During a recession, workers on leave can expect to be called back to their old jobs when the economy recovers, while those whose jobs have been eliminated wait for an employer to create a new one. Predicting exactly how many will be permanently lost is not an easy task. A study in May concluded that 42% of the layoffs that had occurred to date were likely to be permanent. That seems too pessimistic now. But the picture is still unsettling. An example: In a soon to be published report Preview from reporters at the Washington Post this weekThe McKinsey Global Institute predicts 20% of business trips will not return. The fallout means fewer jobs at airlines, hotels, restaurants and retail stores Automation of office support roles as well as some factory jobs.
In November the Brookings Institution reported:
… We see a large number of workers leaving the labor market altogether. The permanently unemployed are particularly likely to leave the labor force, but there is also a small stream of workers who are temporarily laid off and leaving as well. This trend is even more worrying – and a sign of structural damage to the economy that may take longer to heal because workers who are unemployed are even those who say so [they] want a job, have relatively low reemployment rating Even under normal labor market conditions, for example, only around 40 percent of those in employment who state that they are looking for a job will be back in work within 12 months.
It is important to reiterate how deeply uneven the economic improvements have been since April and May. Lael Brainard, a Federal Reserve governor, said in a speech a month ago:
The damage from COVID-19 is focused on groups already challenged. The Federal Reserve’s personnel analysis shows that unemployment among workers in the lower wage quartile is likely above 20 percent, while it has fallen below 5 percent in the upper wage quartile. Black and Hispanic American unemployment was 9.9 percent and 9.3 percent, respectively, in December, while white unemployment was 6.0 percent. The labor force participation of prime-age workers has declined, particularly among parents of school-age children, where the declines were greater for women than for men and greater for black and Hispanic mothers than for white mothers.
In other words, the unemployment rate of the poorest 25% of Americans is four times that of the richest 25%. People of color have been disproportionately injured by this job loss. It is more likely that these are “essential” low-wage workers unable to work remotely, while wealthier workers could work from home with the same pay and benefits as before the pandemic. These higher wage jobs are usually less likely to be automated, at least until Alexa becomes self aware.
For a larger, more readable version of this table, which lists the persistent job losers over the past quarter century, click here.
McDonald’s was Automating his order services and plans too soon automate the passage surgeryIt is just one of many companies that is cutting costs by reducing the number of employees while increasing the performance of machines. This change is of course not new. However, e-commerce, which has grown over the past two decades, has accelerated sharply during the pandemic. This meant hiring more drivers and warehouse workers, but also fewer retail salespeople. And while truly reliable self-driving software may still be years away, automation in warehousing is rapidly spreading. Over time there will still be workers on the ground, but fewer of them.
In a November interview, West Michigan University economist Paul Isely noted, “There will be a shift in these types of jobs. When we get out of this recession, these jobs are unlikely to come back in the numbers we saw before . ” People who work in these professions really need to think about how I can develop myself further in the value chain. “
Susan Lund, the head of McKinsey, reiterated that view to the Post, saying, “We believe there is a very real scenario where many of the big, low-paid, retail and hospitality jobs will simply go away in the years to come . That means we will need a lot more short term training and eligibility programs. “
This is necessary because there are two problems associated with retraining efforts: First, retraining for what jobs? Second, who pays?
President Joe Biden’s US $ 1.9 trillion bailout plan doesn’t include funds for retraining, though lawmakers say additional laws with funds for it could theoretically be passed later this year or next year. However, this ignores the experience of the Obama administration, which 11 years ago only managed to pass a single, inadequate stimulus package from Congress. However, education and retraining should be a key element of the green transition that the Biden-Harris administration has made a core part of its efforts to address the climate crisis. The financing and other facilitation of an environmentally friendly infrastructure as well as its rapid implementation are essential. Passing such legislation in the current Congress could of course be even more difficult than getting the 2009 incentive in the books.
Last week, Powell said that New York Economic Club:
Given the number of people who have lost their jobs and the likelihood that some will have difficulty finding work in the post-pandemic economy, achieving and maintaining maximum employment requires more than supportive monetary policy. It will require societal engagement with input from governments and the private sector. The potential benefits of investing in our country’s workforce are immense. A permanent job offers more than a regular paycheck. It also adds meaning, improves mental health, extends lifespan, and benefits workers and their families. I am confident that with our combined efforts in government and the private sector, our nation will make sustained progress toward our national goal of maximum employment.
Collective efforts obviously require a collective agreement. To do that when much of the Republican side of the congressional corridor opposes policies as humble as unemployment insurance, as an incentive for indolence, and anything that smells like a 21st century New Deal as a communist is difficult. Getting a collective agreement, even as the economy makes this big shift, will require a tremendous amount of diplomacy, arm wrestling and grassroots politics.