This morning, the U.S. Department of Labor released the jobs report for March, 2020 to much anticipation. Just weeks after non-essential businesses shuttered across the country, 701,000 jobs have been lost in a year-over-year comparison with unemployment rates in March, 2019. This sharp decline marks the beginning of a job market collapse that will likely continue to escalate as the COVID-19 pandemic spreads. The Department of Labor’s official unemployment rate is listed at 4.4%, revealing the largest monthly increase since 1975. Prior to the pandemic, unemployment rates were at an all-time low of just 0.9%.
Experts warn these numbers only show part of the problem, however. Because most of the country launched social distancing campaigns in the middle of the month, the March report doesn’t show the full impact of all the businesses that have stalled operations. A portion of that data was still largely consistent with February’s performance, which means these initial findings are just the beginning.
According to The Washington Post, economists say it’s possible we’ll see the highest unemployment rate since the Great Depression. By June, the Congressional Budget Office estimates the second quarter will see 12% unemployment. Bank of America predicts an even higher rate at 15.6%.
The COVID-19 pandemic will transform the job market in the U.S. Here’s what business leaders need to expect from these developments.
What Will the Pandemic Change in the U.S. Job Market?
Economists have long predicted artificial intelligence (AI) and machine learning (ML) will redefine the job market. Most single-task jobs will be automated, for example, and an Oxford Economics study in June, 2019 estimated 8.5% of the world’s manufacturing jobs will be eliminated by 2030. Other positions, like insurance underwriting, customer service, banking and retail, and outbound sales are also likely to become redundant over the next decade.
The current market crisis could accelerate the commercial viability of automation. If companies can replace full-time employees with software and machines, they stand to save money over time. Although the initial buy-in price will be steep, the businesses that survive the pandemic will probably be highly motivated to reduce their workforce.
Forced “shelter in place” orders have driven many nine-to-five desk jobs from the office into the living room. The most immediate concerns for business owners include:
- Designing an infrastructure to support the new demand for remote work, including secure cloud-based documentation and record-sharing.
- Avoiding payroll disruptions—or managing the damage caused by them, if they’re inevitable.
- Transitioning to a digital product or service with online purchasing systems.
- Supervising employees remotely and ensuring they have the equipment they need (laptops, internet access, chargers, etc.).
- Providing flexibility and support to employees who are parents and caretakers—and therefore experiencing interruptions throughout the day.
- Negotiating rent abatement agreements, deferring payments for franchisees, or withholding rent on commercial properties (as is the case with the Cheesecake Factory).
- Cost-cutting measures, such as budget revisions, paycuts, reduced hours, voluntary sabbaticals and unpaid time off, discharging contractors and part-time employees, and as a last resort, laying off or furloughing employees.
Although the initial transition can be painful, when companies expand their WFH policies, it offers a few benefits in the long run. It presents opportunities for lowering property maintenance costs and rent—if the business creates a rotating schedule or changes some positions to be fully remote, for example, it could mean it won’t need as much commercial property at its disposal.
It also could positively impact recruitment efforts. Many workers with disabilities can’t commute to an office every day but can perform the same tasks at home. Flexible WFH policies make workplaces more accessible and allows people to apply for highly competitive jobs, even if they don’t live in a big industry city like New York or San Francisco. Ultimately, this could lead to greater diversity and help workers who live outside the urban sprawl.
Companies across the world have initiated hiring freezes. For job applicants, that means options will be limited—at the same time the market floods with approximately 3.3 million newly unemployed workers, companies are also reducing the size of their workforce.
But despite the overall downturn, the legal, public safety, corporate services, software, and IT job market has grown slightly compared to March 2019. Although these numbers are expected to change as new data comes to light and states continue to limit nonessential business operations, this shows which industries are demonstrating the most resilience.
It’s important to remember company demand also won’t disappear just because businesses aren’t hiring full-time employees. This could cause businesses to shift their focus away from hiring full-time employees in favor of working with independent contractors and consultants. The average cost-per-hire is about $4,425—in comparison, outsourcing professional services could prove more cost-efficient in the weeks ahead.
What’s in Store for the Future?
Market volatility puts everyone on edge and produces some unexpected results. For example, people are more likely to look for new employment options during a crisis, even if they might otherwise be content in their position. While HR departments scramble to address the immediate effects of mandated social distancing, they also need to brace themselves for increased employee turnover and maintaining a strong employer brand.
Right now is a key moment for businesses to develop a long-term talent recruitment strategy. Companies will probably find an eager and highly qualified candidate pool, and they can assume substantial bargaining power for defining the terms of employment. Businesses with the capital, foresight, and resilience to do so will seize this opportunity to onboard employees in high-impact, leadership roles.
For job seekers at Ivy Exec, COVID-19 means there will be fewer public listings—but it doesn’t necessarily have to limit your career. Now is a critical time to reach out to business contacts and develop those relationships. Establish a sense of reciprocity through mutual assistance. Sow the seeds for future prospects by reinforcing your brand and cultivating new skills. Become the type of leader people need, and you might locate a lucrative position serving on an executive board. Some professionals are also taking this opportunity to explore entrepreneurship. Spend a few months consulting or work with a pre-launch startup to build equity in an organization and collect a retainer fee.
The March jobs report might seem grim, but with the right strategy, you can leverage the market and use it as a steppingstone in your career. The tide will change, and when it does, you’ll be ready.
Map out your job search strategy with a career coach to stack the odds in your favor.