Pandemic unemployment insurance benefits ended earlier this week, and some people are deciding to stay home, leaving businesses struggling with staff shortages.

There are several factors contributing to the issue.

Mike Clark, the director of the University of Kentucky Center for Business and Economic Research, listed them out, and shared what he thinks it will take to improve the labor force and lower labor force participation rate.

Job

Job postings in an office. 

Clark explained the difference between the labor market and the labor participation rate.

"When we think about the labor market, what we're really talking about is people who are either employed or they're actively searching for work," said Clark. “So, if you're not searching for work, you are not considered in the labor market. So we've got a lot of people who can fall into that situation."

He said individuals focusing on school and early retirements could contribute to the fluctuating labor market.

There are also several reasons for this lower labor force participation rate.

"What has happened with the pandemic is that we have a number of issues that have really played a role in this, and they all seem to be contributing to our lower labor force participation rate now," said Clark. "So, things like health concerns: Individuals may be avoiding going back to work because they're concerned that if they're in close proximity to other individuals might put them at higher risk of contracting COVID."

class

An empty classroom that should be full. 

Clark said aside from health concerns, others have decided not to return because of their children.

All of the back and forth when it comes to how schools are operating has kept some parents at home to take care of their children.

As you head to your favorite shops and restaurants, you are seeing how these shortages are impacting services.

"What can we do to make sure that we're taking care of the customers with our limited labor force that we have and that may mean adopting more technology to help the workers that they do have cover more customers you know in a shorter amount of time," said Clark.

Clark said we have not seen anything like this before. He said we will likely see more improvements in the labor market as we get a better handle on COVID-19.

While all these factors contribute, Clark said there is not enough data available to determine which factors have the biggest impact on the labor market as a whole.