Since non-essential businesses closed due to COVID-19 and unemployment claims skyrocketed (more than 2.1 million people have filed since mid-March in the UK), we’ve been looking anxiously to the future, wondering how quickly the economy and job market can bounce back. As some states reopen, many are hoping that the job they lost at some point during the past few months will call them back, especially with Pandemic Unemployment Assistance — the extra $600 (£450) a month given to people who have been laid off due to COVID-19 — set to run out at the end of July.
The stock market is doing well, after all. Doesn’t this show that there won’t be a long recession? Not necessarily, according to a recent Wall Street Journal report. One reason the stock market may have risen considerably is the perception that the worst of the pandemic is over, even though the numbers show this isn’t true. Another possible reason is that though certain industries, such as travel and hospitality, have been devastated by COVID-19 closures, the biggest tech companies — including Facebook and Apple — have enjoyed huge gains over the past several months. It indicates hope that the recovery will be almost as dramatic as the plummet that occurred beginning in mid-March — what economists call a V-shaped recovery.
Unfortunately, it’s not clear that the V-shape is likely. The latest research shows some grim prospects; depending on which industry you worked in before COVID-19, your job may no longer exist. A recent report by Bloomberg Economics warned that up to a third of the job losses experienced between February and May might not ever return.
It notes that 30% of pandemic job losses are likely due to “reallocation shock,” meaning that with COVID-19 restructuring so much of the economy, these jobs have disappeared and will be reallocated to other industries. The industries that have seen the most job loss, including hospitality, leisure, and retail — which are also industries where a much higher proportion of women work — are most likely to suffer this reallocation shock and see a permanent reduction in the number of jobs available.
We already know that many restaurants have closed permanently due to financial loss over the past few months, and Bloomberg Economics’ findings say that the pandemic has sped up the boom in e-commerce, especially the dominance of giants like Amazon, as brick-and-mortar stores keep closing. It’s also compounding the trend of the most attractive, sought-after jobs being in tech. A new Glassdoor report out today found that the top five job titles recent college graduates are applying to this year include software engineer, data analyst, and data scientist — and the top five companies new grads apply to are Amazon, Microsoft, Goldman Sachs, Apple, and TikTok. But while a job in one of these positions or at one of these companies might provide stability and security, the job market overall is extremely tough for recent college grads, with 68% fewer entry-level positions available this year than last year.
Bloomberg’s latest research is a little more optimistic than an earlier University of Chicago study, which predicted that 42% of pandemic job losses would be permanent. But this new insight shows that for many of us, coronavirus-related job loss may not just signal unemployment, but a career existential crisis.