COVID’S EFFECT ON JOB MARKET LIKELY TO FAR OUTLIVE PANDEMIC
Esther Montanez’s housecleaning job at the Hilton Back Bay in Boston was a lifeline for the 31-year-old single mother of a 5-yearold son.
The pay was steady and solid — enough to pay her bills and have money left to sock away for a savings account for her child. Montanez liked her co-workers and felt pride in her work.
But when the coronavirus pandemic hit 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 money from her son’s savings to pay her bills.
At Christmas, she turned to charities to provide presents for him.
She’s getting by on unemployment aid and, for the first time, has applied for food stamps.
“I want my job back,” said Montanez, who, with her former colleagues, is working through their union to press the hotel to reinstate their jobs.
Getting a lost job back could be a struggle for her and millions of other unemployed people around the world. Even as 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 number of them at employers that require face-to-face contact with consumers: hotels, restaurants, retailers, entertainment venues.
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 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 end up being 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 might never regain its previous highs.
In a study, Steven Davis of the University of Chicago, José María Barrero of Mexico’s ITAM Business School and Nick Bloom of Stanford University concluded that 32% to 42% of COVID-induced layoffs will be permanent.
The consulting firm McKinsey & Co. estimates that the United States will lose 4.3 million jobs in customer and food service in the next decade.
The U.S. Labor Department estimated last month that, if the pandemic’s lasting economic effects were limited mainly to increased work from home, job growth over the next 10 years will slow to 2.9%.
But if the pandemic exerts a deeper, longer-lasting impact — with many consum
ers 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, it 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. More and more, though, as employers have tried to save money in a time of uncertainty and promote social distancing in the workplace, machines are reaching beyond the factory floor and into retail, restaurants and hotels.
Tamura Jamison 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, which guests can request 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 eventually will be eliminated altogether, the jobs lost to automation. Guests 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 last month, Stefania Albanesi of the University of Pittsburgh and Jiyeon Kim of the Korea Development Institute warned that many companies could replace employees with machines rather than redesign workspaces to facilitate social distancing and reduce the threat of infection in a world still fearful of the virus or other health threats.
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, in which she worked for 37 years. She’s holding out hope that Las Vegas will rebound and that tourists will return to restaurants, hotels and casinos. But it might 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 rise 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. The United Kingdom-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 with the German Economic Institute in Cologne, said that behavioral changes — more digital meetings, for example, and less business travel — would result in permanent job losses in some companies.
But some other sectors of the economy should benefit from pent-up demand once the virus is defeated, Schaefer thinks. He’s 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.”
In Xuzhou, a Chinese city 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,” said Guan.