The Extraordinary Development of the Labor Market in the United States during 2020-2023

Abstract

This paper analyzes the labor market in the United States in 2020–2023, with a focus on its unconventional development due to the COVID-19 pandemic. The pandemic resulted in lockdowns and restrictions in various states, which disrupted the traditional business cycle and caused a significant decline in employment, particularly in service industries such as tourism, hospitality, restaurants, and entertainment. The restrictions also impacted consumer spending, resulting in increased savings and pent-up demand. The article analyzes the unemployment trends among various age and racial-ethnic groups and highlights the most challenging segments of the US labor market. It pays special attention to remote work and the changes it brings, such as hybrid work, the rise of Zoom towns, and hiring through digital platforms. The fiscal stimulus of the US government and its implications for the labor market are demonstrated. Additional funding for small businesses has led to record new business start-ups and rapid job growth that has nearly offset the losses associated with COVID-19. Particular attention is paid to inflation, which peaked at 9.1% in June 2022 and the high growth of which is depressing real incomes, forcing people to go to work. The article notes an unusual situation where slow GDP growth is combined with high employment, and that the mechanism behind this phenomenon is yet to be investigated. It cites data from public opinion polls conducted by the Gallup, which reveal the American society’s mood regarding their financial well-being. The article examines the activation of American trade unions, using the United Auto Workers Union’s September 2023 large-scale strike at several plants of the Big Three (General Motors, Ford, Stellantis) as an example.