It’s been nearly three years since pandemic shutdowns staggered the economy.
In just two months, March and April 2020, Massachusetts employers cut 690,000 jobs — nearly one out of five. Unemployment soared to 17 percent from less than 3 percent.
There’d been nothing like it, even during the Great Depression. And the aftershocks continue to reverberate across the state, exposing faults in what otherwise seems like a solid job market.
Employers added an average of 11,000 jobs a month last year, compared with 4,300 a month in 2019. Yet there were 240,000 open jobs in November, according to the most recent data available. That’s a historically elevated level — the monthly average in the five years before the pandemic was 157,000 openings — that indicates hiring is being held back by a shortage of workers.
With much of 2022′s labor market data in the books, here’s the picture that emerges in Massachusetts.
A slow climb back
By the end of 2020, the state had recouped more than half the jobs lost during the two-month meltdown earlier in the year. But it’s taken two more years to claw back the other half.
As of December, the state was still 7,200 jobs shy of its February 2020 total, a shortfall of 0.2 percent. The country as a whole was back in positive territory by last summer.
Two factors are primarily responsible for the lag: COVID closings here were more aggressive and extended longer than in many other states; and the big leisure and hospitality sector, which accounts for about one in 10 jobs, has been slow to bounce back.
Unemployment in the state was 3.3 percent last month, two-tenths of a percentage point below the national average, which typically runs higher. But the Massachusetts rate is above where it was at the onset of the pandemic, while the US rate is back to its pre-COVID low.
A shrinking labor force
As I wrote earlier this month, the Massachusetts economy is being hampered by a trend that predates COVID: More people are exiting the workforce than are jumping in.
Last month, there were 112,000 fewer people in the labor force — those with jobs or looking for one — than at the peak in June 2019, a drop of 2.9 percent.
Driving the decline are retiring baby boomers, the oldest of which are now 77. And looking forward, Massachusetts has relatively fewer young people moving toward working age. Residents under 18 years old make up 21 percent of the population, ranking it near the bottom of all states.
The demographics, combined with little or no growth in the labor force both here and nationally, mean the state’s supply of workers could be strained in the years ahead unless immigration increases.
More help wanted
As noted, the state has yet to regain all the jobs lost early in the pandemic, largely because of weakness in the leisure and hospitality sector — which includes hotels, restaurants, and tourism.
But other pivotal industries are also struggling to replenish their ranks, including health care, education, manufacturing, finance, and retail.
It’s not for lack of trying. Among the occupations at the top of the list of job postings in December, according to the Burning Glass data in the following chart: registered nurses, retail salespersons, medical and health services managers, and retail supervisors.
Brian Bethune, an economics professor at Boston College, argues that wages must rise to lure workers to these occupations, most which can’t be done remotely and require frequent exposure to a potentially unhealthy public.
“The so-called shortage of workers is an artifice,” he said. “Workers have to be paid more to induce them to undertake higher-risk occupations. Those are the fundamentals of risk-reward at the core of the free market system.”
There are two basic scenarios possible as we move through 2023: Employers continue to boost wages to fill open jobs. Or the economy slows under the weight of higher interest rates, reducing demand for workers.
We should get a better idea of which way things go over the coming months.
Dana Gerber of the Globe staff contributed to this report.