Wage Work: The Foggy 2-Year Window

08/07/2020

Nothing in today’s jobless data changes this picture: Western nations and especially the U.S., with its fluid labor force, face the daunting  prospect over the next few years of millions of workers without demand for their previous form of work.

I say that, mindful of the hazards of projecting even slightly into the future the conditions of the present. So, yes, things can change, particularly if a vaccine against Covid-19 proves reliable over time or a sure-fire treatment is established. But as of now, large swaths of employment seem gone for many months. To date, these job losses are concentrated in activities involving sizable numbers of tightly situated customers or staff—live entertainment, tourism, meetings and classes, food and beverage. In a downturn this wide, however, there will be secondary industry casualties to anticipate.

How can the workforce, and by implication the market economy generally, be sustained through a long interruption?  This is a somewhat different question from how can these employees as people survive. Government fiscal taps have been on fully to see to that.  Even the U.S. now has effectively a Universal Basic Income in the form of supplemental unemployment benefits and other measures to prop up most households. Public-sector jobs, meantime, have largely been preserved even where it is not clear the work is ongoing.

Ideally, a short-run transformation of labor can be led by the private sector, which is most agile in adapting to opportunities.  No surprise, a trio at the University of Chicago’s Becker Friedman Institute has laid out the potential—and obstacles—for this kind of renewal. Their “reallocation shock,” if it is to be managed, would require adequate underlying investment and demand. Less likely, it also envisions political tolerance of volatility in labor pay and practices.

To some degree, employment shifts at the basic hourly end of the work ladder have already taken place. Some retailers of consumer staples have prospered post-virus and done additional hiring.  With so much shopping now occurring digitally, logistics operations that get packages “the last mile” to purchasers have also gained force.  Large, sophisticated operations such as UPS and Fed Ex, and arguably Amazon,  can reasonably offer appealing career tracks to the displaced. It is not as evident that the various gig-economy alternatives that appear to be glorified delivery boys are going to satisfy too many beyond the immediate circumstances.

Whenever employment lags in America, proponents of more activist government are quick to renew calls for infrastructure or conservation corps as a way of offering ‘dignified’ work with long-lasting payoff. This reflects rosy recollections of New Deal-era projects that in fact have more checkered histories. Still, obviously, if underutilized manpower could be put to incremental output in the public realm, that would be a plus.  The frictional barriers to this—for instance, attaining the right skills and conditioning, getting the labor to desired sites and minimizing resistance from existing (unionized) labor—are not minor.

Quick skills retraining is a key to addressing a labor gap of hopefully only a few years. Where apprentice programs are successful, mostly outside the U.S., they can help. America’s community colleges, as well as trade schools that may be public or private, are the most obvious domestic instruction. But how fast can these institutions (and their governing boards) adapt? And at a time of ever-fiercer bidding for tax revenues, would they have the resources to do so?

We’re talking about perhaps 30 million earners in the U.S. alone being dramatically affected. As yet, even techno-optimists have come up short in offering other than bleak estimates of how society’s new arrangements will suit those at the face of basic service sectors. Yet, as noted, human adaptability can confound linear projections. The best policies are those that keep opportunities open. As better news appears, I’ll be looking for it.

Published by timwferguson

Longtime writer-editor, focusing on topics of business and policy, global and local.

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