Jobs, Jobs Everywhere, and Not a Soul to Work

Big problems with unemployment will persist through 2021

My apologies to the Ancient Mariner. (Image Credit: Global Health Film)

Jobs Are Coming Back

In case you didn’t hear, the US added 916,000 jobs in March, reducing the unemployment rate to 6%

By any measure, this is fantastic news, considering that a 5% unemployment rate is considered “full” employment.

But we are not in “any” times.

We are in a deep hole that will take a long time to get out of.

First, we would need a highly improbable run of equally high months to get back the jobs lost since the initial shutdowns.

“Even at a million [additional] jobs a month — which would be an incredible number — we’re still looking at least into 2022 before we get to pre-pandemic levels,” added Bostic, who was speaking during a presentation to the World Affairs Council of Atlanta on Tuesday.

“We’ve still got a ways to go on the employment front before I think we’ll be in a position to really exhale and let the marketplace play out as it will.”

Second, there are some unique obstacles to overcome along the way.

One might call them an albatross around our collective necks.

Major Problems Still Persist

New Grads Can’t Find Jobs

It’s funny how often history repeats itself.

I graduated in 2009, right in the middle of the Great Recession. So instead of having a shiny new job right after graduation, I spent the next 18 months juggling three part-time jobs before finally landing a full-time position.

The graduating classes of 2020 and 2021 are having similar problems.

The reality is that there may be plenty of cheaper-to-hire college graduates, but in an economy still recovering from major layoffs, there are also plenty more experienced workers desperate for jobs.

“They’ll choose, all else equal, people with more experience,” Gould says about employers. “So young workers are left out in the cold and many are going to have a hard time starting their career.”

Even if new graduates find a job, the pay will be much lower than pre-pandemic times.

Graduating in a recession leads to large initial earnings losses. These losses, which amount to about 9 percent of annual earnings in the initial stage, eventually recede, but slowly — halving within five years but not disappearing until about ten years after graduation.

In the long run, college graduates will be alright. But what about those who don’t have a college degree, which so often results in a low-income job?

In short, they’re screwed.

Low Education, Low Wage Workers Feel the Most Pain

Adjusting for cost of living and other factors, there were 53 million low-wage workers in the US in 2019. That’s 44% of the workforce between the ages of 18 and 64.

And these folks are bearing the brunt (as always) of the recession.

Imagine working two jobs but only having a weekly grocery budget of $25. Even for just one person, that’s pitiful.

Now imagine that you were laid off due to a pandemic shut down. Your hope rises when you hear your old company is starting up, only to be crushed again when half of the old positions are completely eliminated.

Researchers at the Massachusetts Institute of Technology warned last year that low-paid workers without college degrees who’ve lost their jobs “may suffer significant hardship as they seek new work, potentially in occupations where they have no experience or training.”

Health Fears

What is the job you once had is now back, but it means an entire days of up-close, in-person, face-to-face time with customers or other employees?

Do you still go back?

That’s a hard question to answer.

Financially, increased unemployment benefits will only last so long, and it’s better to have a long-term, lower-paying job than rely solely on short-term, higher-paying unemployment insurance.

Health-wise, if you are not vaccinated or have other outstanding health issues, you might not want to take the risk of contracting COVID.

Below is from an economist at ZipRecruiter.

For many workers, there’s an understandable fear of getting sick and then infecting kids or other family members at home.

“A pandemic is a shock both to labor demand and to labor supply, and it’s a really significant shock to labor supply,” Pollak says. “There are many, many people who have pulled back and are deciding to sort of wait out this year and come back to work when the conditions are right.”

Child Care

This is such a big problem, and it disproportionately impacts women.

Over the course of the pandemic and subsequent recession, 2.5 million women left the workforce, with so many citing child care as the reason.

If the economy keep adding 1 million new jobs every month, that’s great, but there are still issues to address.

Who is going to take care of children who are still in virtual school until summer?
Who is going to take care of them during summer when families can’t afford all-day childcare?

I’ll give you a hint: they have two X chromosomes.

Adding fuel to the fire, once women do find a job, will they be punished for having to take care of their children?

Here is what one mom says about the interview process while being a parent.

“I’m worried that I will be judged for having to take care of my kids, or maybe they’ll think that I’m unreliable,” said Zucker, who has seven-year old boy and girl twins and a three-year-old boy.

“I try not to mention it, even though I think it’s a huge asset. Moms get stuff done.”

What is the Answer?

Like many macroeconomic problems, the answer is comprised of multiple factors being nudged forward rather than a single universal solution.

Increased Pay and Benefits

Cash is king.

One of the oldest ways to get people to do something they initially don’t want to do it pay them for it.

In this case, pay them more for it.

Check out what the president of a staffing agency said.

Browning said her firm is advising clients to pay more and offer other benefits, including bonuses, to offset the extended jobless aid.

Six months ago, a client raised the hourly rate for a temporary position by $4 an hour. The proportion of jobs filled, she said, jumped from 35% to 98%.

“You really have to encourage people to come back to work,” Browning said, “and that means pay at the level the market is demanding.”

Job Flexibility

This addresses both the health fears and the child care issues.

Companies can either extend or introduce the option of working from home or shift hours to the evening.

Granted, WFH comes with its own issues, such as toxic cultures from work getting worse or a higher risk of bring subject to cyber crime. But there are plenty of parents who would gladly accept those risks in exchange to keeping their (and their kids’) sanity.

Job Training

For those workers whose jobs will never come back, subsidized career training will be essential.

The good news is that with the easy access to online education, the entire system can be digital, avoiding the problems of coming into close contact with other people and arranging for transportation.

Vaccine Acceptance

The current administration has set a goal of April 19 for all adults to be eligible for vaccination.

It will take several months for that entire population to actually get a shot (or two) and be fully vaccinated, but progress is humming along steadily.

If/when we reach her immunity, face-to-face jobs will not be so hard to fill, especially when demand from customers picks up.

Opening Schools

Many schools could be open for in-person teaching for the 2021–2022 academic year. However, they have their own issues to contend with.

The primary concern is that many parents are hesitant to send their kids back to school, especially in hard hit areas. From NPR, “While 42% of students attended schools that offered fully in-person learning, just 33% of students returned full time.”

Other issues include lack of funding for prevention measures, lack of trust in the school system, and resistance from teachers if located in low-vaccination areas.

For any school that wants to reopen — or stay open safely — for in-person learning, the process starts with four basic precautions:

- Universal masking — “without that, in the United States right now it’s very challenging to say that it’s safe” to bring people back to school buildings, Ranney said.

- Grouping students and teachers into stable cohorts so that if one person gets the virus, only a limited number of others are exposed.

- Proper ventilation — anything from “being able to open windows to having better HEPA filters for the HVAC unit,” Ranney said.

- Some level of asymptomatic testing for staff and students to spot cases and prevent outbreaks.

Notice that neither actual vaccine adoption nor actual community COVID rates weren’t included.

Conclusion

Unlike previous recessions, this one was caused by something other than a financial crisis, leaving financial solutions less impactful than usual.

It will take a concerted effort to get people back to work.

The federal government needs to continue aggressive vaccinations.
Local governments need to open school.
Companies need to compensate their employees better.
People need to continue preventive measures.

Short of that, we will yoyo-ing between shut downs and reopenings, leaving everyone exhausted and broke.

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This article is for informational purposes only, it should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.