Only 37 Percent of US Jobs Can Be Done at Home
Understanding the distribution of workers who can work from home may help policy makers direct financial-stabilization resources.
Only 37 Percent of US Jobs Can Be Done at HomeThe COVID-19 pandemic has triggered massive job losses across the globe. In the United States, from March through early May, more than 36 million workers sought unemployment aid.
But the jobs that ultimately return won’t necessarily be the same as those lost, suggests research by Autonomous Technological Institute of Mexico’s Jose Maria Barrero, Stanford’s Nicholas Bloom, and Chicago Booth’s Steven J. Davis. They find that the economic shock caused by COVID-19 and the measures to contain it are changing the labor market, with some companies slashing jobs but others adding positions amid shifting demand.
The researchers reached their conclusions using the monthly Survey of Business Uncertainty (SBU), a forward-looking survey of senior executives, as well as news reports of hiring.
Walmart added 150,000 employees by the middle of April, and announced plans to hire 50,000 more, as demand for essential household staples surged. Companies including Amazon, Instacart, and Domino’s Pizza hired additional people to make deliveries to customers who were sheltering in place, according to news stories the researchers compiled.
Some business organizations are cooperating to help speed the reallocation of workers and jobs. For example, supermarket chain Kroger joined with Marriott International, Sodexo, and Sysco to hire laid-off food-service and hospitality employees, and CVS partnered with Delta Airlines, Gap, and Hilton to recruit 50,000 workers. The restaurant, technology, and health-care sectors are among those that may experience long-lasting reallocation effects, the researchers write.
The SBU conducted between April 13 and April 24 corroborated these news reports. The survey asked respondents how their companies’ staffing had been affected since March 1 across five categories: permanent layoffs, temporary layoffs/furloughs, new hires, cuts to contractors and leased workers, and additions to contractors and leased workers. They were also asked to forecast their staffing needs over the coming month.
Between March 1 and mid-April, according to the survey, companies made staff cuts equal to 11 percent of total employment, and planned to cut another 4 percent. But at the same time, other companies increased staffing by a number equal to 4 percent of March 1 employment. This means that for every 10 layoffs since early March, there were also about three new hires, the researchers note.
Understanding the distribution of workers who can work from home may help policy makers direct financial-stabilization resources.
Only 37 Percent of US Jobs Can Be Done at HomeChicago Booth’s Veronica Guerrieri explains how remote working may benefit women in particular.
Why the Crisis Could Prompt More Women to Join the Labor MarketAbout three-quarters of staffing cuts from March 1 to mid-May were considered temporary layoffs or furloughs, the survey indicates. Thus, many jobs may return after the pandemic. However, deep economic uncertainty and the possibility of an extended transition to the post-COVID world raise the chances of permanent job losses, the researchers write.
The survey also tracks executives’ expectations for the year ahead, with data going back to 2016. Notably, write the researchers, the expected job-reallocation rate over the next year spiked from 1.5 percent of employment in January 2020 to 5.4 percent in April, which is 2.4 times the prepandemic average, and the highest in the survey’s history.
Overall, 42 percent of pandemic-related layoffs will be permanent, the researchers estimate—and the current reallocation trend will continue.
These findings could have crucial implications for US policy. Efforts to retain all jobs lost to the pandemic may waste resources and slow the reallocation process, the researchers write. Some policies that they see as potentially harmful in this regard include unemployment benefits that exceed earnings for many workers, subsidies that encourage employee retention regardless of a company’s long-term outlook, occupational-licensing restrictions that make worker mobility more difficult, and regulations that stifle new business creation and growth. It makes more sense, they argue, to focus more attention on policies that facilitate the swift reallocation of jobs, employees, and capital.
Jose Maria Barrero, Nicholas Bloom, and Steven J. Davis, “COVID-19 Is Also a Reallocation Shock,” Working paper, May 2020.
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