As we stagger into the seventh month of the pandemic, the labor market remains deeply troubled. But while the coronavirus is hurting working people, especially lower-income workers, it is exacerbating underlying inequalities in the economy, not fundamentally reshaping the job market. Our labor policies need to restore worker power and encourage greater equality, pandemic or no pandemic.
First, don’t believe the hype about recent economic improvement. When September’s unemployment report came out, Larry Kudlow, head of Trump’s National Economic Council, claimed “the overall economy is looking good.” This flies in the face of the Bureau of Labor Statistics’ (BLS) monthly report for September, which found more people leaving the work force (695,000) than new jobs created by employers (661,000).
That new jobs number also is lower than previous months, and was well under economists’ expectations of around 800,000 new jobs. Speaking for many experts, Drew Matus, chief market strategist for MetLife Investment Management, said “the issue is momentum, and I think we’re losing it.”
A disturbing sign in the report is the growth in permanent layoffs. Earlier in the recession, many workers reported being on temporary layoff, expecting to go back to their job as the economy recovered. But in September, BLS (Table A-11) reported 3.7 million workers were on permanent layoff, a 30.6% increase in just two months.
This is consistent with company reports. In June, 60% of employers in a Manpower survey said they expected pre-Covid hiring levels by the end of this year. But in the most recent survey, only 20% of firms said they expected to increase hiring in the remainder of 2020. And firms across all industries, including Disney, Coca-Cola, United Airlines, Wells Fargo, and Salesforce all are reporting permanent layoffs, downsizing, and restructuring.
But job losses, and bleak prospects for rehiring or expansion, aren’t evenly distributed across industries, or groups of workers. The leisure and hospitality sector is perhaps hardest hit. It was the economy’s second largest when the recession began, but now it ranks fifth.
And the devastation to state and local budgets from declining revenues means millions of jobs are being lost there, from education to trash pickup to health care. The blocking of further fiscal aid by Senate Republicans means those losses will get worse as the recession goes on, because unlike the federal government, state and local governments have to balance their budgets.
The recession also is hitting different groups of workers unevenly. Educated workers have done better in terms of job retention and rehiring, but we shouldn’t make too much of that relative advantage. As economist Jed Kolko has demonstrated, “the economic damage is widespread” across the job market.
Black workers are more exposed in essential jobs, lack financial resources to buffer unemployment, and are less likely to qualify for unemployment insurance. Older workers are being pushed into involuntary retirement, with inadequate retirement funds and little chance of decent permanent employment. And unemployed women are less likely to be rehired than men, and also are act risk of dropping out of work due to their care work responsibilities for children and older family members.
But is the virus making permanent changes to the labor market? It looks more like we are just in a painful recession with a lot of economic inequality caused, but also revealed by, the pandemic.
First, although some workers continue to work at home (at least part of the time), the claim that office work is dead and large amounts of work would shift permanently to homework seems overblown. BLS reported that “22.7% of employed persons teleworked because of the coronavirus pandemic” but that doesn’t mean they did it full time.
We don’t have a good benchmark for telework pre-Covid. In 2019, 7% of private sector workers reported “access” to telework, rising to 24% of management, business, and financial workers. Facebook and Google are letting many employees work from home for the foreseeable future. But Facebook also has acquired over 2.2 million square feet of office space in New York City in a year, while Google is building a campus in San Jose, CA with 7.3 million square feet of office space along with housing. Somebody’s going to work in those offices.
Second, many of the economy’s fastest growing jobs are in sectors that cannot be done remotely. Eight of the twenty fastest growing occupations are in health care, many involving personal contact. And other fast-growing jobs are in energy, both fossil and alternative fuels, again involving on-site, hands-on work.
Third, the pandemic has hit low-income workers, many of them non-white, the hardest. Retail and hospitality sectors have suffered huge losses, while the least educated workers have the highest proportional job losses. According to a Brookings Institution report, “low-wage workers are six times less likely to be able to work from home than high-income workers.”