Jun 23, 2020

Axios @Work

By Erica Pandey
Erica Pandey

Welcome back to @Work. Reply to this email or write to me at erica@axios.com with your tips, ideas or comments.

  • Situational awareness: Axios has a new daily podcast! The first and second episodes of "Axios Today," with host Niala Boodhoo, are out now. Subscribe here.
  • You're invited: Join Axios CEO and co-founder Jim VandeHei and executive editor Sara Kehaulani Goo Wednesday, June 24, at 12:30pm ET for conversations on ending child hunger with chef and founder of Fieldtrip Harlem JJ Johnson and national policy adviser at Share Our Strength Dorothy McAuliffe. Register here.

I've got 1,481 words for you today — a 6-minute read. To start...

1 big thing: How the pandemic will reshape the job market

Illustration: Eniola Odetunde/Axios

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."
2. Why discrimination persists in the workplace

Illustration: Eniola Odetunde/Axios

Despite laws protecting people from workplace discrimination on the basis of race, gender, age, religion and sexual orientation — including last week's Supreme Court victory for LGBTQ workers — when it comes to actually holding firms accountable, the odds are stacked against workers.

Why it matters: The U.S. workplace is still rampant with discrimination, but the bulk of it is going unchecked as companies have figured out how to keep themselves out of court.

"If you look at the number of white people in the C-suite or attrition rates for African Americans or wage disparities, there's been very little change in the past few decades," says Linda Friedman, a Chicago lawyer who represented 700 workers in a race-discrimination lawsuit against Merrill Lynch in 2013.

  • "In my opinion, the most significant reason is there is no oversight," she says. "Entire industries have taken themselves out of the sight of the law," primarily through mandatory arbitration clauses.

By the numbers: Nearly 70% of U.S. employers with 5,000 or more workers have mandatory arbitration policies, according to the Economic Policy Institute.

  • "Under such agreements, workers whose rights are violated — for example, through employment discrimination or sexual harassment — can’t pursue their claims in court but must submit to arbitration procedures that research shows overwhelmingly favor employers," EPI's Alexander J.S. Colvin writes.
  • In total, around 60 million American workers don't have access to courts due to mandatory arbitration.

But even at firms that don't have such policies, pursuing discrimination cases is difficult, Friedman says.

  • "These cases are hard to prosecute even if you get to court. So much effort is spent in defeating the lawsuits," she says.
  • "It’s a real act of courage and resolve to file one of these lawsuits in the first place." Future employers can Google search you and quickly figure out if you were a plaintiff in a discrimination case — and that could work against you in the hiring process.

Rare counterexamples: Wells Fargo dropped its mandatory arbitration clause for sexual harassment claims in February, and, the same month, a former employee of PNC bank who said she was sexually assaulted by a male customer was awarded $2.4 million by a New Jersey jury.

3. Second-tier cities vie for telecommuters

Illustration: Eniola Odetunde/Axios

Lingering post-pandemic remote work could redistribute some New York City and Silicon Valley jobs to the American heartland, and smaller cities are already competing to attract talent — but it won't be so easy.

The big picture: Although U.S. workers will have the option to scatter and get out of the crowded and expensive metros, the pull of those places may be too strong for the second-tier cities to win out.

The backdrop: We're living the age of winner-take-all cities, with just the top metros vacuuming up all of the wealth and job growth. "It has become very clear that a very short list of places have extreme economic magnetism," says Mark Muro of the Brookings Institution.

  • But now, as companies like Facebook, Twitter, Google and Coinbase say they'll let some portion of their employees work from anywhere, smaller cities are offering incentives for those workers to come to town.
  • Savannah, Georgia, has announced a new $2,000 per remote worker relocation benefit as an incentive. "[W]hether or not the company is headquartered here, we want the high wage earners that can be remote to move here,” Jennifer Bonnett of the Savannah Economic Development Authority told Fast Company.
  • There are similar incentives offered by Tulsa, Oklahoma; Topeka, Kansas; and Vermont, per Fast Company.

And there's some evidence that the efforts of smaller cities might be working. "Zillow and Redfin are both reporting spikes in single-family home searches in smaller cities," the Wall Street Journal reports.

But, but, but: Such incentives might not be enough.

  • Workers may be unwilling to leave the major metros if they know their compensation may go down. (For example, Facebook has said it would adjust pay to local cost of living for remote workers.)
  • And there can be a real fear of becoming marginalized once you're no longer seen in the office each day, the Journal notes.
  • On top of that, there's an allure to living in the big coastal cities that's impossible for smaller metros to replicate. Many young people choose New York or San Francisco or LA precisely because of the bustling crowds and nightlife.

The bottom line: For second-tier cities, "the starting viewpoint should be a skepticism about massive change and decentralization," says Muro. "But announcements like those of Facebook and Twitter do suggest that the current status quo might not be immutable."

4. Worthy of your time

Illustration: Sarah Grillo/Axios

Here's what I'm reading this week.

The coronavirus recovery may be W-shaped (Axios)

  • U.S. economic data has shown improvement in recent reports, all showing better-than-expected rebounds. But the momentum could reverse quickly if the coronavirus pandemic picks back up and policymakers drag their feet on renewing stimulus measures, experts say.

The new normal of everyday life (Wall Street Journal)

  • Scroll through a beautifully designed graphic of the medium- to long-term changes the pandemic will have on offices, gyms, schools and places of worship.

A tidal wave of bankruptcies is coming (New York Times)

  • We've already seen household names like J. Crew and Hertz go belly up as a result of the pandemic. Look for these to be joined by many, many more companies — large and small — as experts project this year will be worse for bankruptcies than in 2008, at the height of the financial crash.

What public health experts say about elevators (Washington Post)

  • Elevators, which pack us into closed, cramped spaces, will present a big challenge for social distancing as America returns to work. And, in the sky-scraping office buildings in major cities, they could create massive bottlenecks. Here's how to ride them safely.
5. 1 fun thing: Drive-thru interview

Illustration: Sarah Grillo/Axios

We've seen curbside pickup at restaurants and drive-by high school graduations — and now recruiting companies are offering something similar: drive-thru job interviews.

What's happening: For many companies, meeting candidates in person before hiring them is a big part of the process, but that's become impossible in the era of social distancing — and videoconferencing just isn't the same.

  • To solve that problem, recruiting companies are having people roll up to a site with their resumes in hand as if ordering fast food. They'll talk for a few minutes about qualifications and job interests. Then the recruiters can go back to firms at least having met potential candidates — even if it was through an open car window.
  • Wall Street Journal reporter James Areddy visited one of these events in Grand Rapids, Michigan, and described the scene on the WSJ's Your Money Briefing podcast: Have a listen.
Erica Pandey

Thanks for reading!