Why the pandemic will leave long-term scars on the global job market

Esther Montanez's housekeeping job at the Hilton Back Bay in Boston was a lifeline for her, a 31-year-old single mother with a 5-year-old son.

The pay was steady and solid — enough to pay her bills and still have money left over to sock away for a savings account for her child. Montanez liked her co-workers and felt pride in her work.

But when the viral pandemic slammed violently into the U.S. economy a year ago, igniting a devastating recession, it swept away her job, along with many tens of millions of others. Since then, in desperation, Montanez has siphoned away money from her son’s savings to help meet expenses. At Christmas, she turned to charities to provide presents for him. For now, she's getting by on unemployment aid and, for the first time, has applied for food stamps.

"The truth is, I want my job back,’’ said Montanez, who has banded with her former colleagues and worked through their union to press the hotel to reinstate their jobs.

Getting it back could prove a struggle for her, along with millions of other unemployed people around the world. Even as viral vaccines increasingly promise a return to something close to normal life, the coronavirus seems sure to leave permanent scars on the job market. At least 30% of the U.S. jobs lost to the pandemic aren't expected to come back — a sizable proportion of them at employers that require face-to-face contact with consumers: Hotels, restaurants, retailers, entertainment venues.

The threat to workers in those occupations, many of them low-wage earners, marks a sharp reversal from the 2008-2009 Great Recession, when middle- and higher-wage construction, factory, office and financial services workers bore the brunt of job losses.

The Fed also reported last month that employment in the lowest-paid jobs was running 20% below pre-pandemic levels. For the highest-paying jobs, by contrast, the shortfall was just 5%.

No one knows exactly what the job market will look like when the virus finally ends its rampage.

An unknowable new normal

Will consumers feel confident enough to return in significant numbers to restaurants, bars, movie theaters and shops, allowing those decimated businesses to employ as many people as they did before?

How much will white-collar professionals continue to work from home, leaving downtown business districts all but empty during the week?

Will business travel fully rebound now that companies have seen the ease with which co-workers can collaborate on video platforms at far less cost?

"Jobs are changing — industries are changing,’’ said Loretta Penn, chair of the Virginia Ready Initiative, which helps workers develop new skills and find new jobs. "We’re creating a new normal every day.’’

The habits that people have grown accustomed to in the pandemic — working, shopping, eating and enjoying entertainment from home — could prove permanent for many. Though these trends predated the virus, the pandemic accelerated them. Depending on how widely such habits stick, demand for waiters, cashiers, front-desk clerks and ticket takers may never regain its previous highs.

Gone for good?

The consultancy McKinsey & Co. estimates that the United States will lose 4.3 million jobs in customer and food service in the next decade.

In a study, José María Barrero of Mexico’s ITAM Business School, Nick Bloom of Stanford University and Steven Davis of the University of Chicago concluded that 32% to 42% of COVID-induced layoffs will be permanent.

Last month, the U.S. Labor Department estimated that if the outbreak's lasting economic effects were limited mainly to increased work from home, job growth over the coming decade would be 2.9%.

But if the pandemic exerts a deeper, longer-lasting impact — with many consumers going less frequently to restaurants, movie theaters and shopping centers — job growth would slow to just 1.9%, the department predicted. In that worst-case scenario, the department estimated, employment would tumble 13% for waiters and waitresses, 14% for bartenders, 16% for fast food cooks and 22% for hotel desk clerks.

The coronavirus recession has been especially cruel, victimizing people at the bottom of the pay scale. Lael Brainard, one of the Federal Reserve's governors, said last month that the poorest 25% of American workers were facing "Depression-era rates of unemployment of around 23%’’ in mid-January — nearly quadruple the national jobless rate.

The Fed also reported last month that employment in the lowest-paid jobs was running 20% below pre-pandemic levels. For the highest-paying jobs, by contrast, the shortfall was just 5%.

Fewer robot-proof jobs

Services workers had long been thought to be safe from the threats that menaced factory employment: Foreign competition and automation. But more and more, as employers have sought to save money in a time of uncertainty and to promote social distancing in the workplace, machines are reaching beyond the factory floor and into retail, restaurants and hotels.

Tamura Jamison, for instance, came back to a changed job when she was recalled to work in June as a front desk agent at the Paris Las Vegas Hotel & Casino, owned by Caesars Entertainment. Her hours were cut from 40 to about 32 a week, resulting in a pay cut of about $700 a month.

Just 26 of 45 workers on her team were brought back. Existing self-service kiosks used to be optional for guests checking in. No longer. Now, agents must direct guests to the kiosks and intervene only if needed. That means fewer commissions for room upgrades; guests can request them on their own.

In a study out last month, Stefania Albanesi of the University of Pittsburgh and Jiyeon Kim of the Korea Development Institute warned that in a world still fearful of the virus or of other health threats, many companies could replace employees with machines rather than redesign workspaces to facilitate social distancing and reduce the threat of infection.

The services occupations that have absorbed the biggest job losses, they say, "have high susceptibility to automation.’’

However things shake out, the pandemic disruption to the job market will likely require millions of workers to find new careers. Reviewing the job outlook in eight major global economies, McKinsey estimated that 100 million workers — 1 in 16 — will need to change occupations by 2030. In the United States, McKinsey concluded, workers who will need retraining are most likely to have a lost low-income job and to be Black, Hispanic or female.

"You can take people in these unskilled positions and teach them,’’ said Susan Lund, an author of the consultancy’s report on the jobs of the future. But in the United States, she said, "the problem is, we have not scaled it up. We do not a have a national program to do it.’’