The US economy lost a net of 8 million jobs between February 2020 and April 2021. Agreement is growing that people not actively seeking employment (inadequate labor supply) have been playing a major role in the slow recovery, as evidenced by factors including record job openings, the largest wage increases in decades, and other signs of a tighter labor market than would generally be expected given the still low levels of employment. Why has labor supply been slow to return? There are many candidate explanations, including the ongoing worry among some adults about getting COVID-19 if they return to the workplace, the increased availability and generosity of unemployment insurance benefits, and challenges for working parents associated with closed schools and inadequate childcare, among others. Diagnosing the sources of ongoing weak labor supply is important to inform the types of policies that are needed now to speed the recovery.
Furman, Jason, Melissa Kearney, and Wilson Powell III. "How Much Have Childcare Challenges Slowed the US Jobs Market Recovery?" Peterson Institute for International Economics, May 2021.