Webinar Recap: “The Short and Long Term Impacts of the Pandemic on the Labor Market” (April 27, 2021)

April 27, 2021, saw The Risk Institute’s fourth Risk Series event of 2021: “The Short and Long Term Impacts of the Pandemic on the Labor Market.” The timely, informative, and thought-provoking session was moderated by Executive Director Phil Renaud, and featured guests Dr. Bruce Weinberg, Professor of Economics and Public Affairs at The Ohio State University, and Dr. Bill LaFayette, author, and owner of Regionomics LLC.

Renaud opened up the session by sharing data that illustrates a clear disparity relating to the effects of the pandemic on the current labor market. Specifically, inequality related to gender, race, age, and type of industry.

Dr. Bruce Weinberg reminded attendees that it is important not to look at the economy in isolation, as it coevolves with the nation’s health, brought to a halt by the coronavirus pandemic. In his research, Dr. Weinberg considers the historic and unprecedented disruption of the labor market – paired with skyrocketing unemployment rates – which dwarf anything that we have seen before, even during the Great Depression or the recession of 2007-2009.

Racial, ethnic, gender, and family composition disparities were identified, as were specific industries and occupations. Understandably, unemployment was less likely if individuals were in a role that enabled them to work remotely, and/or did not require them to operate face to face.

Emerging data highlights other disparities such as younger workers and older workers being more adversely affected by job loss; the most educated and least educated workers were least affected; and lower-income workers were placed at higher health risk, but a reduced risk of losing employment. Another disparity is location. Consider Amazon fulfillment jobs, which are often at warehouses situated in remote locations and, in turn, not serviced by public transport. This creates a challenge for potential employees who do not have cars.

In 2021’s wave to return to work, the disparities mentioned above are only being reinforced:

  • Age: the groups most likely to be unemployed (the older and the younger employees) are also least likely to be reemployed.
  • Gender: women are more likely to have lost their jobs but are less likely to be recalled.
  • The same applies to racial disparities, thereby demonstrating the depths of inequality whereby the disadvantaged groups are hurt the most.

When looking at returning to work post-pandemic, Dr. Weinberg’s research indicated that the majority of people who are returning to work with ease are those being rehired by the same companies. In connection, it is also clear that the more time that passes, the ability for these employers to call in former employees declines. This, of course, is easy to understand: organizations cannot expect employees they let go in early-2020 to sit around and wait for a (potentially never coming) callback.

Dr. Weinberg concluded his presentation by pointing out that with the tremendous churn in the labor market, unprecedented numbers of people losing their jobs, and half a million people getting new positions with new companies, the potential for disparity only increases. The economy is recovering well, and economic stimulus has helped, but these incongruities are likely to continue to grow.

According to Dr. Bill LaFayette, the economy is improving rapidly: the gross domestic product (GDP) loss experienced last year, if economists are correct, will be recovered by this coming fall. This is good news, considering the losses felt locally over the last year. In Columbus alone, 160,000 people lost their jobs – almost triple the number of jobs lost during the 2007-2009 recession.

While the recovery has been steady in the city, state, and country as a whole, Dr. LaFayette believes that (despite the strong forecast growth) when we reach December this year, employment will remain at a lower level than its pre-pandemic starting point. In fact, 60% of the forecasters in a survey by the National Association for Business Economics (NABE) don’t expect employment to return to pre-pandemic levels until 2023 or later.

Dr. LaFayette argued that the pandemic has served to accelerate trends in the labor market that were present beforehand – not only immediately prior to the pandemic, but, in some cases, for decades. We have seen, and will continue to see, an increase in virtual offices and working from home – which has worked out better than employers expected and is preferred by many employees. Many companies and employees are expressing a preference for a hybrid office/home mode. According to a survey by PwC released in January, part of the reason behind this is that 87% of employees think that spending at least part of their time in the office environment promotes a positive company culture. Still, the flexibility of working at home creates a better work/life balance.

One potential advantage for a company that enables its employees to work remotely is the opportunity to cast a bigger net when looking for staff. Many highly skilled potential employees have been restricted from contributing to the workforce for a number of reasons, such as: family commitments, transport, accessibility, and hesitancy to relocate. These barriers are more likely to be overcome if an employee is allowed the flexibility of working from home and provided the tools to do so.

These smaller-scale elements that affect the labor workforce contribute to a major shift in the world economy: from an industrial economy to a knowledge economy. Dr. LaFayette explains that over the past seventy years, the economy has transformed from one based on industrial production, to one based on knowledge production – a transformation accelerated by automation and artificial intelligence.

In this knowledge economy, knowledge becomes as much a factor of production as the traditional factors of land, labor, and capital. It applies everywhere – not just to high-skill and technical fields – and is shaped by places and local economies.

In his 2020 book Knowledge Economies and Knowledge Work, Dr. LaFayette (and his co-authors Wayne Curtis, Denise Bedford, Seema Iyer) address the concept that people believe that artificial intelligence, in particular, will result in a wholesale loss of jobs that we will need to remedy through measures like universal basic income. LaFayette et al. cite and discuss two recent studies that argue the opposite — that these trends are more likely to result in an eventual net job gain.

One of these studies, undertaken by The World Economic Forum, predicted that 75 million jobs that existed in 2018 may be displaced worldwide by 2022, while 133 million new jobs may be created over that period. And it’s worth noting this prediction came before the pandemic accelerated the pace of change.

Dr. LaFayette reminds attendees that these labor force changes may evoke a sense of dislocation and pain, as the majority of jobs will change fundamentally and require a whole new set of skills. But just because certain jobs could be, for example, automated, it doesn’t mean that they will be. It depends – as always – on the cost and effectiveness of machines, versus the cost and effectiveness of people, he says.

These changes, in turn, affect how we look at education and its role in making this knowledge economy a success. Generally speaking, workplace skills are crucial – like teamwork, leadership, critical thinking, personal responsibility, attention to detail, basic math skills, engagement, and, especially, oral and written communication (skills that are far too often lacking, says Dr. LaFayette).

Moving forward, rather than looking through a lens of simply preparing an individual for a career, changes in the way we educate in general will need to be considered:

  • The pace of change will demand the support of ongoing learning that all individuals will need to remain relevant and solve real-world problems.
  • Educational programs geared to so-called “nontraditional” students will have to be far more common
  • Educational institutions will need to stay on top of the skills required by employers and will have to offer programs geared to the schedules and needs of workers.

 

Register today for The Risk Institute’s May 18, 2021 session, “Exploring the Change in Business and Consumer Behavior.”

This webinar will feature Lara Koslow (Boston Consulting Group, Managing Director & Senior Partner), Selin Malkoc (The Ohio State University, Fisher College of Business, Associate Professor, Marketing), Chetan Kandhari (Nationwide, SVP, Chief Innovation & Digital Officer), and Joseph Goodman (The Ohio State University, Fisher College of Business, Associate Professor Chair, Marketing & Logistics). The fireside chat will be moderated by Phil Renaud, Executive Director, and Risk Institute partners at CBUS Retail, David Cherry & Angela Thompson.

Written by Jack Delahunty in partnership with The Risk Institute at Ohio State’s Fisher College of Business

 

 

 

 

 

 

 

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