Covid-19: Why the pandemic left long-term scars on global job market

Esther Montanez’s house cleaning 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.

When the viral pandemic slammed violently into the US economy a year ago, igniting a devastating recession, it swept away tens of millions of jobs AP Business Writers=

Esther Montanez’s house cleaning 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 US 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 per cent of the US 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, Jose Maria Barrero of Mexico’s ITAM Business School, Nick Bloom of Stanford University and Steven Davis of the University of Chicago concluded that 32 per cent to 42 per cent 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 US jobs would grow 3.7 per cent 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 per cent.

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 per cent, the department predicted. In that worst-case scenario, the department estimated, employment would tumble 13 per cent for waiters and waitresses, 14 per cent for bartenders, 16 per cent for fast food cooks and 22 per cent 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 per cent” 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 per cent below pre-pandemic levels. For the highest-paying jobs, by contrast, the shortfall was just 5 per cent.

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 per cent, up only modestly from 7.4 per cent 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.”