We are suffering through a COVID Pandemic which is a 100-year event. Of course, as this occurs, one of the first things which has happened is massive levels of unemployment. Without the demand for goods and services; businesses contracted. As businesses contract, the first thing considered is the extreme reduction in variable expenses. Translation jobs lost. Not just jobs, but the taxes and benefits associated with employees also go away.
Consider some of the facts associated with the pandemic. A recent study by the Department of Economics at the University of Illinois surveyed 5,800 small businesses. This is what they found.
- 43% of businesses temporarily closed since January, 2020.
- Three reasons most cited were reduction in demand, followed by health concerns, followed by disruptions in the supply chain
- 39% of businesses with active employment had reduced headcount.
- United States mid-Atlantic region was as high as 54% closures and 47% reductions in headcount.
- 70% of employers remaining partially opened were taking advantage of government program support.
- In June 2020, more than 32 million people are receiving some sort of unemployment aid from State and Federal governments.
By the end of 2020, the United States population will have been burdened with life changing loss, mostly attributed to COVID. Two things are important footnotes to this statement. First, the Federal Government handling of COVID was perhaps one of the most incompetent and derelict examples of “public service execution” in modern times. Secondly, the United States was already headed towards an economic downturn or recession. It would not have been this extreme, but would still make this strategic question important.
Strategic Question: “Over the next twenty years, will jobs be a reliable way for individuals to progress through their lives and accumulate necessary wealth?”
From 1964 to today, the US average hourly wage has inflated from $2.50 to $22.65 per hour in 2018. That seems to be very attractive, until other factors are considered. The most important is purchasing power. The American purchasing power has grown from $20.27 to $22.65 per hour over the same period. This is based upon a PEW Research Study on jobs.
Let’s say this another way. In 1964, your $2.50 per hour wage allowed you to purchase or invest $20.27 per hour. In other words, your purchasing power was significantly better. In 2018, your $22.65 per hour wage allowed you to purchase or invest only $22.65 per hour. In 1964, because of the expanded purchasing power, it was very possible to accumulate wealth. In 2018, because the wage and purchasing power are equal, it is more accurate to say that every dollar earned is a dollar spent. Wealth accumulation from wages is no longer realistic.
Figure 1. Pew Research Center,
Furthermore, the continued political game on the Affordable Health Care Act and the progression of benefits towards a two-payer system is vitally important to jobs. The major disadvantage that American Companies have is the burden of benefits. Health/Dental/Eye care, disability insurance, payroll taxes and social security represent a significant load on any employer. When considering hiring, outsourcing, or reducing labor resources; this is a huge burden for companies.
Figure 2. US Bureau of Labor Statistics
To highlight how terrible this is, as it relates to stable, rewarding and long-term employment; consider the number of countries that no longer pay for healthcare. The countries that have now moved to universal healthcare coverage, thereby unburdening businesses of this cost.
Figure 3. Wiki on Universal Healthcare
This means in a world where jobs are now scarce, the American worker is fighting against some significant structural defects associated with a job. The job does not pay as much. The job costs the employer is significantly discouraged from hiring based on total benefit costs of any given worker. Finally, most of the countries in the world have advanced well beyond the United States in their efforts to stabilize worker costs; particularly offering citizen health care without involving the employer.
The final piece of this puzzle has already been analyzed many times. Jobs are being lost to automation and AI. The World Bank study of Automation through 2032 suggests that 46% of American workers will be displaced during this period. It does not mean a net loss of jobs. It means that the job a person holds will be eliminated. They will have to learn new skills to pursue other jobs that are open.
As automation and AI were already reducing workforce and improving costs, COVID will just accelerate the trend. Companies will rush to install “touchless” technology as a response to the pandemic. In doing this, they will also not need the workforce most recently eliminated.
Figure 4. US Bureau of Labor Statistics, McKinsey Global Institute
Automation and AI will impact office administration, predictable physical labor and customer service most of all. These three areas already have significant technology available for companies to take advantage of.
With this said, how does anyone maintain a life where they can pursue the following American rights to life.
- While ACA was vilified, it did provide a first real step towards universal coverage. It would now seem that universal coverages must be a top national priority if workers are to survive without a traditional job.
- Learn new skills to prolong a loss of job. It is recommended that those skills are in technology or STEM, are in building & construction or are in healthcare.
- Find something you love, and then figure out how to make money at it. Reduction of expenses is an important strategy to being able to survive.
- Act locally. In other words, two jobless workers have a better chance at surviving than one. Three have an even better chance. And so on. Act locally in purchasing organic farm produce, in purchasing meat, in hiring contractors and so on. Also, bring back the old school notion of bartering. The closer you live to a small and/or strong community / family; the better this is.
- Understand the power of superjobs. If a person, company or contractor can do a superjob, then this is irreplaceable. What is a superjob. It is when the worker can function across many disciplines to see the big picture and accomplish work.
Recognition of these issues and understanding that they will define the workforce, post COVID, is important. There are certain disciplines that may never return to being the same as before the pandemic. One example is sales. It will be difficult to sell with a territory sales force. In its place will be marketing professionals, social media, point of sale automation and virtual experience tools. It is important that organizations start now to reinvest in sales and marketing for the future. Sad to say, but there may be 32 million workers that never return to a job. At least not in the near future.