People wait in line as SF-Marin Food Bank delivers 1,600 bags of food in San Francisco on April 20, 2020. Work permits and layoffs created by coronavirus shelter orders are leading thousands of people to seek assistance. food.
San Francisco Chronicle | Hearst Newspapers via Getty Images
With brief federal measures to shore up the expiring economy, we are likely to face a second wave of unemployment that requires acute and systemic solutions to another impending crisis. As our nation’s governors grapple with the spread of the coronavirus this summer, an insidious economic problem looms: the second wave of layoffs.
When the pandemic hit, millions of Americans felt an immediate and severe economic impact, with more than 40 million workers applying for unemployment since early March. Congress moved quickly, enacting the CARES Act and implementing numerous short-term measures to stem economic bleeding, injecting stimulus, granting incentive-laden loans, and extending and expanding unemployment benefits.
Although we may not agree on the merits of these and other efforts designed to shore up the economy in a time of crisis, the reality is that each of them has an expiration date.
On July 31, the $ 600 increase in unemployment benefits will disappear for millions of Americans. Next month, many of the 4.6 million companies that took stimulus loans may start laying off employees as funds run out, according to a recent survey. And on October 1, the layoff bans tied to our $ 25 billion bailout of the airline industry will expire.
As these and other short-term economic elements disappear, a measure of economic stability will evaporate for unemployed and unemployed workers, many of whom are trying to await the economic impact of the pandemic. In a vacuum, this in itself could be a crisis, but it is more likely to be an omen. Throughout the fall and through the end of 2020, businesses, small, medium, and large, and in a wide range of industries, will face bleak economic conditions and difficult workforce decisions.
The problem with “high sugar levels” and short-term solutions
In executive circles, the reality of large-scale layoffs is considered to be that all data, except true and available, suggests continuing difficulties for the economy. Earlier this week, Goldman Sachs predicted that the US economy would contract more than previously expected, at a rate of 4.6% compared to 4.2%. In addition, United Airlines issued a memorandum to employees indicating the risk of leave and layoffs in the coming months.
As the workforce implications of these and other political “poison pills” prevail, they will have far-reaching implications for the US job market.
Another series of financial stimuli from Congress could provide a short-term solution. That alone will not fuel the kind of sustained growth policymakers expect of the post-COVID economy, and what’s worse, it can produce a “high sugar level.” No capital injection will address an underlying reality for millions of workers struggling to keep up with the demands of a rapidly evolving job market months ago, when we were still in the tightest job market in fifty years.
Before the pandemic, the investigation indicated that seven out of ten white-collar employers were already laying off workers because technology made their jobs “irrelevant or redundant.” Now, some estimates suggest that up to 40% of lost jobs will never return. The pandemic has become what MIT economist David Autor has called an “automation forcing event.” Workers urgently need new skills and training to get a job or to stay employed in an era when jobs will be scarce and where the life span of skills will continue to decrease.
Rather than simply prioritizing short-term economic stability for businesses, Congress should invest in the people who suffer the most. Those investments should be in the type of education and training that can build resilience to continued economic turmoil. Getting the United States back to work, but also to jobs of the future, will require changes on both the supply side and the labor market.
On the supply side, we need massive new investments to ensure that people have the means to pay for training programs. Our workforce development infrastructure was weakened by decades of anemic investment long before the pandemic. With insufficient funding to support unemployment of 3.5 percent in the pre-pandemic economy, that system does not have the resources to finance the training of the tens of millions of workers represented by 11.1% unemployment, a number that many they hope to go higher this fall.
But public investments can’t focus on training alone: displaced workers, disproportionately low incomes, and people of color who lack access to the social capital that many of us take for granted in our job search will need training and professional support . That support will enable them to successfully navigate the torrent of marketing and commercial materials from a maze of thousands of sometimes unscrupulous business schools. In addition, federal policy makers must recognize that transportation, child care, and other factors all too often hinder access and success for displaced adult workers. So-called Opportunity Accounts can be a way to close these gaps, providing the resources to allow underserved groups to take advantage of the training and unlock its many benefits.
Of the 7.1 million net jobs lost during the economic recession that followed the financial crisis in 2007, almost all were filled by workers with less than a bachelor’s degree. But only 3.2 million of the jobs added during the recovery went to that population.
Of course, the solution should not be entirely from the government.
Closing the skill and equity gaps will challenge employers to think differently; looking for talent in unconventional locations and communicating not only the credentials and experience, but also the skills they want for prospective employees in a way that enables them to target more accurately and reduce the cost of additional training.
Hiring by both potential and pedigree has the potential to create a more inclusive future. It will also remedy the growing wage and economic inequality that emerged in the wake of the Great Recession. Of the 7.1 million net jobs lost during the economic recession that followed the financial crisis in 2007, almost all were filled by workers with less than a bachelor’s degree. But only 3.2 million of the jobs added during the recovery went to that population, and the vast majority of them were people with an associate degree or at least some college education.
Employers who need skilled workers can use creative funding tools like Career Impact Bonds, which expand access to high-quality, professional, and job-focused training. Employers must support the kinds of higher education investments that create professional and economic mobility for workers, along with an acknowledgment that workers who don’t perfectly fit the historical powers for talent may still have the skills they need to shut down. the skill still present: and capital gaps.
Addressing the second wave of the unemployment crisis will also require unprecedented collaboration between employers who are on opposite sides of the rising wave of the labor market. Because while many segments of our economy are exploding right now, others are growing. Employers on both sides of the hiring spectrum must participate in a process that links laid off workers to opportunities or one that sets a clear standard on how to achieve them.
Beyond the work of individual actors, displaced workers need employers and training who rarely speak the same language to unite, with a shared sense of responsibility to create a smoother transition for workers. Coalition efforts, such as the newly formed SkillUp Coalition, which leverages partners who address these issues from multiple perspectives, are a vital way to address the situation on the ground.
The stark reality is that our country, which is already in the midst of a historic recession and in many ways unprecedented, will surely face more economic pain in the coming months. We have a better chance of recovering quickly and fairly if we treat it sustainably. We must overcome short-term solutions and avoid thinking that, like the coronavirus itself, waiting for it will be enough.
—By Maria Flynn, CEO of JFF National Nonprofit, and Jane Swift, President of LearnLaunch nonprofit edtech and former Massachusetts Governor
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