In this analysis, we examine the impacts of the pandemic recession across different dimensions, including employment, labor force participation, and the need to switch industries. This analysis provides texture and evidence to the emerging understanding that women and people of color, working in the service industry, have been the most negatively affected. The challenge of long-term unemployment for some workers, coupled with the high likelihood that some industries will see weaker labor demand for some time, requires a workforce development strategy that supports workers who will need to switch industries and occupations.
Many people previously employed in harder-hit industries have felt compelled to change industries. As certain industries continue to face pressures and the benefits of switching out of struggling industries do not abate, additional broad-based workforce training would help to facilitate these transitions. Figure 4 shows how workers in different industries fared from December 2019 to November 2020 (solid colors) and from December 2018 to November 2019 (hatched colors). Using the Current Population Survey, we constructed consecutive four-month periods over which the same worker is observed. Conditional on the industry in which the person reports working in month one, we describe the share of workers who changed industries. We note whether they also saw a change of employment status (in any direction between employed, unemployed, and not in the labor force) within those four months.
In almost every sector, there were more cross-sector moves from December 2019 to November 2020 than the prior year. More than 20 percent of those who started their four-month panel in the leisure and hospitality, service, agricultural, transportation, wholesale, and retail sectors were reported to be in a different sector within three months. Among those who changed sectors the share who reported a change in employment status (a spell of unemployment or labor force nonparticipation) vastly outstripped those who did not in almost every sector.
More and Better Workforce Training is Needed to Help Workers Adjust
There are numerous policies needed to address the labor market challenges facing the millions of people who are out of work. First, measures are needed to ensure people feel safe to resume overall economic activity so that job growth accelerates. Second, household financial resources must be bolstered by the social insurance system, including unemployment insurance, in order to support their spending while the economy is weak and in order to support a more robust economic recovery. Third, overall job quality must be improved including protection for workers who would be at risk as they return to jobs and the assurance of a fair, living wage.
As a result of the long-term unemployment wrought by the COVID-19 recession and the expected changes in labor demand going forward, investments in education and training are also a needed part of the policy solutions. As a group, those with lower levels of education still had not made up their Great Recession employment losses before the COVID-19 pandemic hit. Those with lower levels of education were more likely to have lost their job and were more likely to have to start over in a new industry to find a new job during the pandemic. Providing access to training and education helps people who want to get into higher paying careers do so and is also necessary for some whose jobs will not be coming back.
As some industries might be quite slow to recover and indeed some changes in the labor market are likely permanent, the ability to find employment in different occupations and industries will be an increasingly critical factor in the economic recovery from the COVID-19 recession. David Autor and Elizabeth Reynolds argue that an acceleration in automation as a result of the response of firms to the pandemic will change the composition of labor demand. They write: “We can expect leaner staffing in retail stores, restaurants, auto dealerships, and meat-packing facilities, among many other places. Like the decline of retail, these developments were sure to happen over the longer run. But the crisis has pulled them forward in time, hastening both the accompanying productivity gains and the inevitable labor market adjustments.” Indeed, as we described above, already we can see that many people who are getting jobs are getting them in different industries than they were before.
Federal support for workforce training, to help equip people with the different skills they will need for the different labor force they will return to, will be essential for a strong labor market recovery. That support will need to address affordability and access to training both outside and inside of companies. In addition, the most effective policies would ensure that workforce training is of high quality and leads to better labor market outcomes. Efforts to increase affordability are needed at community colleges, as many have proposed, but also at other training providers such as community-based training programs and union-connected training.
The Markle Foundation has put forward the following proposals: an Opportunity Account to help people pay for effective education and training; investments to support unions, colleges, and other organizations that create training for quality jobs; matching funding for employers making significant investments in training new workers; and career coaching that is available to all unemployed and low-wage workers.
Chosen excerpts by Job Market Monitor. Read the whole story @ The critical role of workforce training in the labor market recovery