Latest loopback mocha tests are not running

Describe the bug

Create a new lb app with node 16,
Trying to run the default tests that come with lb app, using yarn test, it immediately throws this typescript error. This seems to be a mocha issue, but why did Loopback upgrade to latest mocha?

ERR_REQUIRE_ESM errors with Mocha tests.

const stringWidth = require('string-width');
                    ^

Error [ERR_REQUIRE_ESM]: require() of ES Module /home/fahad/work/testapp/node_modules/string-width/index.js from /home/fahad/work/testapp/node_modules/yargs/node_modules/cliui/build/index.cjs not supported.
Instead change the require of index.js in /home/fahad/work/testapp/node_modules/yargs/node_modules/cliui/build/index.cjs to a dynamic import() which is available in all CommonJS modules.
    at Object.<anonymous> (/home/fahad/work/testapp/node_modules/yargs/node_modules/cliui/build/index.cjs:291:21)
    at Object.<anonymous> (/home/fahad/work/testapp/node_modules/yargs/build/index.cjs:2861:12)
    at Object.<anonymous> (/home/fahad/work/testapp/node_modules/yargs/yargs:3:69)
    at Object.<anonymous> (/home/fahad/work/testapp/node_modules/mocha/lib/cli/cli.js:15:15)
    at Object.<anonymous> (/home/fahad/work/testapp/node_modules/mocha/bin/mocha.js:141:3) {
  code: 'ERR_REQUIRE_ESM'
}

Logs

No response

Additional information

If I downgrade yargs library to 14.2.2, this issue is not occurring.

Reproduction

THIS ISSUE IS OBVIOUS

Run yarn test in a newly created LoopBack app using Node 16 and inspect the generated test setup and dependency versions around Mocha and yargs. Done means the default Mocha tests run without the reported ERR_REQUIRE_ESM failure while retaining the intended dependency versions.