Job mismatch after Covid-19 due to many factors – Twin Cities

The continuing to escape COVID-19 pandemic will go down in history as a major exogenous shock to the global economy. We won’t see a smooth return to the status quo that prevailed before 2020, if at all.

But, while we have some preliminary hints as to what changes we’ve seen over the past year or so will or may persist, the way life will be, say, in 2025, when the time is up to sort it all out, is. far from clear. This is true around the world, but is particularly striking in industrialized countries, where the share of the workforce in jobs requiring physical on-site labor, such as construction or manufacturing, is low. .

In our own country, we are in the midst of structural changes in our economy in retailing, especially in food. In many professions, the economic benefits of doing significant amounts of homework and holding virtual meetings have become evident to employers and workers alike. The ease of seeing your doctor for health issues that don’t require a physical exam is a positive change from check-in lines and waiting rooms. There are advantages to online shopping for items we buy in malls and ordering groceries for pickup or delivery. A protracted adjustment process awaits us.

In the short term, an immediate high-profile problem is that the number of vacant jobs employers want to fill has grown faster than the number of applicants. This is especially true in the service sector, and it is happening despite the massive layoffs and business closures we saw a year ago.

In April, the total number of non-farm jobs was 144.3 million, up more than 14 million from April 2020 – the labor market bottom collapsed due to COVID-19 and restrictions to contain it.

However, that was still 8 million workers employed below 152.5 million in February 2020, when COVID first appeared in the United States at a nursing home near Seattle. It was a historic high. Another measure, all private sector employees, shows a very similar trend of decline and lukewarm recovery.

Yet in March, the last month for which job vacancy figures are available, some 8 million jobs remained vacant. Anecdotal reports of Twin Cities metro employers struggling to find unsuccessful workers are common.

Last month, 9.8 million people still met the official criteria to be counted as “unemployed”, more than 3 million above the low set in February of last year.

So why don’t unemployed people beat the doors of frustrated employers?

One obvious explanation is that federal spending in response to the COVID downturn makes it less expensive to be unemployed than “normal” times. The extra $ 300 a week, started in the COVID assistance bill passed in the last few months of the Trump administration and continued with additional spending after President Joe Biden took office, is an obvious problem.

Republican politicians and conservative economists identify this as the key problem – an incentive not to work, if you will. Some states have decided to eliminate the rate hike or require applicants for unemployment assistance to prove that they are actually looking for work.

Many Democratic officials dismiss this theory out of hand. Liberal economists criticize the millions of child care spaces that remain closed. Many schools remain in hybrid mode, with children staying at home much of the time. What should a working parent do? It’s hard enough to go to a virtual job if there aren’t good alternatives for childcare, but to show up for work in a bistro or bakery counter? Impossible.

In addition, vaccination campaigns initially focused on vulnerable people, especially the elderly or people with serious health problems, and those in the health professions. They then worked up to younger and healthier people, first to those in in-person service jobs. In other words, the majority of the first people vaccinated this spring were the least likely to be in the workforce, even in normal times. The proportion of people of working age who are not vaccinated is significantly higher than the population as a whole. And it is higher for low income and minority communities. Many unvaccinated people have legitimate concerns about exposure to infection, especially if they take on a job that involves contact with many different strangers.

As in many situations in the contemporary American economy, there are stark differences in the opportunities and dangers faced by people at different income levels. Hospitality and retail jobs more often involve close, unmasked contact with the public than those where a worker spends time in a home office, cubicle, no matter how dark, or in front of a machine. in a factory. Such work involves little contact with the public and is physically separated from a discreet group of colleagues seen daily about whose health one can learn much more.

Our inept mosaic health care system also adds complications. The risk of young people between the ages of 20 and 50 dying from COVID-19, if infected, is not high. But the infection can involve a lot of medical treatment and a long time that you cannot work. People who earn too much to qualify for Medicaid, but who do not achieve significant health benefits at work, risk relatively greater financial losses if they become ill. Many of the service sector jobs that remain open do not have paid sick leave.

Another factor is that the total figures for employment, unemployment and vacancies do not distinguish between full-time and part-time positions. The safe alternative of $ 300 per week does not depend on how many hours one worked before the pandemic or how many hours one would get from an available job. Inevitably, this incentive is greater for those who, intentionally or not, are likely to have low-paying jobs 20 hours a week rather than full-time jobs.

The question of the value of the flat-rate benefit compared to the compensation lost exists regardless of the number of hours worked. For someone laid off from a full-time job of $ 100,000 per year and offered for a new one, losing $ 300 per week is minor. For someone with a part-time job on the table bus or cleaning offices or hotel rooms, $ 300 is a lot.

A final factor to consider is the usual and pervasive factor of “imperfect information”. We are no longer in a situation of the 1950s where Ford, GM or US Steel could lay off 200,000 workers whom they would rehire when the economy improved. Many low-skilled jobs have disappeared with the closure of bars, restaurants and small tourism businesses.

People who have worked for them can indeed find similar work, but it will have to be with another employer. Employers and job seekers face greater uncertainty in a new situation than in the more familiar situation of a recession where the distribution of job losses and rehires is more evenly distributed.

This labor market crisis is an immediate problem that receives a lot of attention. It will work out in time. These are essentially what economists call “cyclical” problems. Yet COVID-19, as exogenous shocks do, also promotes much deeper, longer-term “structural” economic changes – in this case in the way people view and value work. These alone merit further examination.

St. Paul’s economist and writer Edward Lotterman can be reached at [email protected].