Why the pandemic left long-term scars on global job market
Esther Montanez’s housecleaning job at the Hilton Back Bay in Boston was a lifeline for her, a 31-year-old single mother with a 5-year-old son.
The pay was steady and solid — enough to pay her bills and still have money left over to sock away for a savings account for her child. Montanez liked her co-workers and felt pride in her work.
But when the viral pandemic slammed violently into the U.S. economy a year ago, igniting a devastating recession, it swept away her job, along with many tens of millions of others. Since then, in desperation, Montanez has siphoned away money from her son’s savings to help meet expenses. At Christmas, she turned to charities to provide presents for him. For now, she’s getting by on unemployment aid and, for the first time, has applied for food stamps.
“The truth is, I want my job back,” said Montanez, who has banded with her former colleagues and worked through their union to press the hotel to reinstate their jobs.
Getting it back could prove a struggle for her, along with millions of other unemployed people around the world. Even as viral vaccines increasingly promise a return to something close to normal life, the coronavirus seems sure to leave permanent scars on the job market. At least 30% of the U.S. jobs lost to the pandemic aren’t expected to come back — a sizable proportion of them at employers that require face-to-face contact with consumers: Hotels, restaurants, retailers, entertainment venues. United Here, Montanez’s union, says 75% of the 300,000 hospitality workers it represents remain out of work.
The threat to workers in those occupations, many of them low-wage earners, marks a sharp reversal from the 2008-2009 Great Recession, when middle- and higher-wage construction, factory, office and financial services workers bore the brunt of job losses.
No one knows exactly what the job market will look like when the virus finally ends its rampage.
Will consumers feel confident enough to return in significant numbers to restaurants, bars, movie theaters and shops, allowing those decimated businesses to employ as many people as they did before?
How much will white-collar professionals continue to work from home, leaving downtown business districts all but empty during the week?
Will business travel fully rebound now that companies have seen the ease with which co-workers can collaborate on video platforms at far less cost?
“Jobs are changing — industries are changing,” said Loretta Penn, chair of the Virginia Ready Initiative, which helps workers develop new skills and find new jobs. “We’re creating a new normal every day.’’
The habits that people have grown accustomed to in the pandemic — working, shopping, eating and enjoying entertainment from home — could prove permanent for many. Though these trends predated the virus, the pandemic accelerated them. Depending on how widely such habits stick, demand for waiters, cashiers, front-desk clerks and ticket takers may never regain its previous highs.
The consultancy McKinsey & Co. estimates that the United States will lose 4.3 million jobs in customer and food service in the next decade.
In a study, José María Barrero of Mexico’s ITAM Business School, Nick Bloom of Stanford University and Steven Davis of the University of Chicago concluded that 32% to 42% of COVID-induced layoffs will be permanent.
The U.S. Labor Department, too, has tried to estimate the pandemic’s likely impact on the job market. Before taking the pandemic into account, the department last year projected that U.S. jobs would grow 3.7% between 2019 and 2029.
Last month, it estimated that if the outbreak’s lasting economic effects were limited mainly to increased work from home, job growth over the 10 years would slow to 2.9%.
But if the pandemic exerts a deeper, longer-lasting impact — with many consumers going less frequently to restaurants, movie theaters and shopping centers — job growth would slow to just 1.9%, the department predicted. In that worst-case scenario, the department estimated, employment would tumble 13% for waiters and waitresses, 14% for bartenders, 16% for fast food cooks and 22% for hotel desk clerks.
The coronavirus recession has been especially cruel, victimizing people at the bottom of the pay scale. Lael Brainard, one of the Federal Reserve’s governors, said last month that the poorest 25% of American workers were facing “Depression-era rates of unemployment of around 23%” in mid-January — nearly quadruple the national jobless rate.
The Fed also reported last month that employment in the lowest-paid jobs was running 20% below pre-pandemic levels. For the highest-paying jobs, by contrast, the shortfall was just 5%.
Services workers had long been thought to be safe from the threats that menaced factory employment: Foreign competition and automation. But more and more, as employers have sought to save money in a time of uncertainty and to promote social distancing in the workplace, machines are reaching beyond the factory floor and into retail, restaurants and hotels.
Tamura Jamison, for instance, came back to a changed job when she was recalled to work in June as a front desk agent at the Paris Las Vegas Hotel & Casino, owned by Caesars Entertainment. Her hours were cut from 40 to about 32 a week, resulting in a pay cut of about $700 a month.
Just 26 of 45 workers on her team were brought back. Existing self-service kiosks used to be optional for guests checking in. No longer. Now, agents must direct guests to the kiosks and intervene only if needed. That means fewer commissions for room upgrades; guests can request them on their own.
As a union shop steward, Jamison knows that her missing colleagues won’t likely be recalled.
“At this point,” she said, “they have to move on with their lives.”
Jamison wonders whether the front desk operation will eventually be eliminated altogether, the jobs lost to automation. Guests, she notes, will soon have keys on their smartphones, allowing them to go directly to their rooms.
“This is the start of a new Vegas,” Jamison said. “The front desk doesn’t really have to be there. There are ways to eliminate our jobs.”
In a study out last month, Stefania Albanesi of the University of Pittsburgh and Jiyeon Kim of the Korea Development Institute warned that in a world still fearful of the virus or of other health threats, many companies could replace employees with machines rather than redesign workspaces to facilitate social distancing and reduce the threat of infection.
The services occupations that have absorbed the biggest job losses, they say, “have high susceptibility to automation.” That “raises the prospect that as the economy recovers, at least some of the jobs lost may not be reinstated.’’
Few places have been hurt more ruinously by the pandemic than Las Vegas, whose economy is powered by out-of-town visitors and live entertainment. Until 12 months ago, Sharon Beza was among 283,000 workers in the city’s tourism and hospitality field. She had worked as a cocktail waitress at Eastside Cannery hotel-casino from the time it opened in 2008 to the day she was furloughed a year ago. Over the summer, her job was eliminated.
Now a part-time cashier at an Albertsons grocery store, Beza is still seeking full-time work in the restaurant industry, which employed her for 37 years. She’s holding out hope that Las Vegas will rebound and tourists will return to restaurants, hotels and casinos. But it may be impossible, she knows, for laid-off workers like her to land jobs that offer the kinds of solid wages, tips and benefits they used to enjoy.
In Europe, government jobs programs have prevented a devastating spike in unemployment. Unemployment in January was 8.1%, up only modestly from 7.4% a year earlier. Yet an economic reckoning has begun, with companies in the worst-hit sectors envisioning years of reduced demand.
Consider commercial airlines. Lufthansa’s workforce shrank from 138,000 to 110,000 in 2020. British Airways plans to cut 12,000 jobs from its 42,000-strong workforce. UK-based regional airline Flybe took 2,000 jobs with it when it collapsed a year ago.
Germany’s hotel and restaurant association says that despite government support to help maintain payrolls, employment sank from 2.45 million pre-pandemic to 2.09 million. Holger Schaefer, a labor economist at the German Economic Institute in Cologne, suggested that behavioral changes — more digital meetings, for example, and less business travel — would result in permanent job losses in some companies.
By contrast, some other sectors of the economy should benefit from pent-up demand once the virus is defeated. Schaefer is optimistic about restaurants, for one.
“There is a fundamental demand for such services,” he said. “I can’t imagine that when everyone is vaccinated and it’s safe, that there will still be problems in that area.”
Around the world in the Chinese city of Xuzhou, northwest of Shanghai, Guan Li, a convenience store owner, said he hired four out-of-work relatives but had to lay them off after sales fell by half. Now, he and his wife run the shop themselves.
“People just don’t want to buy,” he said. Guan, who is close to 60, and his wife plan to retire because the shop’s income may no longer cover their costs. Owners of two similar shops nearby also plan to close, he said.
In Egypt, Mohammed Gamal used to earn a decent living working six days a week at a café in Giza, twin city of Cairo. But pandemic restrictions and dwindling business shrank his workweek and slashed his income by more than half. It didn’t help when the government banned “sheesha,” the hookah water pipe that’s popular across the Middle East and is a major moneymaker for cafes.
In mid-2020, he sent his wife and two children back to his parents’ house in Beni Mazar, south of Cairo. Now, he shares a room with a friend to save on rent.
“I just work three days a week, and this is not enough even for a single person,” said Gamal, 31.
In Mexico City, Gerardo González, wearing a suit, a black mask and a plastic face shield, waited recently on the sidewalk outside the delivery service Didi. He had hoped to find work a month after he lost his job at a bakery where he did cleaning and displayed merchandise.
He’s applied for jobs at five companies.
“I can’t get anything,” said González, 51, who supports his wife and two young children. To meet his family’s expenses, he’s burned through his savings.
“We hope that with the vaccine, things will start going back to normal,” he said.
Melinda Harmon lost a job she loved as a bartender at Milwaukee’s Fiserv Forum last year. First, she found work as a health care aide for $9.25 an hour. Even after receiving a raise to $10, she struggled to support her two sons. Frustrated, she resigned and took on a new job as a security guard for $12 an hour. She’s been switching off lights to save money for electricity and has had to delay haircuts for her two beloved Pomeranians.
Yet she remains optimistic that the Fiserv Forum will reopen and that she will one day be mixing drinks for Bucks fans again.
“I do believe things will go back,” said Harmon, 39.
In New York, Bill Zanker is also envisioning a comeback after being forced to close his luxury gym, Grit Bxng. He’s raising money to launch an at-home fitness business in the fall, which will mean eventually hiring to support a online business, including customer service and supply specialists.
Still, Zanker is hopeful that his Manhattan gym, known for its cocktail bar and backed by billionaire Tony Robbins and others, will eventually come roaring back. Before the pandemic forced its closure, Zanker said, classes would be booked for the entire week within two hours each Monday morning. With the bar typically packed, he had been on the verge of opening a second location.
“There is so much pent-up demand,” Zanker said. “People after class are going to want to hang out and socialize. It’s like after Prohibition: Party like there’s no tomorrow.”
However things shake out, the pandemic disruption to the job market will likely require millions of workers to find new careers. Reviewing the job outlook in eight major economies, McKinsey estimated that 100 million workers — 1 in 16 — will need to change occupations by 2030. In the United States, McKinsey concluded, workers who will need retraining are most likely to have a lost low-income job and to be Black, Hispanic or female.
“You can take people in these unskilled positions and teach them,” said Susan Lund, an author of the consultancy’s report on the jobs of the future. But in the United States, she said, “the problem is, we have not scaled it up. We do not a have a national program to do it.’’
The U.S. spends a fraction of what other rich countries do on programs that are designed to help workers make career transitions. And a bewildering web of employment and training programs often leaves workers confused. The programs tend to focus on helping laid-off factory workers — not the unemployed chefs and sales clerks who are likely to be most in need in the pandemic’s aftermath.
“We make people jump through insane hoops just to get advice on getting a new job,” said Annelies Goger, who studies training programs as a fellow at the Brookings Institution. “We make it extremely challenging.”
In a paper last year, David Autor and Elisabeth Reynolds of the Massachusetts Institute of Technology warned that dwindling demand for low-paid workers without college degrees won’t coincide with job opportunities for “these same workers in middle-paid jobs...
“Those displaced may suffer significant hardship as they seek new work, potentially in occupations where they have no experience or training,” they wrote.
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