By Jonnelle Marte

(Reuters) Despite unprecedented labor demand and record numbers of vacant positions, large gaps remain in the U.S. employment market and workforce more than a year after the COVID-19 Pandemic.

It is difficult for policymakers to comprehend why so many people don’t want to return to work, or look for work. The monthly payrolls report for October showed strong hiring, but the labor force participation rate which tracks the percentage of those looking for work or working didn’t change.

Jerome Powell, Federal Reserve Chair, stated last week that “there’s room to a lot of humility here as it attempts to think about maximum employment.”

The labor market recovery did not see a significant turnaround at moments like the beginning of school or expiration of enhanced unemployment benefit.

Economists have discovered that workers might be taking a break because they are worried about the virus, or simply want to try something different.

Below are some questions that experts believe could assist in determining what the future labor market might look like after the pandemic has passed.

HOW MANY PEOPLE DO NOT WORK DUE TO THE VIRUS?

Although it is difficult to determine exactly what the problem was, Friday’s data indicated some improvement. Around 3.8 million workers were not able to work, or had reduced hours, due to businesses closing down or cutting operations. This is a decrease from the 5.0 million reported in September. It’s a resuming of a downward trend, which was interrupted in August by an increase.

According to the latest figures, the number of those who claimed they had stopped looking for work as a result of the pandemic fell to 1.3m from September’s 1.6m. This is the first noticeable drop in this category since June.

WILL THE RETRAIRES COME BACK TO WORK FORCE?

According to the Kansas City Fed, the number of retirees rose by 3.6million between February 2020 and June 2021. This is more than 1.5 million that were expected to be retiring under the pre-pandemic retirement trend. The reason for this was a significant drop in the number of people who are returning to work after retirement, probably due to health issues. The labor market also saw a drop in baby boomers.

(GRAPHIC: Spike in number of retirees – https://graphics.reuters.com/USA-ECONOMY/FULL-EMPLOYMENT/jnvwexemavw/chart.png)

Michelle Bowman (Federal Board Governor) stated that surging retirements may make it more difficult or even impossible to go back to high levels of employment before the pandemic.

Some people were able to retire because of the tight labor market. Economists warn that this could again happen if wages rise and infections continue to drop.

HOW LONG WILL IT TAKE WOMEN TO EMPLOYMENT RECOVERS?

The Brookings Institution predicts that school reopenings will bring women back into the labor force. However, it is not yet certain.

Joe Brusuelas chief economist at RSM, stated that tracking the time it takes for women to return to work, especially those of Black or Hispanic origin, is “going to become a very important focal point of policymakers over six months.”

(GRAPHIC: Women of color see slower labor recovery – https://graphics.reuters.com/USA-ECONOMY/FULL-EMPLOYMENT/lgvdwnkbjpo/chart.png)

According to him, the possibility of a larger number finding jobs during this time could boost labor supply and lower wage pressures. Expectations for job force recovery could drop, and wage pressures might persist.

ARE SAVINGS KEY TO HELP PEOPLE REMAIN HOME?

Savings made during the crisis, when consumers cut back on spending, were given stimulus checks and received federal relief from student loan payments and mortgage payments. This gave potential job seekers the opportunity to continue searching for the best position and to provide full-time care for loved ones for longer periods. According to economists, these funds are at risk of running out as enhanced unemployment benefits and forbearance programs expire.

(GRAPHIC: Pandemic cash cushion Pandemic cash cushion – https://graphics.reuters.com/USA-ECONOMY/gkplgxroevb/chart.png)

As of September, households had saved about $2.5 trillion more than they would have if the pandemic had never happened, Mark Zandi, chief economist at Moody’s Analytics, estimates. Higher-income households held most of the money. He still estimates that about $500B was saved by households between 20% and 60 percent of income. That leaves those with around $10,000 per person.

The JPMorgan Chase Institute reports that lower income households only have about $1,000 of savings on average. Zandi stated that “the financial pressure to return to work will overwhelm.”

HOW MUCH DO PEOPLE PREFER TO WORK FOR ONE ANOTHER?

People tried to make ends meet by working as freelancers, capitalize on the new trends and take control of their own work.

This could explain why there is a shortage of workers: People are more inclined to do it themselves. We don’t know how many businesses or jobs these new ventures will create, and it is still too soon.

John Haltiwanger from the University of Maryland economist found that most of the newly created businesses would remain non-employer firms. This means they will be run by one-person entrepreneurs who are self-employed. However, the proportion of companies with “high potential” for creating jobs has increased.

WILL IMMIGRATION BE REBOUNDED?

The Trump administration’s tighter policies, and subsequent restrictions during the pandemic caused a decline in immigration over several years. According to Cato Institute, visas for foreigners who are eligible to work declined by 1.2 millions during the pandemic.

(GRAPHIC: Fewer foreign workers – https://graphics.reuters.com/USA-ECONOMY/FULL-EMPLOYMENT/mopanlnxnva/chart.png)

As infections fall and restrictions loosen, this trend is being reversed. Julia Coronado (president of MacroPolicy Perspectives) said that the number of immigrants could increase by 250,000-500,000 next year compared to current levels. She is also an ex Fed economist.

According to Jesse Edgerton (a senior economist at J.P. Morgan), the decline in immigration may allow for labor market conditions to remain tight, even without full employment recovery to pre-pandemic levels. It means that wages can continue to increase for certain jobs which could draw more people from the sidelines, and boost labor force participation.