What challenges and changes are in store for the workplace and the future of work?
The COVID-19 pandemic has fundamentally changed the way we work, presenting a new set of challenges for companies, according to a new report.
A new report on the labor market finds that the COVID-19 pandemic has fundamentally changed employment in the US. The report, by the Littler Workplace Policy Institute, said that for employers, 2020 has been unlike any other year they have experienced.
For American workers, the report notes the upheaval of historically high rates of unemployment in recent months, new family care obligations, significant changes to workspaces for those employees still on the job, and new remote-work arrangements for many others. For employers, the pandemic has brought about existential threats as markets have shifted rapidly, shutdown orders and new shopping habits limit sales, and liability becomes an even bigger concern than in the past.
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“The challenges employees and employers continue to face this Labor Day are enormous and unprecedented,” the report said. “Even when the coronavirus is finally behind us, many of these challenges will remain.”
The report is broken into four sections, covering job markets, the changing nature of work, lawsuits associated with COVID-19, and a chapter on state and federal efforts to address the pandemic.
Workers and workplaces: both are seeing dramatic changes
The report notes that the contraction of jobs in the US this spring was the greatest drop in employment since the U.S. began tracking employment in 1939. Private sector jobs accounted for 96 percent of job losses. Millions more Americans saw their hours cut or their jobs affected in other ways.
The job losses varied by geographic location: The East and West Coast, with big cities, big populations, and larger economies were hit harder than more rural, midwestern states. “State variations seem to reflect a variety of factors, including the extent of virus infection cases in the early stages of the spread, the extent of public health measures adopted affecting economic activity, and the relative size of employment in the hard-hit leisure and hospitality industry sector,” the report said. “As the extent and severity of infection in the summer has spread to states that had relatively lower unemployment rates in July, it will be important to watch how the unemployment rates in those states change in the months that follow.”
According to the report, women have been hardest hit by unemployment in the US. Younger workers (ages 16 to 24) were more affected by job losses than older workers. Although all racial groups saw double-digit declines in employment, white employment decreased the least and is recovering more quickly than employment for Blacks and other ethnic groups.
As for the industries affected by the pandemic, the report notes a devastating effect on hospitality and retail industries. But no industry escaped the impact to employment.
“The vast majority of those receiving unemployment in June 2020 were in the hotel and restaurants/food services sector (over 2.8 million individuals)—a more than 2,500% increase over the June 2019 numbers,” the report said. “Over 1.8 million individuals were receiving unemployment in the retail trade industry (over 1,350% increase from June 2019), 1.6 million in the health care industry (over 1,000% increase), 1.3 million from the administration support services (over 700% increase), and nearly 1.3 million in manufacturing (over 750% increase).”
The workplace itself is seeing big changes; with big increases in remote work being the most visible change. A government survey found that 31 percent of US workers had started working remotely due to the pandemic, by July that number had dropped only slightly, to 26.4 percent.
The report notes that this change is bringing a set of new challenges for employers, including in the areas of compensation, expense reimbursement, and taxes. Changes to onsite work are challenging as well, as businesses try to ensure their customers and workers remain safe from the virus.
Federal and state governments respond
The federal government passed four major bills to help ease the blow to both employers and employees, the most well-known are the CARES Act and the Paycheck Protection Program. The report notes that federal lawmakers responded relatively quickly early in the pandemic, but current efforts to continue and expand federal aid are bogged down in partisan wrangling.
States have stepped in to fill the gaps, to some extent. “Over 200 employment-related state and local bills, ordinances, and regulations have been enacted—many on a temporary basis— in response to COVID-19,” the report said. “These laws and regulations address a range of workplace issues impacted by the pandemic, and are in addition to the countless governor-issued executive orders governing workplace closures, health screenings, face coverings, and return-to-work protocols.”
The report adds that the most common state legislative changes have been to unemployment programs, with more than half relaxing restrictions on accessing unemployment benefits. In some cases, laws were passed that eased the impact of UI claims on an employer’s experience rating.
Predictions in an unpredictable time
The report ends with some predictions for the future, although it notes forecasting the future is an art, not a science. These include:
- An increase in independent contracting.
- Improved economic growth when a vaccine is introduced—although questions remain on how the public will respond to a new vaccine.
- An increase in personal and business bankruptcy filings.
- The report said an overall strong recovery will be dependent on how small businesses fare.
- So far, statistics on small business recovery are mixed at best.
Changing consumer habits and how companies adapt is one area to watch, the report concludes. “The pandemic might have influenced even more individuals to switch to online shopping—or services, such as health care visits—exclusively,” the report said. “Facilities that already had an online presence—or could quickly and efficiently create one—will outlast those that do not. Similarly, crowd avoidance may influence the number of people who plan to attend concerts and theaters, take public transportation, or travel when the pandemic subsides.”
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