Weekend reading: Where are all the workers?

What caught my eye this week.

Britain has a problem with its workers. No, I’m not only thinking about the ones you can’t find to fix your boiler. Or the increasing number missing in action because they’re away striking for higher pay. Or even necessarily those a few of you wanted to send back to Eastern Europe for doing too good a job.

I mean the would-be workers who aren’t workers anymore.

Ian Stewart, chief economist at Deloitte, noted this week that there are 270,000 people fewer in employment than before the pandemic struck in early 2020.

The economy meanwhile is slightly larger, with a 1.2% increase in GDP.

As many people who run businesses will know, the UK’s problem right now is not a lack of job vacancies but a lack of people to fill them.

Worse, that 270,000 figure doesn’t capture the full extent of workers ‘lost’ to the jobs market.

“To work that out we need to estimate the number of people who did not enter the labour market, or decided to leave it, because of the pandemic,” says Stewart.

Since we can’t ask them all about their rationale, Stewart does some guesstimates:

It seems likely that the sharp rise, of over 250,000, in the number of people of working age classified as suffering from long- or short-term sickness since late 2019, is largely pandemic related. This seems plausible given that ONS data show an estimated 2m people suffering from self-reported long COVID at the beginning of June, of whom over 400,000 said it had limited their ability to undertake day-to-day activities “a lot”.

The pandemic also seems likely to be a major factor in the decision by more than 50,000 people of working age to retire, a change that goes against the recent trend of later retirement. […]

Student numbers have also surged, with uncertainty and dire predictions of job losses encouraging more young people to stay on in full-time education. Again, the data are unclear, but we estimate that roughly 100,000 people may be in education today for such reasons.

Finally, there is the effect of the pandemic, and of Brexit, on people coming to work in the UK and on foreign workers who were already here. The data are incomplete, but HMRC reports that between June 2019 and June 2021 the number of EU nationals on UK payrolls fell by just over 170,000. […] Some workers were likely always planning to return home however, and new immigration rules have prevented a new generation of EU citizens from moving to the UK.

Summing the increase in the number of people who are sick or retired, additional growth in student numbers and falling numbers of EU workers we get to 570,000 people.

So we have more than half-a-million fewer workers doing productive work, drawing a salary, and paying taxes. Many of whom would probably still be in work, if not for the pandemic one way or another.

That is is pretty staggering – even for someone like me who was wary of the frozen in carbonite theory that turning the economy off and on for lockdowns would not have vast economic consequences. (Which is not to say we shouldn’t have done it anyway, especially in early 2020).

Indeed those consequences have actually shown up in high inflation and lower output – as well as far higher public debt, of course – rather than directly causing joblessness.

So it seems it’s the high toll of Covid on health that’s the problem?

Well maybe. But maybe not exactly.

United in suffering

Another interesting analysis of the UK’s worker shortage was conducted this week by the always-excellent data miner Robert Burn-Murdoch for the Financial Times [Search result].

Burn-Murdoch sees roughly the same half a million workers missing when he surveys the UK. But he has even less time for cozy explanations such as people reassessing their lives and optionally retiring early.

Rather, Burn-Murdoch blames chronic illness:

Of the roughly half a million Britons aged 15-64 missing from the workforce, two in three cite long-term illness as their reason for not holding or seeking a job.

It would be easy to point the finger of blame at Britain’s handling of the virus, but the data suggest otherwise.

And as fans of his work would expect, Burn-Murdoch has a pretty convincing graphic to back up his case.

One of these recoveries is not like the others

Source: FT

Staggering, isn’t it? Just eyeballing the chart, only the US and arguably Turkey are remotely similar. And both of those have now got onto a better trajectory.

Of course you could offer other theories besides chronic illness.

All three of these countries entered the pandemic led by populist leaders who made decisions accordingly. Perhaps that skewed the eventual outcome?

The US and the UK both offered generous fiscal relief for workers, too. A right-leaning view might be that safety-cushioned workers haven’t felt the need to hurry back into employment.

However plenty of the other countries offered support packages.

For his part, Burn-Murdoch sounds almost apocalyptic:

With direct impacts of Covid ruled out, the most plausible remaining explanation is grim: we may be witnessing the collapse of the NHS, as hundreds of thousands of patients, unable to access timely care, see their condition worsen to the point of being unable to work.

The 332,000 people who have been waiting more than a year for hospital treatment in Britain is a close numerical match for the 309,000 now missing from the labour force due to long-term sickness.

This is the Financial Times he’s writing for remember, not The Guardian.

Again, one flagged up the long-term health consequences of making it harder for people to access care during Covid at your peril. Trust me, I got the heated reader responses to prove it.

That said I’m sympathetic to the view that it was the virus – not the lockdowns – that was to blame for much or even most of this.

For example, why should doctors and nurses have taken even more risks from a novel virus, particularly pre-vaccination? People avoiding GPs to avoid catching Covid might have been making their own rational decisions, too.

But I do feel there wasn’t enough mainstream airtime given to setting the clock on this time-bomb. Which in turn helped to push it to the lunatic fringe as the debate became polarized by late-2020.

Readers won’t be surprised to hear I also finger Brexit.

With open borders with the EU, the NHS could be rapidly recruiting to cover its strained workforce and treat more patients (if sufficiently funded, obviously).

As things stand it’s scrabbling in a hamstrung economy with the rest of them.


As the owner of a blog about financial independence, I lapped up stories about The Great Resignation and people swapping joyless jobs for early retirement.

But this seems to have only happened at the margin.

Rather, a lot of more people seem to be too sick for employment. Which is a human tragedy.

Finally, let’s be wary with the ‘kids don’t want to work these days’ popular with Barry Blimps.

Besides the fact that it might be hard to blame them given the economic odds stacked against them (high house prices and rents, inflation, student debts) it’s a trope old as the hills:

A Brief History of Nobody Wants to Work Anymore

— Paul Fairie (@paulisci) July 19, 2022

Where do you think all our workers went? Let us know in the comments.

And have a great weekend!

From Monevator

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From the archive-ator: what I learned about investing from a cult card game – Monevator


Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1

UK inflation hits 40-year high of 9.4%; could be 12% “by October”Guardian

Britain faces a summer of strikes as inflation and falling real wages bite – CNBC

London boroughs where houses ‘earn’ as much as their owners… – Evening Standard

…versus London’s desperate rental market crisis – Evening Standard

GSK spins off £30bn Haleon in biggest European listing for a decade – CNBC

Ukraine and Russia sign deal to restart grain exports – Guardian

Are long bonds still only for fools? [US but relevant]Morningstar

Products and services

NS&I increases rates on savings products: how do they compare? – Which

Open an account with InvestEngine via our affiliate link and get £25 when you invest at least £100 (new customers only, T&Cs apply) – InvestEngine

Green upgrades could cut UK energy bills by £1,800 – Guardian

Single-stock [US] ETFs enable you to leverage or short the likes of Tesla [But…]ETF.com

Open a SIPP with Interactive Investor and pay no SIPP fee for six months. Terms apply – Interactive Investor

Startup Atlantic Money offers money transfers up to £1m for a £3 flat fee – ThisIsMoney

Glamorous getaways to rent, in pictures – Guardian

Comment and opinion

You’ll probably never run out of money – Mr Money Mustache

There will always be sorcerers – Of Dollars and Data

Why your 60/40 portfolio isn’t working in 2022 – Morningstar

Nine key questions and answers for investors – Humble Dollar

Gold shines as a haven in 2022 – Morningstar

The humblest thing an investor can do is buy index funds [Podcast]Morningstar

Why more money won’t lead to financial independence – Darius Foroux

Metrics – Indeedably

Penniless at last: the returns from coin collecting – Humble Dollar

Ease, comfort, and time – Fortunes & Frictions

Risks and rewards of the FIRE movement – ThisIsMoney

Crypt o’ crypto

Elon Musk’s Tesla sells most of its Bitcoin holdings – BBC

Naughty corner: Active antics

Reflections on the investing process: QA with Michael Mauboussin – The Manual

Generation moonshot: why young investors aren’t giving up on risk [Search result]FT

Berkshire Hathaway: the incomparable compounder [Podcast]Business Breakdowns

Peter Spiller: Look at the 1960s, not the 1970s, for economic lessons [Search result]FT

Focus on finding good businesses, not cheap stocks – Rational Walk

US inflation mini-special

The last time US inflation was this high – A Wealth of Common Sense

Should the Fed continue to raise rates? – The Bonddad Blog

Inflation problems persist, not least thanks to resilient consumers – Tker

Kindle book bargains

Thinking Better: The Art of the Shortcut by Marcus du Sautoy – £0.99 on Kindle

Banking On It: How I Disrupted an Industry by Anne Boden – £0.99 on Kindle

Amazon Unbound: Jeff Bezos and the Invention of a Global Empire by Brad Stone – £0.99 on Kindle

Secrets of Sand Hill Road: Venture Capital and How to Get It by Scott Kupor – £0.99 on Kindle

Environmental factors

Fish poop might help corals overcome bleaching – Hakai Magazine

The search for the geological signal that will define our destructive era – Orion

Larry Swedroe: what does a change in ESG rating tell us about returns? – TEBI

The infamous 1970s report that predicted civilization’s collapse – Wired

Kylie Jenner apparently takes her private jet for three-minute flights – Mic

Brexit ceaselessly stupid mini-special

Brexit after Boris Johnson – Prospect

Brexit made Dover gridlock inevitable – Independent

Off our beat

The digital nomad visas luring workers overseas – BBC

Haves and have-yachts – The New Yorker

Why you should quit your job after 10 years – Bloomberg via Pocket

Cut the meetings, make more friends [Search result]FT

Machine-learning identifies new molecules for chemical weapons… – via Twitter

…and I’m shocked, shocked, to see robot dogs mounted with guns – via Twitter

Why European swimmers took so long to learn the front crawl – Slate

And finally…

“To build wealth it didn’t matter when you bought US stocks, just that you bought them and kept buying them. It didn’t matter if valuations were high or low. It didn’t matter if you were in a bull market or a bear market. All that mattered was that you kept buying.”
– Nick Maggiulli, Just Keep Buying

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Is chronic illness to blame for the UK’s missing half-a-million workers? Plus the rest of the week’s good reads…
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