Over the past weekend, I found myself looking back at the last time I left town in early March. My wife and I celebrated our 23rd wedding anniversary. We bought tickets for the Eagles Concert at The Toyota Center in Houston, made reservations at a downtown hotel and nearby restaurant. We had a nice stay, a great dinner, and the concert was terrific. The common thread was great service everywhere we went. Why? Everyone skillfully performed their jobs at a high level. From our customers’ perspective, it was a seamless experience.
We came home from that fun weekend in a great mood. Then the COVID-19 pandemic began….
The effects on the economy have been staggering, with over 22 million U.S. jobs lost in March and April. Sectors hit the hardest included leisure, hospitality and retail. The overall economy has partially recovered 11 million of those positions, but despite these gains, the unemployment rate sits at almost 8% with layoffs still occurring and dragging down any achievements. The pandemic has effectively eliminated all of 2018 and 2019’s economic growth and caused more damage than the 2007-2009 downturn when 8.7 million jobs were lost.
K-shaped recovery
A few months ago, certain economists predicted that a V-shaped recovery would be a swift rebound from the steep decline. Others forecasted a U-shaped path with a long downturn before its eventual rise.
The Wall Street Journal recently detailed a two-track recovery that was actually K shaped. Some workers and industries are faring far better than others.
The upward arm of the K includes well-educated information, management and professional services personnel typically tied to the digital economy as well as people in select service industries, including cleaning service professionals, landscapers, plumbers, health care providers and other essential workers. They are still doing well because they reside in industries in which their skills are still in demand.
The K’s lower arm includes lower wage workers with fewer credentials. They typically work for old line businesses, and they are struggling with no end in sight.
As we look at this K-shaped recovery, we see deeply divided outcomes. With some enjoying investment and family wealth at record highs while others are seeking essentials in long foodbank lines.
Workforce insights
Prior to the pandemic, almost all workforce demographics saw unemployment rates fall to the lowest on record while pay simultaneously rose.
As the pandemic took hold, job losses occurred in March and April. By September, U.S. Labor Department data showed that workers with Bachelor’s degrees or higher had nearly fully recovered from job losses while those holding a high school diploma held 11.7% fewer jobs compared to February. Furthermore, those without a high school diploma held 18.3% fewer jobs. These last two groups comprised a total of 4.4 million job loss, or around 40% of the jobs lost since the pandemic began. The group was disproportionately affected as it only constitutes only 27% of the labor force.
It is worth noting that the 36 million Americans with some college but no degree have also been adversely impacted, with 6.5 million fewer jobs.
As you would expect, some of the most secure jobs are the ones that can be done remotely– technology, management, accounting and financial positions, to name a few.
Effect on state governments
This economic contraction is also impacting U.S. states, many of which face the biggest cash crisis since the Great Depression. According to Moody’s Analytics, these same states are facing a budget shortfall projected to total $434 billion between 2020 and 2022. The estimate assumes no additional assistance from Washington, further coronavirus restrictions on business and travel, as well as additional costs associated with Medicaid due to high unemployment. The shortfall is greater than the 2019 K-12 budget of every state combined. Fiscal deficits have already caused tax increases and cuts to some important state budget items.
Adding additional skills
This raises the question: where do people go from here? How can they take control of their future and change their current path? Fortunately, attaining additional market-ready skills offers a way forward. The breadth of those skills is noteworthy. It may involve learning a trade that is always in demand, such as HVAC or plumbing. The necessary skills and certifications can still be affordably accessed at many community colleges and online institutions. Many of these same institutions offer local co-op or internship opportunities.
It may also entail seeking entry-level skills in health professions, technology, education or business. I’m a director of academic programs at Western Governors University, and I am proud that we offer affordable programs that upskill students and prepare them for the future. Our competency-based university offers a student-centric experience with incredible flexibility and support. That being said, there are also a number of great institutions that offer convenient online alternatives, so students have many options.
The world will continue to evolve during and after this pandemic. The educational community needs to continually refresh and create innovative low-cost curricula that develop market-ready skills. This will serve the needs of a changing diverse workforce and help to create better lives for everyone.
References
Wall Street Journal, “U.S. Job Growth Slowed in September”, October 2nd, 2020.
Wall Street Journal, “The Covid Economy Carves Deep Divide Between Haves and Have-Nots”, October 5th, 2020
Wall Street Journal, “U.S. States Face Biggest Cash Crisis Since the Great Depression”, October 28th, 2020
Disclaimer: Embedded links in articles don’t represent author endorsement, but aim to provide readers with additional context and service.
You Might Also Like
