Over a year and a half since the pandemic first started to take its toll on the health and welfare of individuals and the economy, the country is still reeling and struggling to recover. Some employers and industries were able to pivot and weather the devastating effects of COVID-19. Others scaled back operations or closed permanently due to changes in demand, supply chain issues, or hiring shortfalls.  As businesses start to reopen, employers are facing new challenges.

COVID-19 fundamentally changed the nature of work and how it will be performed going forward.  With the rise of the COVID-19 Delta variant, a growing number of employers are resorting to mandatory vaccine policies, an option they avoided just months ago. And while many employers are finally welcoming their workers back to the physical office, albeit on a limited basis, many employees—by necessity or design—are still working remotely. As a result, employers are dealing with new logistical and operational hurdles, particularly when workers set up shop in states or cities that differ from their primary residence and/or the employer’s brick-and-mortar location. In addition to new issues that arise from employing wandering workers, employers are juggling new accommodation requests and discrimination claims based on the pandemic and vaccination requirements.

At the same time, a large percentage of employers seeking to rehire are encountering staffing difficulties. Some employers—especially those in the restaurant and hospitality industries—simply cannot find enough workers to meet demand and are turning to novel ways to recruit.

The pandemic remains a key factor as to why is there an apparent labor shortage after months of crippling long-term unemployment. Workers, particularly those older and immunocompromised, are still concerned about their safety at the worksite given the new variants and vaccine hesitancy. Others are shouldering caregiving responsibilities, including for children too young to take the vaccine.  

The law of supply and demand is another factor. With increased demand for workers, employees are holding out for better pay and working conditions. Still others are using this opportunity to change careers altogether, particularly as AI and automation are on the rise.

Against this backdrop is the change in administration. Several executive orders, rulemaking activity, and legislative efforts indicate a shift in the federal government’s approach to regulating the workplace. The Biden administration’s agenda will continue to take shape as more key administration officials are confirmed.

Part I of this Report examines the current jobs market and who has been especially impacted by the changing economic conditions since the pandemic began. This section discusses which industries and job sectors have been damaged the most and which are recovering faster. Although the economy has regained most of the 22.2 million jobs lost in the spring of 2020, the jobs level remains about 4.3% short of the pre-pandemic benchmark and does not take into consideration the growth of the civilian labor force in the interim. The leisure and hospitality industry was the most damaged by job losses and continues to lag in recovery. This sector still needs to fill almost 1.7 million jobs to reach the February 2020 pre-pandemic benchmark.  In addition, women, people of color, and members of the LGBT+ community have suffered disproportionately during the pandemic.

Part II discusses how legislative and regulatory measures at the federal, state and local levels are addressing the current economic climate. Since the pandemic began, over 500 new COVID-19-related laws, rules and ordinances have been enacted, including measures providing employees with paid time off to get vaccinated or care for a sick family member, and granting rights of recall to employees affected by pandemic-related job loss. Many of these new laws were temporary emergency measures, but some are still in effect. This section also includes an overview of the new administration and how it is driving employment policy.

Part III focuses on the changing nature of work. How have jobs changed? How will the increased use of AI and automation accelerate these changes? Many businesses, including fast-food chains and hotels, availed themselves of technology during the pandemic to maintain social distancing requirements while keeping their operations running. Many retailers switched to online sales. The newfound reliance on automation could ultimately decrease wages for low-skilled workers or displace them entirely. At the same time, an increasing number of workers are looking for new jobs or are switching careers. Training will be necessary to close the skills gap.

Part IV looks ahead. What challenges will employers face in the coming months? Many employers are still struggling to find workers and are resorting to innovative ways to recruit and retain staff. Job hunters are seeking flexibility as well as increased pay. Many employees who have been working remotely would rather quit than give up this work option. Some employers are offering nontraditional benefits, such as home gyms, fertility benefits, and pet insurance, to attract talent. In addition to remote work and novel benefits, vaccine mandates will become increasingly common as the pandemic wears on.

We hope this Labor Day Report 2021 provides some insight on what employers can expect. 

Click here to read the full WPI Report.