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Labor shortage? ‘Absurd’ says one economist, who calculates U.S. could add 28 million more jobs

July 21, 2021, 10:00 AM UTC

Despite the number of help-wanted signs dotting nearly every shop these days or notes encouraging patience at restaurants because of staffing shortages, a new report finds that the U.S. is far from a real dearth of workers.

A new report from the Roosevelt Institute finds that the U.S. could add an additional 28 million jobs over the next decade if there’s a sustained and strong demand for labor. That’s about 10 percentage points higher than the Congressional Budget Office’s estimate of maximum employment

“It’s absurd to say there’s a labor shortage in any absolute sense. There are a lot of people sitting on the sidelines who can and will come into the labor market if we just keep the current level of tightness,” says J.W. Mason, an author of the report and an economist with the Roosevelt Institute. 

To determine maximum employment, Mason and the team calculated the size of the latent labor force by basically asking how many people could plausibly be working in the U.S. by taking into account employment rates across race, gender, education, and age. In doing so, they found that there’s much more labor market slack than conventional measures of unemployment suggest. 

“Essentially, if you could get rid of the racial employment gap, get rid of the non-childcare gender gap, and just get the education and age gaps back to the levels they’ve been at in the relatively recent past, then that gets you 28 million additional workers,” Mason told Fortune

That’s not to say that workers don’t face a lot of barriers to employment, including systemic inequalities and discrimination. The report finds that Black Americans, women, and those with less education do find themselves at the back of the hiring queue more often. 

“Employment discrimination is very important and we shouldn’t lose sight of that, but there are a lot of other barriers that make it easier for some people to get employed than others,” Mason says. That includes factors such as flexibility of worker schedules, location, and even background.

It’s worth noting, however, that the report estimates that adding these 28 million jobs would require an average annual growth in employment of 2.7%—a rate the U.S. hasn’t seen since the 1970s. “That we have not seen employment grow at this rate in recent years does not mean it is impossible,” the authors write. 

And achieving this level of true full employment will be disruptive for employers. Companies and businesses may have to relax their standards or work a lot harder to recruit employees. 

“Maybe you have to consider people without the college degree you thought was required, or people without as much experience as you thought was required, or people who are going to be pickier about their schedule,” Mason says. 

“People are used to having a buyer’s market for labor, and it’s a little bit of an adjustment. But a little bit of adjustment does not mean an emergency, and it doesn’t mean that we should be cutting off the opportunities for people to work just because that will make employers’ lives a little easier.”

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