Will the economy opening up really solve the unemployment problem?
Updated: Jun 13, 2020
The country has experienced unprecedented disruption from the global pandemic.
Millions of jobs vanished as restaurants, stores, and entertainment venues came to a screeching halt. Large, seemingly monolithic companies began furloughing and laying off workers by the thousands, “right sizing”, with over 75 large companies (500 people or more) filing for bankruptcy.
For those who remain employed, ways of working changed overnight as a vast majority of workers shifted to Zoom and converted kitchens, living rooms, and play spaces into ad hoc office / day care center / sourdough bread factories.
Frustratingly 86% of those who are the most economically vulnerable (make less than $40,000 a year) and are the least likely to be able to work remotely (work in middle skilled roles such as leisure, hospitality and retail) are the first to get cut in a downturn (McKinsey).
Prior to the pandemic 53% of all jobs available were considered middle-skilled, or those that require at least a high school diploma or equivalent but less than a college degree.
As Phase 1 and 2 begin to open things up, will these jobs come back and the uncertainty lift? Probably not anytime soon.
Of furloughed employees, 45% have returned on a part time basis, many with reduced hours and 7% are out of work permanently
Where restaurants are reopening many are forced to operate at limited capacity (50%), on limited staff, which many owners find untenable
Federal Reserve Chairman Powell estimates 15 million unemployed this December, indicating a long recovery
Compounding this, will people utilize services and businesses any time soon? If epidemiologists are any indicator, 44% won't travel by plane for 3-12 month. 66% of American voters said they are uncomfortable at the idea of attending any public gathering and 54% said they would be uncomfortable eating at a restaurant.
There does not seem to be the optimistically touted “on switch”, instead a potential feedback loop where less people utilize the services that are still available, and more people remain vulnerable to unemployment.
Business as-is is not going to work.
What can be done economically to address this problem and help those affected the most?
In the LinkedIn article “How the emergence of new-collar tech jobs highlights critical tech skills gaps & the opportunity for America's employers to create a new workforce” AAW’s Nick New insightfully analyzes how middle skilled workers can fill the tech skill gap. It turns what is an otherwise grim outlook into a realistic approach to help solve unemployment. Simply put:
Demand for tech skills continues to be high
The majority of unemployed workforce is not skilled to fill available tech jobs
The tech skills available in the workforce is not much different now vs Q1
There are more available workers now in Q2 2020 who could be upskilled
There needs to be drastic action to upskill workforce for tech based roles
We can retrain and shift capable workers into well paying tech jobs. Jobs whose barrier to entry is much less challenging than 5 and 10 years ago.
At AAW our primary focus is to enable large organizations, who have the resource and the imperative to enact this change, elevate those who have not necessarily had the same opportunities as someone on a traditional educational or social pathway.
With a critically low supply of tech talent and a growing number of tech jobs in large companies, organizations will have to build their own talent pipelines to survive.
The silver lining in this economic mess is there are millions of qualified, capable Americans who can now have an opportunity to reskill themselves into new roles and be less vulnerable like those who were fortunate enough to maintain their jobs.