For nearly a decade, businesses in Nebraska have faced challenges finding enough workers to fill available jobs. While the pandemic exacerbated some of these challenges, other trends have constrained the availability of labor in the state for many years beforehand. Previous research has detailed both pandemic-induced distortions to the labor market and longer-term headwinds to labor force growth. This update highlights that, among the population currently in Nebraska, younger individuals have been less active in seeking employment, compounding issues associated with labor scarcity in recent years.
The youth labor force has been declining for decades, with fewer individuals actively seeking employment. In the current environment, many of the businesses struggling to hire are those that disproportionately employ younger workers. While not a solution for all labor scarcity issues, increasing participation among the youngest members of the labor force could help fill some job openings in industries struggling most with shortages. It appears that young workers are responsive to wage signals, having returned to the labor force alongside recent robust wage growth, offering one potential path forward for businesses struggling to find labor.
The views expressed are those of the authors and do not necessarily reflect the positions of the Federal Reserve Bank of Kansas City or the Federal Reserve System.