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Introduction
World history has seen devastating global pandemics, which have drastically changed the situation in the economy. In this regard, it might be interesting to compare the impact caused by the current COVID-19 with the consequences of the earlier pandemics. Mankiw (2020) mentions the case of the Black Death, the bubonic plague that wiped out approximately one-third of Europes population in the 14th century. As a result, labor supply became significantly lower, which forced wealthy land owners to raise wages in order to maintain land output rates. Therefore, survivors among the peasant classes received economic benefits from the pandemic, whereas landed classes experienced a loss in income (Mankiw, 2020). In certain ways, this outcome has repeated itself during the COVID-19, despite the obvious differences between medieval and modern-world economies.
COVID-19 Influence on Labor Demand
At the beginning of the COVID-19 pandemic, forced lockdowns and business closures put significant economic pressure on U.S. business owners. As a result, they had to either fire employees or send them on unpaid leaves due to plummeting revenues, which was a clear sign of lowering labor demand. The consequences of the reduced labor demand during the early stages of the pandemic were evident even a year after its start. For instance, employment in February 2021 was 8.5 million less than in February 2020 (Kochhar & Bennett, 2021). However, this negative trend changed with business re-openings during the second quarter of 2021.
In both April and May 2021, employers opened more than 9 million jobs across the United States. Those were the highest number since the Bureau of Labor Statistics began reporting job openings (Renna & Coate, 2021). In addition, business owners had to increase wages, especially in low-wage occupations. For example, wages in Leisure and Hospitality, a low-paying sector that suffered the most from the pandemic, grew by 10.6% between the end of 2020 and June 2021 (Renna & Coate, 2021). Therefore, COVID-19 ultimately increased labor demand and wages an impact similar to the Black Death. However, this positive shift for the employees might not last long since employers will eventually refill most staff gaps. In the end, COVID-19 is much less lethal than the bubonic plague of the 14th century, so demand for workers will not be that sharp.
COVID-19 Influence on Labor Supply
The growing labor demand caused by the business re-openings COVID-19 is facing an opposite trend of the low labor supply. Fortunately, the reason behind the lowered labor supply is not as grim as it was during the Black Death days. However, many people who left or lost their jobs at the beginning of the COVID-19 pandemic remain unemployed despite the increasing labor demand. According to Renna and Coate (2021), there are still more than 3 million fewer Americans in the labor force today than before the pandemic. This unemployed population primarily consists of women, older workers, and former employees in the Leisure and Hospitality sector (Renna & Coate, 2021). The reasons behind their decision may vary women take care of their families, older workers retire, and low-wage Leisure and Hospitality employees prefer to receive unemployment benefits while searching for a better job. Regardless, the eventual effect on labor supply is quite comparable to Black Death fewer potential employees are available on the market.
Conclusion
The modern economy is much more complicated and diversified in comparison to the medieval age. However, the impact of global pandemics on labor demand and supply are similar in both eras. COVID-19 pandemic is less lethal than Black Death, but it still resulted in lowered labor supply and increased labor demand. The biggest advantage for modern-day business owners compared to medieval land owners lies in the medical advancements of our time. As a result, the companies will not have to wait for a new generation of workers to be born. Instead, they only have to weather the storm and regain the losses as the economy returns to normal functioning.
References
Kochhar, R., & Bennett, J. (2021). U.S. labor market inches back from the COVID-19 shock, but recovery is far from complete. Pew Research Center. Web.
Mankiw, N. G. (2020). Principles of economics (9th ed.). Cengage Learning US.
Renna, F., & Coate, P. (2021). Is there a labor shortage? National Council on Compensation Insurance. Web.
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