Every day, we are inspired by the essential workers on the frontlines of this pandemic—by their commitment to working despite the risks and their resourcefulness and tremendous talents under duress. The workers manning grocery stores, the janitors sanitizing hospital wards, the warehouse workers fulfilling our online orders – they all share one thing in common: they are a part of America’s low-wage workforce. They are the workers keeping things going for the rest of us—and yet, many of them are financially insecure and lack opportunities for advancement.
The COVID-19 crisis has underscored the precariousness of America’s low-wage workers. Many lack access to paid leave and health insurance and are among the least attached to their employers. Brookings Institution Senior Fellow Marcela Escobari has found that these vulnerable workers are heavily concentrated in the hospitality and retail sectors, the two sectors most immediately impacted by COVID-19-related shutdowns and layoffs. A recent Federal Reserve Board survey found that 39 percent of those earning less than $40,000 had lost a job by the beginning of April.
The Mastercard Center for Inclusive Growth recently convened an online panel of leading labor market and workforce development experts from Massachusetts Institute of Technology, Brookings Institution, Opportunity@Work and Urban Institute to discuss how the U.S. can rebuild a more resilient workforce out of this crisis. All agreed the country needs a rapid and dramatic scaling up of its workforce development system beginning now.
"Instead of 40 million people chasing 10 million scarce jobs, the best we can do as a country is to have a lot people investing in the right training and support for the jobs we will need in order to rebuild," said Byron Auguste, CEO and co-founder of Opportunity@Work.
Job seekers get discouraged and their skills get rusty in recessions
As of May 26, 38.6 million Americans have filed for unemployment and more job losses are likely to come. The last recession shows how slow the climb back can be and the very real risk that workers will simply drop out of the workforce. The great danger, Federal Reserve Chairman Jerome Powell told 60 Minutes in May, is that when people are out of work for long periods, their skills atrophy and they lose contact with the workforce. Longer and deeper recessions, he said, "leave behind damage to people’s careers." That was evident in the recovery from the 2008 recession. Even as late as January 2020, with unemployment rates at historic lows, the share of working-age people employed remained well below pre-recession levels because many had dropped out of the workforce altogether.
For those who did find jobs, they likely earned less and had fewer benefits. As MIT economist David Autor noted, the economy has restructured over the last 40 years as workers have moved out of offices and factories and into jobs that pay less like food service, personal care and home health. Four in ten workers today earn less than $15 an hour.
Creating new tools and services to speed job transitions and upward mobility
To ensure history does not repeat itself, we need to strengthen the ties between workers and employers to minimize unemployment. We also need new platforms and services to help workers both upgrade their skills and make their (often hidden) skills more apparent to employers. For example, we will need hundreds of thousands of contact tracers immediately, yet no one has a degree in contact tracing, though many have applicable skills.
In her work with Brookings, Escobari is developing a tool to help firms cast a wider net for job candidates by showing where employers can find similarly skilled workers in other sectors. The tool can show a retailer in sudden need of more stockers, for example, who tends to become a stock clerk. "We know that cashiers, retail workers and even cooks can and do move into these positions," she said. "That information may help companies work together with other companies to get those furloughed workers with limited training into other jobs."
But, beyond just a quick fix fit for the moment, Escobari noted that, with thoughtful and intentional policy guidance, business-to-business arrangements can become lasting partnerships benefiting workers and companies alike.
In the near-term, workers could benefit from more stability and companies from added flexibility to meet uncertain demand. Policymakers could build upon these partnerships between companies to bolster worker security and foster shared talent development.
With the right tools and insights, finding workers with applicable skills for emerging jobs could be made easier, said Escobari. Employers would be able to easily see that "if I’m looking for a network administrator, I can look at printer repair experts and they’ll do just as good a job if I give them a shot." Insights on which jobs provide upward mobility can also help empower workers to chart their own path to better wages.
Platforms to upskill workers for emerging jobs
The current crisis has shown some employers that they can get by with less labor. "They won’t unlearn that lesson," said Autor. More checkouts will be automated, more robots will be cleaning stores or showing customers around—and that means lost jobs. These displaced workers will need faster and more effective training to help them transition into the new jobs that will also be created by these advanced technologies.
According to recent analysis, 30 million low- and middle-wage workers have skills that are bridgeable to jobs that pay 50 percent more than their current job, said Byron Auguste. Another 36 million workers do not yet have the skills for significantly higher-wage work—this segment holds jobs that are especially susceptible to automation.
Through Opportunity@Work, Auguste and his colleagues are developing the Opportunity Marketplace to connect employers, training providers and job seekers to help workers find a variety of roles and employment options in the digital economy, including internships and full-time positions. The data insights from the job seekers’ paths through this system will also create a feedback loop that signals to job training organizations which skills are in demand, thus improving job placement rates over the longer term.
Creating a new playbook for recovery
Amid all the uncertainty, one thing is certain, the pandemic has been the most unnatural jolt to the American economy in 100 years. The country will need a different playbook for a more inclusive recovery.
A more resilient comeback will require deep engagement and better connections across the broader ecosystem, said Bruce Katz in another webinar the Center hosted on policies for an inclusive recovery. At the local level, community colleges and other education and training institutions will need support from corporations, government, foundations and nonprofit organizations. "If we’re smart," said Katz, founding director of the Nowak Metro Finance Lab at Drexel University and partner at Accelerator for America, "we’ll tailor the skills training around the jobs that have potential to grow," and make other changes to our “creaky trade training system.”
"We didn’t send Marines back to the farm after WWII," said Auguste. "We created mass higher education with the GI Bill. We can create a mass learning system now."
Tweet me: Essential workers on the frontlines of #COVID19 are inspiring. They’re the ones keeping things going— yet, many of them are financially insecure & lack opportunities for advancement. Learn more about how we can build a more resilient workforce https://bit.ly/3ip3Vnu @CNTR4growth
KEYWORDS: mastercard, The Mastercard Center for Inclusive Growth, COVID-19, coronavirus, pandemic, Opportunity@Work, workforce, workforce development, job training, career training