I’m a little confused, wouldn’t this mean that there are people sitting around who seemingly prefer no job than a lower than they would like paying job? I don’t understand how all these unemployed people are surviving.
Many, many workers are working for non-economic reasons. Retired people work for exercise and social interactions. Married couples who can get by on one income no longer need to have both spouses working. And forcing students into attending classes from home has further forced more and more working couples to take a break to supervise their kids who are learning at home since most children (particularly young children) cannot be trusted to attend their classes without direct supervision. Many teenagers, also, who would have been in the workforce to have some spending money have decided the risks of the pandemic aren't worth it. And then there's the unemployment benefits. In short: Many people who can get by without working suddenly are.
It only takes a few percent of the population choosing to no longer work to create a massive labor shortage.