor force participation rate reached as low as 58%, the rate has largely hovered around 62% since August 2020. The labor force participation rate measures the percentage of residents age 16+ who are working or actively seeking a job.  

The 1.3% difference between March 2020 and December 2021 represents the roughly 9,000 workers who are missing from Baton Rouge’s economy. There are several theories regarding this drop in the labor force, which this piece will address.  

The Great Resignation?  

Much has been written about the “Great Resignation,” the phrase used to describe the unprecedented number of people quitting their jobs throughout the pandemic. Serdar Birinci and Aaron Amburgey, researchers at the Federal Reserve Bank of St. Louis, argue that the “Great Resignation” should be dubbed the “Great Reallocation” because they find that many workers who quit their jobs are transitioning to new, higher paying jobs rather than leaving the workforce altogether

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. Their research looks at jobs in the manufacturing and construction and leisure/hospitality industries. They determine that, nationally, the rate of workers in leisure/hospitality who quit their job was equal to the rate of leisure/hospitality workers who went through a job-to-job transition

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. For manufacturing and construction, however, they find that the number of workers who quit their job outpaced the number of workers going through a job-to-job transition.  

This suggests that most workers in leisure who quit their job may be quitting to work elsewhere, whereas in manufacturing and construction quits may not be as driven by job-to-job transitions. The researchers associate these trends with wage growth in these two respective industries, highlighting that nominal wages in leisure/hospitality rose about 13% between January and November 2021 versus an increase of only 4% for manufacturing and construction workers. Importantly, these nominal wage gains result in real wage gains of about 6% for leisure/hospitality and a real wage decline of about 2% for construction/manufacturing employees. Real wage gains are adjusted for inflation; the 7.9% year-over-year increase in the Consumer Price Index

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is the reason a 6% nominal wage gain translates into a 2% real wage decline. These results support the hypothesis that the “larger the increase in job-to-job transitions, the larger the wage growth,” according to these researchers.  

“Importantly, these nominal wage gains result in real wage gains of about 6% for leisure/hospitality and a real wage decline of about 2% for construction/manufacturing employees.”

What does this mean for Baton Rouge? Manufacturing jobs make up about 7.4% of total nonfarm jobs in the Metro; construction makes up 10.6%; and leisure & hospitality about 9.3%

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. If Birinci and Amburgey’s analysis applies to our local labor market, that would mean 18% of our region’s labor currently works in an industry that did not raise real wages from January to November 2021. 

From January to November 2021, the aggregated construction and manufacturing industries gained a modest 2,500 jobs, a 3.6% increase. The leisure and hospitality industry added 4,100 jobs over this time

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, an increase of 12.5%. Could wage hikes (or lack thereof) be a more significant factor in these job recovery figures than we previously thought? One important consideration for potential wage increases is worker demographics in these respective industries. Two-thirds of our region’s leisure & hospitality workers are below the age of 35, whereas two-thirds of workers in manufacturing & construction are 35 or older

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. Older workers closer to retirement age are more likely to quit a job and not seek out new employment. With fewer job-to-job transitions occurring, managers in the construction & manufacturing industries may be less inclined to offer higher wages to workers transitioning from another job. Are fewer of these workers transitioning jobs because wages aren’t keeping pace? Or are wages not rising because more workers are choosing to quit outright than take a new job?  

If a lack of wage growth is partially responsible for workers leaving the manufacturing and construction industries, how many will return to the labor force in exchange for higher wages? Demand for talent isn’t the issue: the construction & manufacturing industries recorded over 2,000 unique job postings from December 2021 - January 2022. It’s important we continue to track these wage dynamics as we attempt to explain what happened to our region’s 9,000 missing workers.  

Could “Long COVID” be a factor?  

We understand little about the effects of “long COVID” on the human body, and we may understand even less about long COVID’s impacts on our labor market. A January 2022 analysis by Katie Bach at the Brookings Institute sought to understand the percentage of the labor force shortage that can be explained by long COVID

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. Based on studies cited in her report, between 27% and 33% of COVID patients experience symptoms months after infection, placing them in the long COVID camp. Additional cited studies report that between 23% and 28% of long COVID patients were not working because of long COVID symptoms at the time of the studies. Bach also points out that up to 46% of workers experiencing long COVID symptoms may be reducing their working hours rather than leaving the workforce altogether. Based on her findings, Bach estimates that the U.S. labor market may be missing up to 1.6 million full-time equivalent workers because of long COVID.  

Applying the researcher’s figures to total case counts recorded by the Louisiana Department of Health for the nine-parish Capital Region, between 13,000 and 20,000 workers in Baton Rouge may not be working due to long COVID health complications. These numbers are likely overestimates given our region’s labor force is currently missing only 9,000 workers. This analysis does, however, bring up important questions about long COVID’s impact on our economy.  

The Pennington Biomedical Research Institute is leading a consortium of healthcare institutions across Louisiana to “investigate the mysteries of ‘long COVID.’” Their findings will have important implications not only for the health of our state’s residents but also for identifying potential consequences this illness has for our region’s labor market.  

What are people self-reporting?  

In April 2020, the Census Bureau began administering the Household Pulse Survey in an attempt to get real-time data on a host of economic, health, and education indicators for the U.S. population. One section of the survey asks individuals their “reason for not working.”   

Retired workers are estimated to represent 36% of all those age 18+ who are currently not working in Louisiana, a significant 13% increase since early May 2020

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. Another uptick can be seen in the number of people saying they’re not working because of COVID, either because they themselves contracted the illness or because they’re caring for someone with COVID symptoms. This gives some credence to the long COVID argument discussed above; regardless, this shows a good chunk of our regional population may be feeling the effects of the COVID pandemic either on their health or their employment status.  

The Verdict 

Unfortunately, there is no bright-line answer as to where exactly our region’s 9,000 missing workers have gone. The factors discussed here - lack of wage growth, long COVID, increases in early retirees - are likely a few of several factors contributing to this labor force shortage. A lack of daycare workers contributing to rising childcare costs could be encouraging workers with young children to stay home and avoid joining the labor force. Falling birth rates in addition to reduced immigration may also play a role. Employers mandating vaccines for employees may even have an impact on workforce numbers.   

The good news is that for those in the labor force or those interested in rejoining the labor force, workers have a historical amount of leverage. The number of job postings in Baton Rouge topped 31,000 in February 2022, up 3,000 from the month prior. The downside of these increased labor costs is that these income gains are passed on to the consumer through higher prices/inflation. What’s clear is that in the Capital Region, it’s crucial that we find workers to fill the 31,000+ open jobs, and the best way to do that is retaining the 55,000 students we currently have in higher education in Baton Rouge. As we continue to work through the effects of COVID and the economic recovery, attracting and retaining talent will be at the forefront of BRAC’s efforts.  

Regional employers interested in accessing local talent can create a free employer profile on Handshake, and recruit students from the region’s universities. Job seekers and employers alike are encouraged to check out BR Works, the only regional job board for the Capital Region that connects job seekers to career and training opportunities and employers to high-quality local talent.  

Jake Polansky, MPA is an Economic Research and Policy Analyst at the Baton Rouge Area Chamber.

1. Bureau of Labor Statistics, December 2021; 2020 US Census. 

2. Serdar Birinci and Aaron Amburgey, "The Great Resignation vs. The Great Reallocation: Industry-Level Evidence," Economic Synopses, No. 4, 2022. https://doi.org/10.20955/es.2022.4 

3. a job-to-job transition means that a worker left one job in an industry to take another job 

4. Bureau of Labor Statistics, February 2022 Consumer Price Index 

5. Bureau of Labor Statistics, December 2021  

6. Self-employed workers are not included in these jobs figures. Self-employed workers are estimated to make up 4.5% of leisure & hospitality jobs and 7.4% of construction & manufacturing jobs in Baton Rouge, according to EMSI. Baton Rouge Metro saw 56% growth in the number of business applications filed between 2019 and 2020. These indicators mean these jobs figures are likely underestimates of total jobs when factoring in both employees and self-employed persons.  

7. EMSI Labor Market Analytics 

8. https://www.brookings.edu/research/is-long-covid-worsening-the-labor-shortage/ 

9. Household Pulse Survey; author’s calculations