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Calling in Sick to Work

Macro Minute
February 8, 2022

Reponses to the U.S. Census Bureau's Household Pulse Survey conducted from Dec. 29, 2021 to Jan. 10, 2022 showed an astounding increase in the number of people not working due to COVID-19. As shown in Figure 1, 8.75 million people were not working for reasons such as "caring for someone or sick myself with coronavirus symptoms," up from 2.95 million in the prior survey period (Dec. 1-13) — a 197 percent increase!

Figure 1

Number of People Not Working Who are Sick or Caring for Someone with Covid Symptoms

What effect did we see on the labor market? Coincidentally, these responses were gathered during a period that overlaps with the January survey period for the Bureau of Labor Statistics (BLS) Current Population Survey — the underlying survey for the unemployment rate and labor force participation rate (LFPR). So in this post, we dive into the January employment report to see to what extent the leading signals from the Household Pulse Survey were confirmed by the monthly data.

While someone might respond to the Household Pulse Survey as "absent from work," this doesn't necessarily mean he or she left or lost their job entirely. For example, the Current Population Survey indicated that 7.6 million people were absent from work but still employed in January (up 2.7 million versus December). Accordingly, the change in the unemployment rate was much less dramatic than the Household Pulse Survey might have suggested. January's unemployment registered at 4 percent, up from 3.9 percent in December.

After accounting for a change in BLS population adjustments which happens at the beginning of every year, household employment in January fell by 272,000 from December levels — a tiny portion of those who said they were not working in the Household Pulse Survey. A separate survey of businesses indicated that nonfarm payrolls actually rose in January by 467,000.

Similarly, only a fraction of the 8.75 million people in the Household Pulse Survey who were not working due to COVID-19 have left the labor force altogether. January's monthly change in the LFPR was minimal. As reported, the rate rose from 61.9 percent in December to 62.2 percent in January. But this shift was entirely driven by the change in BLS population estimate — December's LFPR would also have been 62.2 percent if previous data reflected the new population estimates.

While the slow recovery in labor force participation reflects many factors, including retirements and childcare responsibilities, the pandemic remains a significant factor. January's household employment survey indicated that 1.8 million people not in the labor force did not look for work due to the pandemic, up from 1.1 million in December.

Figure 2 plots the LFPR and a counterfactual participation rate that includes those who had reported they were not in the labor force due to COVID-19. In the earlier stages of the pandemic, counting these individuals as part of the labor force suggested participation could fully recover if the pandemic came under control – in fact, the counterfactual participation rate was even higher than the pre-pandemic participation rate. This no longer seems to be the case. Even if COVID-19 nonparticipants were counted in the labor force, January's LFPR would have reached only 62.9 percent, remaining 0.5 percentage points below the pre-pandemic level.

Figure 2

Labor Force Participation Rate vs. LFPR If COVID-19 Did Not Prevent People From Looking for Work

Views expressed in this article are those of the author and not necessarily those of the Federal Reserve Bank of Richmond or the Federal Reserve System.

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