How the pandemic will reshape the job market
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A shock to the job market as massive and as sustained as the coronavirus will leave lasting change — and damage — in its wake.
The big picture: We jumped from the best labor market in 60 years, before the coronavirus, to the worst, in April. As the country comes back, millions of jobs lost during the pandemic will never come back, and there will be massive reallocations of jobs from some parts of the economy to others.
- "This is the biggest thing since the Great Depression. It's absolutely enormous and incredibly fast," says Nicholas Bloom, an economist at Stanford.
What's happening: Even as states start opening up, new job postings in the U.S. are still down nearly 30% compared with February, according to an analysis by research firm Gartner.
But a closer look at which sectors of the economy are hiring tells us more about how the pandemic might alter the job market.
- There's been a surge in postings for grocery and delivery workers. Amazon, Walmart and Instacart alone have hired around 700,000 people since the pandemic began.
- Look for similar surges in cleaning, sanitation and construction in the coming weeks and months, Bloom says. Public spaces will need to hire cleaning crews and construction companies to keep spaces sanitized and add barriers or other distance-enforcing features.
- We could also see increased hiring in high tech because jobs in that sector can often be done remotely, he says.
There is also data on the sectors that have suffered most and that will have the toughest recoveries.
- Jobs like Uber driver, flight attendant, server and chef are among those that have seen the steepest hiring slumps.
- Gartner notes that hiring in some of the hardest-hit areas of the economy — like hospitality and retail — is starting to climb back up. But millions of jobs will be gone for good as many stores and restaurants permanently shutter and people remain nervous about traveling.
And there's another longer-term — and seldom discussed — potential impact of the pandemic: So far, much of the pain has hit low-skill and low-wage jobs, but white-collar jobs will also be in jeopardy as the crisis grinds on, Bloom says.
- Consider this: The bulk of job creation during the pandemic has been in low-wage jobs, like grocery and delivery, while other sectors freeze hiring altogether. If a graphic designer or a middle manager at a software company loses their job now, it'll be very difficult to find a comparable job out there.
- The deteriorating labor market could also push discouraged, laid-off older workers — who are also at greater risk of becoming seriously ill if they contract the coronavirus — into early retirement.
- "There will be a number of people for whom this will be the last job they have," says Bloom. "And waves of early retirement are really bad for the U.S. labor market."
