Millions of jobs that have been shortchanged or wiped out entirely by the coronavirus pandemic are unlikely to come back, economists warn, setting up a massive need for career changes and retraining in the United States.
Microsoft founder-turned-philanthropist Bill Gates raised eyebrows in November when he predicted that half of business travel and 30 percent of “days in the office” would go away forever. That forecast no longer seems far-fetched. In a report coming out later this week that was previewed to The Washington Post, the McKinsey Global Institute says that 20 percent of business travel won’t come back and about 20 percent of workers could end up working from home indefinitely. These shifts mean fewer jobs at hotels, restaurants and downtown shops, in addition to ongoing automation of office support roles and some factory jobs.
“We’re recovering, but to a different economy,” Federal Reserve Chair Jerome H. Powell said in November.
The nation’s unemployed are starting to react to these big shifts. Two-thirds of the jobless say they have seriously considered changing their occupation or field of work, according to the Pew Research Center. That is a significant increase from the Great Recession era, when 52 percent said they were considering such a change.
“We think that there is a very real scenario in which a lot of the large employment, low-wage jobs in retail and in food service just go away in the coming years,” said Susan Lund, head of the McKinsey Global Institute. “It means that we’re going to need a lot more short-term training and credentialing programs.”
One problem for many unemployed people is they lack the money to retrain. This crisis has put many out of work for nearly a year, and the financial support from unemployment and food stamps is often not sufficient to pay their bills. The stimulus legislation being debated in Congress does not include any money for retraining.
“Trying to figure out what to do six months from now is hard when you are trying to make ends meet and you don’t have enough food,” said Brad Hershbein, who helps design and study retraining programs as a senior economist at the W.E. Upjohn Institute for Employment Research.
Take Serena Couch, who lost her job at Disney World in Orlando in April. She initially held out hope that she would be called back, but as the months went by, it became clear that that was unlikely. Now the 27-year-old has started spending her days looking for jobs and trying to learn to code by watching YouTube videos and reading blogs.
“I’m trying to learn coding on my own, because that’s what everyone says to do when you’re in this position,” said Couch, who receives about $500 a month in jobless benefits, not enough to pay bills. “I can’t afford to pay for a program, so I’m just doing free programs online.”
Couch and her boyfriend, who is also laid off from a theme park, moved in with a relative to save money, and her car was repossessed around Christmas. Couch said she never intended to make a career in the hospitality industry, but without a college degree, she thought her job options were limited.
“We haven’t been able to find anything that makes nearly as much as that Disney job,” Couch said.
Indeed, the number of workers in need of retraining could be in the millions, according to McKinsey and David Autor, an economist at the Massachusetts Institute of Technology who co-wrote a report warning that automation is accelerating in the pandemic. He predicts far fewer jobs in retail, rest, car dealerships and meatpacking facilities.
“Once robots are in place, we won’t go back. Once you’ve made that type of capital investment, you don’t tend to go backward,” Autor said. In the report he wrote, “These developments were sure to happen over the longer run. But the crisis has pulled them forward in time.”
Automation of jobs often speeds up during recessions, as companies look to cut costs and use periods of layoffs to experiment with new technologies. Some economists predict that there could be more automation now, because the pandemic forced companies to look for ways to minimize the number of employees in a workspace and the vast scale of the layoffs in the economy gives executives a unique opportunity to bring in robots.
Chewy, an online pet food and supply company, opened its first fully automated fulfillment center in Archbald, Pa., in October. Wall Street analysts who monitor the company closely say the facility — a warehouse where orders are processed and packaged for delivery — needs only about a third of the workers who are at Chewy’s other warehouses.
“When you can take labor out and replace it with automation, you are taking out a significant cost,” said Stephanie Wissink, a managing director at Jefferies who researches Chewy. “You won’t eliminate all labor. Chewy will still have engineers and warehouse directors, but there won’t be nearly as many individual laborers walking those floors.”
Chewy chief executive Sumit Singh told investors that the Archbald facility is already more productive than any of the nine other warehouses, and that there are plans to build more.
Chewy spokeswoman Diane Pelkey referred The Post to an article saying the Archbald facility would create 1,000 jobs. She declined to comment on whether those jobs came to fruition or how staffing compares to Chewy’s other facilities.
Job postings in recent months help illustrate what positions are emerging and which are rapidly going away, said Andrew Chamberlain, chief economist at Glassdoor. Chamberlain has seen a rapid decline in posts seeking administration assistants, human resources personnel, food service workers, beauty consultants, pet groomers, valets, professors, brand ambassadors and even physical therapists and audiologists. Only some of these jobs will come back. He’s hesitant to give an exact number, but he agrees that millions may need to find a new career.
“During a crisis, everything is on the table. You can easily push for big changes in a company,” Chamberlain said. “When you rebuild, you have a chance to rethink your workforce.”
Although many of the nation’s 20 million people receiving unemployment want to change jobs and increase their skills, it’s often difficult to predict which sectors of the economy will experience sustainable growth.
As online retail has boomed during the pandemic, warehouses have added nearly 115,000 jobs in the past year, meaning more workers are in the field now than there were pre-pandemic. Yet even that field is not a sure bet. Automation has become cheap enough that it is now being deployed more readily in warehouses and on factory floors, as Chewy illustrates.
Hershbein, the economist who studies retraining programs, said there has been a massive shift from just trying to help people write résumés and look at job listings to setting up partnerships with local businesses, offering career coaching about growing industries in the region, and helping job seekers arrange transportation and child care. The more holistic approach pays off, but it is often more costly and time-intensive.
An early sign of the high demand right now for more upskilling and retraining is on display in Michigan. The state used some of its stimulus money last year to create a “Futures for Frontliners” program to give free tuition to grocery store clerks, health aides and other front-line workers so they can earn a certificate or an associate degree. More than 100,000 people applied. The program also comes with career advice.
Meanwhile, the $1.9 trillion relief bill stimulus package that President Biden proposed and House Democrats have been working on does not include any funding specifically for retraining. A person familiar with the deliberations, who spoke on the condition of anonymity, said lawmakers hope to include retraining spending in legislation later this year.
Economists say that over time, the United States probably will employ the same overall number of people that the nation had pre-pandemic, but the specific jobs people do are likely to change. For the people who need to shift careers, it is a major life change.
“I’ve seen businesses who have told me they have been thinking about doing automation investments, but have decided this is the time to do it,” Atlanta Fed President Raphael Bostic told The Post. “We’ve seen real changes in the willingness of businesses to leverage technology to deliver their services.”
Bostic described a hospital in the Atlanta area that went from 3 percent of visits done via telehealth before the pandemic to 33 percent now, a shift that probably means the hospital cafe and parking area won’t need as many employees.
For many, the career shift is driven by necessity.
Marco Leaver is a waiter at a top Miami hotel. He worked New Year’s Eve during the pandemic and served only two tables, a major letdown from the prior year when he made $800 in that single night.
Leaver, 21, doesn’t know whether business travel will ever be like it was before. He has read about the estimates from Bill Gates and others, but his biggest indicator is the near-empty restaurant around him — the same situation at most of the city’s hotels. He went from making $75,000 a year to about $20,000 as his hours were cut and tips dried up.
He wants options. In November, he got his real estate license, a path to a new career.
“I have a few clients now, so I might be able to transition into that,” Leaver said. “I never thought things could’ve possibly gotten this bad when the pandemic began.”
An earlier version of this story said Wall Street analysts say an automated Chewy warehouse needs about 10 percent of the workers of a traditional facility. This referred to processing and packaging work. The overall facility needs about a third of the workers of a traditional warehouse.