Job loss in recent weeks because of the impacts of COVID-19 have been unprecedented. From the four weeks from March 20 to April 10, 22 million workers newly filed for unemployment benefits, easily . eclipsing all previous records. Recent estimates suggest unemployment could easily reach 20 percent and crest above even Great Depression era numbers, meaning 30–40 million workers could be dislocated.
Unfortunately, when the pandemic subsides, it’s not as if the economy will be able to turn the lights back on and these workers will be able to return to the same companies—or even the same occupations—as they had before. Thousands of businesses in sectors such as leisure and hospitality, which shed a half a million jobs in the March alone, won’t reopen even when strict social distancing guidelines are lifted.
Indeed, that very social distancing will facilitate the type of job-shifting technological change that economists have warned could eliminate 10–15 percent of all current jobs over the next several decades. Companies that adopt new technology can empower more social distancing necessary to fight the spread of COVID-19 and will gain a competitive advantage that will be the foundation of how our workplaces change moving forward. Burgeoning online shopping will reduce brick and mortar realtors and companies will embrace work-from-home options limiting the need for office space and requisite maintenance and support workers.
Perhaps most importantly, spurred on by this crisis, the long-anticipated shift to more automated forms of work will be abrupt, meaning millions of workers who could have been retrained on new technologies to stay in their jobs—with a longer transition—will need to be rapidly retrained after losing jobs.
Workers who lose their jobs due to our health crisis and technological change in the workplace will need reskilling to prepare them for jobs that emerge from the COVID-19 crisis, well beyond the intensity and length of time covered by current policies. The capacity of current retraining systems will be dwarfed by the challenge ahead. While millions are entering unemployment insurance (UI) now, current rules would mean relatively few would be able to continue receiving benefits if they needed retraining to get a new job, because workers in longer-term education and training programs (such as those at community colleges that lead to a degree) are often excluded entirely from eligibility for UI benefits. This exclusion prevents workers from contributing to their local economy and often means workers can’t afford services—such as childcare, transportation to a training site, or daily necessities—that ensure success in training. Businesses need to be engaged in training delivery and development and will need support to ensure workers succeed once starting a new job after a period of dislocation. Even as individual companies invest to retrain new workers, the scale of the challenge will require partnership between business and industry impossible for a single firm to take on alone.
Worker Needs and Business Demand
While the scale of job loss associated with either COVID-19 and technological change in the workplace is unprecedented—the challenges of not having a comprehensive system of reemployment services and policies are not.
Job loss results in economic, emotional, and physical harm for workers. For workers without access to comprehensive reemployment services, such as access to financial supports or connections to job training, the effects are even more severe. Research suggests that workers who lose their jobs bear economic costs of up to three years of lost wages, factoring in time spent unemployed, lower wages in subsequent employment, and associated job insecurity that continues for up to a decade after someone loses their job.
In today’s crisis, racial inequities caused by past policy decisions will also continue to mean workers of color will fare worse in any crisis and its economic response than other workers. Currently, people of color are underrepresented among people who access reemployment and dislocated worker programs. Nearly three-quarters of all workers served by Workforce Innovation and Opportunity Act (WIOA) dislocated worker programs are white, while only 60 percent of adults 18–64 are white. Similarly, while the demographics have improved in recent years, 65 percent of Trade Adjustment Assistance (TAA) participants are white, with a median age of 52. Expanding services to the kinds of frontline workers (such as those in retail) impacted by COVID-19 could help to reduce these disparities.
Communities with high levels of worker displacement experience wide-reaching negative impacts. Children in these communities score lower on achievement tests. Communities with high levels of worker displacement have reduced levels of homeownership, and therefore lower tax bases to invest in education and other local priorities. And workers who have been dislocated are 14 percent more likely to be arrested than the general public.
A lack of a comprehensive reemployment strategy that matches workers who lose their jobs with the skills necessary to succeed in good-paying jobs of the twenty-first century, hinders economic mobility and economic growth. Over the next decade, the majority of jobs will require some sort of training after high school, but not a four-year degree, and yet too few workers can access the skills necessary to fill job openings. According to hiring managers in one national survey, job openings cost business on average $800,000 each year. In the manufacturing industry alone—one of the first industries impacted by technological change, a mismatch of worker skills and business needs and at the forefront of our COVID-19 response—2.4 million unfilled positions between 2018 and 2028 could have a potential economic impact of $2.5 trillion on the U.S. economy in lost wages, spending, and business growth.
Lack of Policy Response Today
In the United States, after job loss, workers may be able to access resources under a patchwork of federal and state programs, based on how, when, and where they lost a job. None of these programs—in their current form—has the capacity to serve those currently looking for jobs, let alone an influx of tens of millions new displaced workers.
Past economic crises—while likely different in both scale and types of challenges—offer lessons for today’s environment. In response to the economic crisis in 2008–09, states and the federal government took steps to create universal dislocated workers programs that would provide workers and businesses with many of the supports necessary to move towards a comprehensive reemployment system.
- Successful, but not scaled: Michigan’s No Worker Left Behind program (NWLB). NWLB provided workers with training benefits of up to $5,000 for two years. Any adult worker earning under $40,000 could apply for the training support through the local workforce centers, Michigan Works! Michigan supported the costs for the program initially by blending funding available through the predecessor to WIOA, the Workforce Investment Act (WIA) funds, TAA grants, and Temporary Assistance for Needy Families (TANF) funding. After early success, Michigan aggressively sought supplementary discretionary federal funds under TAA and WIA national grant programs. In 2008, the state budget included a $15 million investment in the program, as well.In response to success in Michigan, Maine and Connecticut also implemented pieces of NWLB.
- Proposed, but not implemented: Universal Dislocated Worker Programs. In 2009, the Obama administration announced a proposal for a Universal Dislocated Worker Program that would provide job search assistance, training, and other benefits for up to million dislocated workers. The program would provide access to reemployment services for all workers; a $4,000 training award for up to two years; a weekly stipend to support childcare, transportation, and other expenses for seventy-eight weeks, in addition to access to twenty-six weeks of UI benefits; and up to $4,500 for allowances for relocation and job search expenses.The proposal was never adopted by Congress, but components were written into WIOA when it was passed in 2014.
- Robust, but limited: Trade Adjustment Assistance for Workers. The United States has also already acknowledged the need for worker training, income support, and access to support services funded at the federal level, but only for some workers. Trade Adjustment Assistance—programs that help workers who lost their jobs because of the impact of foreign trade—is the one reemployment program in our country that most closely maps with needs of dislocated workers and businesses addressing technological change and today’s crisis. The Recovery Act expanded Trade Adjustment Assistance, with new streamlined eligibility and new resources for colleges training dislocated workers, but these enhancements were scaled back as part of Congress’s budget tightening.
Components of Policy Solutions
In response to COVID-19 and its economic impact, and as part of any future stimulus packages, Congress should support policies that are part of a Twenty-First Century Reemployment Accord—a commitment to workers and businesses to prepare workers who lose their jobs for new jobs of the twenty-first century, whether this job loss occurs because of the impact of trade, automation, or our current health pandemic. This accord should include four key pieces:
- Expand access to skills training by making workers who lose their jobs eligible for a Dislocation Training Account, providing up to $15,000 in public funds to invest in training through an apprenticeship program, with a community organization or at a community or technical college. Studies suggest financial concerns are the largest barrier to workers succeeding in training. Reskilling for jobs of the twenty-first century will require short and longer-term training, frequently outside of traditional degree programs, yet today workers are often unable to access public funds to support training for quality non-degree credentials.
- Launch a federal “Reemployment Distribution Fund,” providing access to income support, through robust unemployment insurance and wage-replacement subsidies, that mitigate the financial impact of job loss on workers, their families, and communities. An initial investment of $20 billion as well as sustainable funding, should empower states to draw down funds to cover the length of training and job search necessary for workers to access a job of the twenty-first century. Current wage insurance programs are often too limited in scope or benefit levels to mitigate the effects of dislocation or are inaccessible to workers in longer-term training. Income levels under the program should be sufficient to empower workers to continue training, while still being able to afford transportation and childcare. A first step for Congress to accomplish these goals would be to expand Trade Adjustment Assistance to cover a far larger set of workers, such as those who lose their jobs permanently due to automation.
- Create a network of “Twenty-First Century Industry Partnerships” among businesses, education providers, the public workforce system, and community organizations to ensure the significant public and private investments necessary to respond to worker dislocation caused by technological changes in the workplace align with employment opportunities in in-demand industries. Industry and sector partnerships are a best practice across the country but need to be expanded to more industries in more local areas to reach the scale necessary to respond to challenges associated with technological change in the workplace. This expansion will mean a dedicated federal investment.
- Maximize eligibility for and access to other support services under existing federal programs for workers during the reemployment process. Barriers to accessing childcare, transportation, and other support services—such as eligibility that doesn’t permit workers to access subsidies while in training programs, underfunding that leads to long waiting lists, or the fact that our social safety net programs reach too few people—make it harder for workers to succeed in training programs necessary for reemployment. To maximize retention and success in a new job, these services should be available to workers during the transition period in a new job, as well. Any federal response to job loss caused by technological change needs to provide workers with access to comprehensive, robust support services that improve worker success and retention.
header photo: Eddie Rodriguez (R) and other City of Hialeah employees hand out unemployment applications to people in their vehicles in front of the John F. Kennedy Library in Hialeah, Florida. Source: Joe Raedle/Getty Images