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Is Lower Workforce Participation To Blame For Business Staffing Challenges?

By Brock E.W. Turner

Posted May 21, 2021

Downtown Indianapolis blocked parts of Mass Ave. to allow outdoor seating. The city also installed signs, reminding people to social distance while visiting businesses and restaurants.

Business owners are hopeful as restrictions ease, workers will return. (Lauren Chapman/IPB News)

Experts say lower workforce participation is causing many of the hiring challenges businesses are facing.  Restaurants, hotels, and manufacturers all are facing the problem.

While the number of unemployed Hoosiers is roughly the same as in April, significantly fewer people are available for work today than before the pandemic.

Whether that rate climbs as vaccines are widely available and students return to in-person instruction remains unclear.

Kelly School of Business associate professor Dr. R. Andrew Butters says the labor market looks vastly different today than it did in 2019.

“A drop in the labor participation rate in the last 15 months that would mostly represent like a decade type event,” he said. “Now, we’ve seen some rebound, but we’re still pretty far below that.”

For restaurant owners, the economic struggle has been significant. 

The Indiana Restaurant and Lodging Association estimates one in five Hoosier restaurants closed as a result of the COVID-19 pandemic, and now they’re navigating a difficult labor market. 

Association president Patrick Tamm says many workers previously employed at restaurants have found work elsewhere.

“What made them great employees, what made them future leaders, also make them highly attractive in other industries,” Tamm said.

Most experts agree the coronavirus has had a disproportionate impact on labor participation of women and workers of color.

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