COVID-19 & The Labor Market: Equitable Recovery Through Human Infrastructure

Dr. Angela Jackson opened the LMI Institute’s panel entitled Gender, Race, and Ethnicity: The impact of COVID-19 on the Labor Market Recession and Recovery. Dr. Jackson has led New Profit’s Future of Work Initiative, a movement seeking to close the career-readiness gap for Americans from low-income backgrounds. She recently launched a $6 million Future of Work Grand Challenge to rapidly reskill 25,000 displaced workers into living-wage jobs. One of her first initiatives Dr. Jackson highlighted, the Global Language Project, involved giving underestimated students proficiency in a second language. Skills associated with learning a second language, especially cultural competency, can unlock access to much more than a language (postsecondary schools, employment). Such investment is an example of what Dr. Jackson called human ‘infrastructure’. In fact, she framed the panel with a profound question: What kind of human infrastructure does America have for its 70 million underestimated workers (especially workers from low-income and non-white households)?

Dr. Jackson highlighted how the education and employment sector is a ‘leaky pipeline’, not responding rapidly enough to meet the demands of the future of work. She also stated that 80% of employers’ development dollars are spent on their highest wage-earning employees. To drive home the point, she mentioned how her previous company didn’t really need to pay for her further education. Despite coming from a working-class family, given her salary, she could have afforded it (while many lower-salaried workers can’t). Instead of poaching for talent, Dr. Jackson also promoted that companies should grow talent from within—a reminder of economic development’s challenge between forward-looking strategies of growth-from-within and traditional ‘smokestack-chasing’.

1,200 innovators applied to Dr. Jackson’s Future of Work Grand Challenge. This led to her organization funding over 200 mostly tech-based wrap-around training programs involving artificial and virtual reality, and personalized learning to meet the needs of employers. Dr. Jackson stressed teamwork and partnerships needed to realize such an initiative, with a call to action for building power and capacity within communities researchers and funders work with. In her words, “proximity (to a community) is expertise”. Her initiative has worked with Walmart, Accenture, Goodwill, workforce boards, and nearly 1,600 job centers.

Oriane Casale, Interim Director of the Labor Market Information Office of the Minnesota Department of Employment and Economic Development (DEED) continued the conversation. Oriane presented data her department produced on unemployment claims of workers in Minnesota. DEED found that 75% of workers who claimed unemployment income (UI) at the start of the pandemic in Minnesota were reemployed by the third quarter. Of these, 59% were recalled by their same employer (of which 33% were subsequently furloughed). 7% found work at a previous employer, and 9% changed employers (on average, seeing greater wage losses). 21% continued to request benefits, and 3% stopped claiming UI.

DEED found that part-time, low-wage, and black workers were those least likely to be recalled by employers. Temporary help and information industries were the sectors least likely to recall workers (only 25% of those laid off), while manufacturing and health care the most likely to (81%). One of the most interesting points Oriane made was that most workers in the leisure and hospitality industry who found a new job went into temporary help (9%) and retail (23%). This ‘reshuffling’ helps paint a more nuanced picture of what may be occurring with long-term UI claims. As every industry was affected by the pandemic, reshuffling can cause intense competition for the lowest-skilled workers. The few temp-help and retail positions available post-pandemic are being filled by displaced workers with potentially higher credentials. Re-entering familiar positions in the labor market can become especially difficult for the lowest-skilled/credentialed displaced workers, facilitating long-term UI claims—emphasizing the need for an equitable human infrastructure to upskill workers.

Dr. Till Von Wachter, Professor of Economics, Faculty Director of the California Policy Lab (CPL) and Director of the Census Research Data Center at UCLA, closed the panel. Prof. von Wachter’s research examined the long-term costs of job loss, the consequences of long-term unemployment, and the effects of UI on workers. During the crisis, Prof. von Wachter and his CPL team published monthly reports on the state of the UI system using data from California that has received national attention. Dr. Wachter carried on the conversation of UI claims with a detailed research, county by county, across California. Dr. Wachter emphasized how long-term unemployment (LTU) leads to lower reemployment wages, hence, it is crucial we understand what may be causing individuals to continue claiming UI. Perhaps one of the most interesting points Dr. Wachter raised was that although being black was correlated with higher UI claims, this varied county to county. Educational attainment, a worker’s industry, population density, limited English, available transportation, broadband, number of COVID-19 cases, self-employment, and population age all played into influencing long-term UI claims. Dr. Wachter drove home the point that the factors and motivations surrounding long-term unemployment are far more complex than what is commonly heard. Crucial to equitably overcoming them is investing in all the components of that fundamental human infrastructure Dr. Jackson spoke of—from languages to broadband, credentials, and employer investment.