Researchers from the top economics school in the United States are warning that they estimate that 42% of the 36.2 million Americans who have lost their jobs over the past 10 weeks will not regain their jobs.
The report titled “COVID-19 Is Also a Reallocation Shock,” issued by the University of Chicago’s Becker Friedman Institute found that while workers’ former jobs are not coming back, there are some growing job sectors.
There is a shift and some major corporations are hiring. Those companies are hiring in thousands or tens of thousands, but the new hiring will not come close to making up the difference in the job losses.
In Rhode Island, the hospitality industry is being hit hard and numerous restaurants have already declared they will never reopen.
Restaurants Eleven Forty Nine in Warwick, Nick’s on Westminster and Bravo in Providence, Red Stripe in East Greenwich, and Griswold’s in Newport have all announced they are permanently closed, impacting hundreds of jobs.
As of Monday, the Rhode Island Department of Labor and Training reported 221,898 have filed for unemployment insurance, 53,060 have filed for “gig” economy benefits, and another 22,127 have filed for temporary disability insurance benefits.
Impact of the Coronavirus on Employment
“The COVID-19 pandemic and efforts to contain the virus are exacting a staggering economic toll in countries around the world. China’s economy shrank 6.8 percent in the first quarter of 2020 on a year-on-year basis, and Eurozone economies shrank at a 14.8 percent annualized rate,” write the report’s authors Jose Maria Barrero, Nick Bloom and Steven Davis.
“In the United States, nearly 28 million persons filed new claims for unemployment benefits over the six-week period ending April 25,” they continue. “The U.S. economy shrank at an annualized rate of 4.8 percent in the first quarter of 2020, and many analysts project it will shrink at a rate of 25% or more in the second quarter. Yet, even as much of the economy is shuttered, some firms are expanding in response to pandemic-induced demand shifts.”
“Drawing on our survey evidence and historical evidence of how layoffs relate to recalls, we estimate that 42 percent of recent pandemic-induced layoffs will result in permanent job loss. If the pandemic and partial economic shutdown linger for many months, or if pandemics with serious health consequences and high mortality rates become a recurring phenomenon, there will be profound, long-term consequences for the reallocation of jobs, workers and capital across firms and locations.”
According to the study, “As of April 18, Walmart hired 150,000 new employees in the span of a month and plans to hire 50,000 more (Nassauer, 2020). Likewise, Amazon hired 100,000 new employees in recent weeks and aims to hire 4 another 75,000. Dollar General plans to hire 50,000 new workers by the end of April 5. Lowe’s, the home improvement chain, aims to hire 30,000 new employees this spring.”
The emerging delivery business sector is also driving new hiring. “As of late March, many takeout and delivery-oriented firms are scrambling to hire workers. Instacart, for example, is adding 300,000 shoppers to its payroll, and Domino’s is adding roughly 10,000 pizza delivery drivers. Papa John’s plans to hire 20,000 new employees to meet heightened demand for pizza delivery in the wake of the pandemic.”
Rhode Island’s CVS has announced it is hiring 50,000 new permanent and temporary workers.
In late March CVS Health said it was “embarking on the most ambitious hiring drive in the company’s history, with plans to immediately fill 50,000 full-time, part-time and temporary roles across the country. Roles include store associates, home delivery drivers, distribution center employees and member/customer service professionals. The company will utilize a technology-enabled hiring process that includes virtual job fairs, virtual interviews and virtual job tryouts.”